Bush to Drop Farm Subsidies if EU Does the Same

[Vicsun]

http://www.timesonline.co.uk/article/0, ... 16,00.html

I'll drop farming subsidies if EU does the same, says Bush
By Steve Bird and Helen Rumbelow
President issues challenge to leaders with claim that opening markets to Africa would reduce the need for aid

PRESIDENT BUSH yesterday challenged EU leaders to scrap massive subsidies paid to their farmers, saying free trade with Africa would eliminate the need for Third World aid.

Mr Bush, on the eve of the G8 summit in Gleneagles, said that Europe paid “tremendous” agricultural subsidies, and that the US was ready to drop its own payouts to American farmers if Europe had the courage to do the same.

Mr Bush’s challenge — in an interview with Sir Trevor McDonald to be screened by ITV tonight — is likely to be rejected not only by France and Germany, but by many in his own country. But it appeared to be a bold rhetorical step by his Administration to get the world’s richest nations away from talk of aid and toward free-market solutions in the quest to alleviate poverty in Africa.

Asked directly if America would drop its subsidy system if the EU abandoned the Common Agricultural Policy (CAP), Mr Bush said: “Absolutely. And I think we have an obligation to work together to do that.

“Because if we do achieve this business of free trade, and if markets in the West are opened up to countries in Africa, they could be so successful, they could eliminate the need for aid. The benefits that have come from opening up markets — our markets to them and their markets to us — far outweigh the benefits of aid.”

Mr Bush’s call to scrap agricultural subsidies in the developed world follows that of Tony Blair, who recently said the system of over-generous subsidies was “hypocrisy” that could no longer be ignored.

Farmers in developed countries receive more than £150 billion in subsidies, which Mr Blair said gives them an unfair advantage which holds back Africa’s poorest nations. He has also suggested that the CAP, which is fiercely defended by President Chirac of France, should be abandoned as part of a complete overhaul of the EU’s finances.

Mr Bush added: “Let’s join hands as wealthy industrialised nations and say to the world, we are going to get rid of all our agricultural subsidies together. And so the position of the US Government is, we are willing to do so, and we will do so with our fine friends in the European Union.”

A senior source close to the British G8 negotiating team last night welcomed Mr Bush’s comments, saying he had delivered a “major challenge to the European Union”. He added: “Mr Bush has just upped the pressure. The seeds are there of a potential breakthrough.” The British, he said, were last night in talks aimed at persuading the G8 to wipe out all export subsidies in the next five years.

Peter Mandelson, the European Trade Commissioner, said: “Don’t underestimate the vested interests. But we have seen reform take place before. The Common Agricultural Policy in Europe has seen considerable reform over the past decade and it can go on.”

Gordon Brown said that, in the longer term, reform of global trading rules, with the removal of distorting tariffs and subsidies, would allow African countries to grow their economies. However, he was criticised for saying that some of the fundamental pillars of a new deal for Africa — 100 per cent debt relief for the poorest countries and a doubling in aid — were now already in place.

Oxfam and ActionAid said that the deals fell short of what was required and urged the G8 leaders to take a further step. “Given the events of this weekend, there are millions of people expecting G8 to come up with something extraordinary, and this isn’t it,” an Oxfam spokesman said.

A spokeswoman for ActionAid, one of the members of the Make Poverty History campaign, welcomed Mr Bush’s comments. “The subsidies have been extremely damaging and if the G8 leaders can agree to end that system it will be an important move towards making poverty history and something the billions of people who watched Live 8 are demanding.”

Both Mr Blair and Gordon Brown have been pushing to emerge from Gleneagles with an agreement for Africa to trade its way out of poverty. They want a formal agreement ratified at the World Trade Organisation talks in Hong Kong in December.

Mr Brown is also due to announce the launch of a fund to pay for life-saving vaccines for children in Africa. He hopes to announce that five million lives will be saved in Africa by vaccinating against measles, TB and polio. The Chancellor has secured funding from Bill Gates, the Microsoft founder, as well as Scandinavia and Italy.

I'd be really happy if I wasn't convinced it's a bluff the EU won't call. The CAP needs to go; if not for Africa's sake (despite it being one of the absolutely best things that can happen to them at this point), then for Europe's and America's. Few systems are as grossly inefficient and downright wasteful as 'our' agricultural subsidies.

[C Elegans]

[QUOTE=Vicsun]Few systems are as grossly inefficient and downright wasteful as 'our' agricultural subsidies.[/QUOTE]

Don't even get me started on Europe's agricultural subsidies. Unfortunately I am convinced we will never learn whether Shrub bluffs or or not since I believe the EU would prefer to sink in the Atlantic rather than allowing a free market for agricultural products.

[Dottie]

[QUOTE=Vicsun]I'd be really happy if I wasn't convinced it's a bluff the EU won't call. The CAP needs to go; if not for Africa's sake (despite it being one of the absolutely best things that can happen to them at this point), then for Europe's and America's. Few systems are as grossly inefficient and downright wasteful as 'our' agricultural subsidies.[/QUOTE]

Certainly agree about all points here. While I think that Blair and some other might actually consider it I having a very difficult time seeing Chirac make such a move.

[fable]

[QUOTE=C Elegans] Don't even get me started on Europe's agricultural subsidies. Unfortunately I am convinced we will never learn whether Shrub bluffs or or not since I believe the EU would prefer to sink in the Atlantic rather than allowing a free market for agricultural products.[/QUOTE]

Agreed. Too many votes in certain nations that have gotten used to those agricultural subsidies over the years. I'm sure Bush knows that as sensitive as the EU is right now to the recent constitution rejection, they're not about to drop farm subsidies. And as for Bush, this has his usual air of grandstanding when engaged in a bluff. Typcially, when he really wants something accomplished, he goes about it in a sneaky, quiet, backroom manner, then reveals it to the public as a fait accompli.

[jopperm2]

I saw a great deal of ag subsidies being abused during my ubbringing in the agricultural midwest. I'd hate to see my lovely homeland go to waste, but my conservative pocketbook morals say pull the plug. I'm sure it won't happen though.

[fable]

[QUOTE=jopperm2]I saw a great deal of ag subsidies being abused during my ubbringing in the agricultural midwest. I'd hate to see my lovely homeland go to waste, but my conservative pocketbook morals say pull the plug. I'm sure it won't happen though.[/QUOTE]

I doubt the Republicans in Congress from the Midwest and South would ever approve it, Jop. As much as they scream continuously for Free Trade, they'll line up in favor of protectionist policies when it concerns their states and their presence in Congress. And of course, Bush is the same. He wouldn't dare have said this if it stood a chance of passage, because it could have cost the Republicans the the Congress in 2006, and the White House in 2008.

[Cuchulain82]

This step alone, of dropping farm subsidies, has the potential to change the global economic reality more than any other single action in the world. I'm really not overstating this, but unfortunately I don't have time to expound.

[giles337]

I think dropping subsidies and quotas can only be a good thing. At the moment, for example, it is cheaper for a farm to tip spare (i.e, above quota) milk down the drain than to over produce.

[Lestat]

With half the money that goes into the CAP currently, you could probably pay all the adjustment costs for farmers in Europe. Especially since most of the money goes to a few big farmers and the agro-industry. BTW I thought I read somewhere that Prince Charles is one of the biggest recipients in England of EU farm subsidies. I'll try to find that...

[Lestat]

Got It

From the Economist June 19th 2003 (long live search engines and my memory)

The commission also wants to cap the amount that the largest farms receive, so ending the anomaly of the wealthiest landholders, such as England's Prince Charles, doing particularly well out of the CAP.

The full article (still relevant):
http://www.economist.com/displaystory.c ... id=1859183

[Aegis]

It's NAFTA all over again. Talks to scrap farm subsidies were discussed between Canada and the US during the initial penning of the NAFTA agreement (amongst other things). Many of these things, Canada accepted in faith that American business and administrative groups would do the same.

As it stands now, American business has done little to hold up their end of the bargin, leaving Canadian industry and agriculture a frail shadow of what it once was, not to mention having taking American business to court numerous times on such issues (soft timbre, produce, Alberta beef, Maritime potatoes. The list can go on.)

In this particular case, I don't think the EU should back down in the CAP program, and they should use Canada as an example as to why not.

[Lestat]

[QUOTE=Aegis]In this particular case, I don't think the EU should back down in the CAP program, and they should use Canada as an example as to why not.[/QUOTE]

Well I think we should... and at the least it we should reform it:
- because it is a friggin' waste of money that could be better used
- because it makes Europeans pay a higher price for foodstuffs (and that hits the poor the most since they spend a higher percentage of their disposable income on food than the rich).
- because it distorts world trade in agricultural products and depresses prices on the world market. This hurts countries in the developing world the most since agriculture is a far bigger part of their economy. It would help Africa more than all the aid money that is poured into it now (if they grasp the opportunity).
- because it doesn't do what it is supposed to: help struggling European farmers. 80% of subsidies go to the 20% biggest farmers (see article I posted).
- because Chichi likes the CAP (and that is why it won't get reformed, sadly enough ).

[Chanak]

[QUOTE=fable]...And as for Bush, this has his usual air of grandstanding when engaged in a bluff. Typcially, when he really wants something accomplished, he goes about it in a sneaky, quiet, backroom manner, then reveals it to the public as a fait accompli.[/QUOTE]

The actions of his administration agree with you, fable. My first impression when learning of this from a newscast is "it's a bluff." The farm subsidies in the US has been a scandalous, wasteful affair for far too long, thanks to representatives of those interested in seeing these continue being in Congress (there are no partisan lines with this issue, interestingly enough). This is classic absurd Dubyah.

As the neo-cons fancy themselves a corporate "world leader", they should lead the way by ending this waste of taxpayer's money here in the US with no ballyhoo until it's done. *Then* approach the EU - that move would have much more effect. Of course, if anyone thinks this would actually happen, I would advise you to wake up out of that dream.

[Fiona]

I would be grateful if someone could explain all this to me. Obviously most of the people who have posted here know about farm subsidies and are against them. It is not clear to me why they are seen as clearly bad and I would like to know more of the arguments. In particular:

I see that 80% of the subsidy goes to large Agribusiness farms. Is this true in every country which gives subsidy? Is it possible that this is only true in countries where other pressures have led to centrilisation in agriculture. For example that process followed the "cheap food" policy pursued in the UK before that country joined the EU. That was nothing to do with the CAP but it did meant that when Britain joined the large farmers benefited most as they were also the biggest sector in the business. Could the CAP work better if it was implemented before that change had started ?

In France I have noticed a very wide range of food options and a diversity of outlets even in the smallest places. This does not exist in the UK where small villages and towns; and even poor parts of cities are food deserts where little is available and what there is is expensive. What role does the CAP play in this difference?

If food subsidies are removed then what evidence is there that food prices will fall. On the face of it this doesn't make sense to me since the costs of importing food are surely fairly fixed. If a country cannot produce what it needs it must import. Even leaving aside the environmental impact and the uncertaintly of the subsidies to fuel which lead to imported food being artificially cheaper than the real cost, it seems possible that food prices will rise, not fall. At least in some years. In the UK this would mean that the poorest could not afford even the very poor diet they eat at present. What proportion of any savings would have to be spent to raise low wages and benefits to compensate for this ?

[Lestat]

@ Fiona: check out the link to the article, it answers quite a few of your questions. The viewpoint is clearly of the freetrade liberal sort, so if you are leftleaning, you might be offended . But it explains things in a nutshell and in a way that is comprehensible, even without having a background in economics.

If questions still remain, then we'll have to start a course in Agricultural & International Economics.

[Fiona]

@ Lestat. I may be dense but I don't think the article does answer any of my questions.

I don't think I am offended because I am left leaning, though I do think a big part of the article is mere playground insult, and that does offend me.

Although it says that the recipients of the subsidy are the big farmers it neither denies the fact that small farmers thrive in France nor does it demonstrate that is independent of the policy. My question remains.

If the subsidy makes food in the west cheaper than it would otherwise be it seems to follow it will get more expensive if the subsidy is removed. Presumably this will be met by buying food from developing countries (the thrust of the open the markets demand. I think). Again questions of costs of transport both in money and environmental terms remains. If the subsidy leads to overproduction can the same transport money not be used to send the surplus where it is needed as an addition to indigenous production. I dont see why this will necessarily undermine local markets, though there may be good reasons why this is inevitable

I also worry about the export of food from nations where there is not enough to eat. There have certainly been examples in the past where that has happened because these countries have little else to export and there is also the example of the move to cash crops such as opium. No matter how many subsidies we remove a farmer is always going to get a better price for poppies than potatoes, surely

The article just assumes that a free market is always better. I know this is a popular view but I just don't see any evidence for it at all. Wherever free market liberalisation has been imposed as a condition of aid or debt relief or whatever poor economies quickly become basket cases. Sadly the free market proponents always seem to counter that evidence with the stolen cry that the experiment has not failed it just hasn't been properly tried. They then demand more of the same.

Can you start your course please

[CM]

The EU will not get rid of the CAP for the next 20 or 30 years. Plus Bush knows that. Even though Bush is pro-free trade, his vote base is agriculture. So he won't do it. Plus with CAFTA he has knocked out the US sugar industry so he won't be dumb enough to eliminate 20 billion dollars in subsidies. Plus this flies in the face of WTO negotiations that were conducted just last year.

Last year the US and EU forced developing countries to accept 20 billion dollars in subsidies to be placed in the Blue Box. (http://www.wto.org/english/tratop_e/agr ... oxes_e.htm - an explanation on the boxes)

The US farm bill and CAP are amber box. But the additionally 20 billion was blue box. So they are "supposedly less distorting". They aren't. They are just amber box subsidies placed in the blue box.

Secondly right now at the WTO and negotiations are under way on NAMA - Non-agriculture market access. They have yet to touch agriculture at all.

[Lestat]

Although it says that the recipients of the subsidy are the big farmers it neither denies the fact that small farmers thrive in France nor does it demonstrate that is independent of the policy. My question remains.

Well, those small farmers that thrive are playing on our quest for different tastes and natural (bio-)products. They'd probably thrive without subsidies. There is the policy of "terroir", of regional branding, of niche play which is very strong in France.
In general, you will see that even in France, farm size is increasing and the number of farms is steadily decreasing. I can't give figures like that, but you'll see that those farmers growing the more standard foodstuffs need a certain critical size. And bigger is better, since many costs are fixed (remaining the same for large bracket of production level) not variable (varying with production level). While production subsidies are directly related to level of production.

If the subsidy makes food in the west cheaper than it would otherwise be it seems to follow it will get more expensive if the subsidy is removed. Presumably this will be met by buying food from developing countries (the thrust of the open the markets demand. I think). Again questions of costs of transport both in money and environmental terms remains. If the subsidy leads to overproduction can the same transport money not be used to send the surplus where it is needed as an addition to indigenous production. I dont see why this will necessarily undermine local markets, though there may be good reasons why this is inevitable

The CAP, which is a very complicated system of tariffs, export subsidies, production subsidies, price controls and quota with different regimes for different produce, does not make food cheaper, in fact in many cases it makes it more expensive. Prices for sugar on the worldmarket can be half of what it is on the internal market.

Let's take a simple tariff: you add 10% to the price of imported wheat, wheat prices go up with 10% in the EU. The farmers in the EU will get more income, and the citizens of the EU pay more for their bread. But as long as you are importing, some money finds its way to the state.
Encouraged by this higher price, more farmers grow wheat, so much that they supply the whole internal market. And then more... To keep the price at the level that it was, the EU is now obliged to pay an export subsidy for the wheat it is now exporting to keep a price difference of 10% and is losing money (so you are paying as tax payer and as consumer).
Price controls work in the same way, only you don't get the benefit of income from tariff.

The environmental question: would you prefer capital intensive (high energy consumption), high use of chemicals and little labour in EU (think greenhouses for tomatoes in winter), or labour intensive, low use of chemicals in a country at some distance away. OK this is simplifying and not perfectly true, but agriculture in Europe is of the most energy intensive in the world (may Japan beats it).

The question of getting surplus where it is needed: the horrors of food aid ! I understand the real sincere feeling behind it , but there are few things worse to happen to a country than food aid.
1. Seldom a famine has been caused by lack of food, mostly it is a question of access to food (and thus: income). People die, because they cannot afford to buy food. Most of the time there is enough food available if not always on the spot, then in the country or in the region.
2. Giving out free food harms local farmers and food producers who see prices plummet, and percentage of people in this category is much higher in developing countries. It should be done only in dire, sudden emergencies.
3. If there is a need to hand out food, buy as local as possible (if there is not enough food in that country buy with the neighbours). Tastes and preferences are not the same. (eg: Maize in EU: fodder, Maize in Africa: staple food; different strains, different tastes).
I once spoke to a Ugandan scientist about this and he got really worked up about this issue.

I also worry about the export of food from nations where there is not enough to eat. There have certainly been examples in the past where that has happened because these countries have little else to export and there is also the example of the move to cash crops such as opium. No matter how many subsidies we remove a farmer is always going to get a better price for poppies than potatoes, surely

Well if those people grow poppies they can pay for their potatoes... and much more potatoes than they could have grown.
As said before, there are few places/situations were there is not enough food to go around. If they choose to grow a cash crop, they have good reason for it. But in cases where food is exported, while people are starving: look for government involvement.
And if everyone starts growing cash crops and noone food crops, you'd be surprised how quickly the price of food crops would go up, and thus become cash crops.
BTW Liberia imports rice, peoples favourite staple food, and exports rubber. Nobody is starving here.

The article just assumes that a free market is always better. I know this is a popular view but I just don't see any evidence for it at all. Wherever free market liberalisation has been imposed as a condition of aid or debt relief or whatever poor economies quickly become basket cases. Sadly the free market proponents always seem to counter that evidence with the stolen cry that the experiment has not failed it just hasn't been properly tried. They then demand more of the same.

Obviously, a free market is not always better, but when it's not better it is because not all costs are reflected in the price. But reflect on this: is it better to subsidise the price of a foodstuff or of petrol (and thus lower price for everyone) or let the market play and give money to those that are needy?
Most countries who opened up their economy have done actually better (Chile is fine example, when compared with more mercantilist Argentina, and China is doing also fairly well with market oriented reforms). And often those countries that you refer to were basket cases to start with. But liberalising the economy is not enough, you need strong institutions, rule of law, governance, etc. A free market is best at setting the right prices, but don't ask it to write the budget of a country or set its policies.

[Fiona]

Well, those small farmers that thrive are playing on our quest for different tastes and natural (bio-)products. They'd probably thrive without subsidies. There is the policy of "terroir", of regional branding, of niche play which is very strong in France.
In general, you will see that even in France, farm size is increasing and the number of farms is steadily decreasing. I can't give figures like that, but you'll see that those farmers growing the more standard foodstuffs need a certain critical size. And bigger is better, since many costs are fixed (remaining the same for large bracket of production level) not variable (varying with production level). While production subsidies are directly related to level of production.[/quote}

Lestat

As to the above: 1. You say they'd thrive without subsidies. They don't in the UK. Evidence ? 2. I don't see how you can have it both ways. If, even with subsidies, the trend is to bigger "agribusiness" type farms, how will abolishing subsidy help? If the fixed costs are a large proportion of the total costs in standard food stuff production why is it different in the niche market? In Britain the distribution network has a very large impact on what constitutes standard food stuffs, as does the marketing industry. Eating patterns have changed a lot here, partly because of this. It seems to me that people eat what they can afford and this is relatively elastic (there is some support for this in a study of food subsidy I found here:

http://www.ifpri.org/pubs/books/ppa88/ppa88ch01.pdf

(Please forgive if this is not the right part of the book - Cuchulain 82 has taught me a bit about the mechanics of posting but I am still very clumsy and find it hard)

Let's take a simple tariff: you add 10% to the price of imported wheat, wheat prices go up with 10% in the EU. The farmers in the EU will get more income, and the citizens of the EU pay more for their bread. But as long as you are importing, some money finds its way to the state.
Encouraged by this higher price, more farmers grow wheat, so much that they supply the whole internal market. And then more... To keep the price at the level that it was, the EU is now obliged to pay an export subsidy for the wheat it is now exporting to keep a price difference of 10% and is losing money (so you are paying as tax payer and as consumer)

I don't see how I am paying twice. I am paying in two different ways, one of which (price of food) is regressive and one of which(tax) is progressive. At the risk of being facile this sounds good to me, though the tax is not as progressive as I would like to see.( I am assuming the subsidy comes from general taxation not consumption taxes since in the UK food is exempt from VAT. This may not be true everywhere)

The environmental question: would you prefer capital intensive (high energy consumption), high use of chemicals and little labour in EU (think greenhouses for tomatoes in winter), or labour intensive, low use of chemicals in a country at some distance away. OK this is simplifying and not perfectly true, but agriculture in Europe is of the most energy intensive in the world (may Japan beats it).

If we have surplus, as you suggest, I don't see that this is truly a choice. You acknowledge this is a simplification and you might like to elaborate. At present I think that I would need to know how the costs of chemicals are fixed and if they truly are fair. I don't know how the costs and environmental impact of transport are included in your calculation. The link above also discusses the less obvious benefits of releasing people from direct food production into other areas. Could it be that the strong manufacturing and financial and service sectors can only exist where farming is not labour intensive ? The strong economies seem to get their wealth from concentration on sectors other than food production. Why would poor countries get rich in a different way ? Surely they need both capital and labour which is free to develop more technology etc. I am not saying that the environment wouldn't benefit but I am saying there is more to it than letting poor countries produce all our food, quite apart from the dangers of putting food into the same situation oil was in in the 1970's. Where a crucial commodity is controlled abroad it seems to me to lead to conflict and the potential for serious dislocation.

The question of getting surplus where it is needed: the horrors of food aid ! I understand the real sincere feeling behind it , but there are few things worse to happen to a country than food aid.
1. Seldom a famine has been caused by lack of food, mostly it is a question of access to food (and thus: income). People die, because they cannot afford to buy food. Most of the time there is enough food available if not always on the spot, then in the country or in the region.
2. Giving out free food harms local farmers and food producers who see prices plummet, and percentage of people in this category is much higher in developing countries. It should be done only in dire, sudden emergencies.
3. If there is a need to hand out food, buy as local as possible (if there is not enough food in that country buy with the neighbours). Tastes and preferences are not the same. (eg: Maize in EU: fodder, Maize in Africa: staple food; different strains, different tastes).
I once spoke to a Ugandan scientist about this and he got really worked up about this issue.

Again, see the link above. I am aware that many people would argue that the abolition of aid etc would be the best thing that could happen to many poor countries. In the book above it shows that things are not that simple. In particular:
1. Even if you are right and famine is (normally) a question of access people still die.
2. When the poor are given access to food through higher income or subsidised prices they eat more. According to the book this generally means that food has to be imported at least for a time. This does cause problems, which are fully elaborated there, but it does not suggest there is usually enough food in situ
3.I don't see how giving out free food can cause prices to plummet. The poor aren't buying it they are dying instead. How can feeding them affect the market directly. Indirectly they are more likely to be able to work and produce if they are fed. Wouldn't that be beneficial in the long run ?
4. As to tastes and preferences, I have already alluded to that above. It is more elastic than you suggest (though there have been major errors in the past, they are sometimes based on religious taboos and more often on fundamental misunderstandings. For example, in the UK for a long time government and researchers advised the poor to buy cheap cuts of meat, dried beans etc and spent money to teach them how to cook them. This patronising approach was a complete failure because the poor could not afford the fuel to cook things for a long time)

Well if those people grow pppies they can pay for their potatoes... and much more potatoes than they could have grown.

Perhaps true, but maybe immoral ?

If they choose to grow a cash crop, they have good reason for it.

Certainly. People are not stupid. My point is they often do not have a free choice.

But in cases where food is exported, while people are starving: look for government involvement.

Yes, but. The world bank and the IMO etc place demands on governments in desperate situations and this seems to me to be based on a theory of economics which, as I said before, does not seem to me to work.

And if everyone starts growing cash crops and noone food crops, you'd be surprised how quickly the price of food crops would go up, and thus become cash crops.

To the point where the proportion of the population living below the poverty line increases. What good is that ?


Apparently I am out of space so I am going to add another post even if this is a strong hint that I am overdoing it. Sorry

[Fiona]

Obviously, a free market is not always better, but when it's not better it is because not all costs are reflected in the price. But reflect on this: is it better to subsidise the price of a foodstuff or of petrol (and thus lower price for everyone) or let the market play and give money to those that are needy?
Most countries who opened up their economy have done actually better (Chile is fine example, when compared with more mercantilist Argentina, and China is doing also fairly well with market oriented reforms). And often those countries that you refer to were basket cases to start with. But liberalising the economy is not enough, you need strong institutions, rule of law, governance, etc. A free market is best at setting the right prices, but don't ask it to write the budget of a country or set its policies.

Not sure about your first sentence. I think you have again introduced a false dichotomy when you suggest we either target money to the needy or subsidise food. Many countries target food subsidies with complicated outcomes depending on how it is done; what the aim is etc. As I said in my original post it is necessary to consider whether the increase in wages/incomes which would have to take place to offset the removal of subsidy would work out better. The book I have read suggests it would not.

In practice I fear food would go up but the concomitant adjustment would not take place and the poor would just die in greater numbers.

As to your final point, of course. It seems to me that the free marketeers have been telling a story which suggests that the problems are largely due to government interference and regulation. I disagree. I think that any progress in the quality of ordinay people's lives is directly tied to increased regulation of business. It is not always beneficial but it is, broadly. Business is only interested in profit (indeed is legally required to make share value their only goal, at least in the UK). A strong democracy is the best preventive medicine for famine, and that is why the free marketeers have an interest in conflating the two concepts.

Finally, I do not know what you mean by "mercantile". I did look up some facts about Chile and Argentina and the article did not seem to unambiguously support your case. I was interested to note that Chile has 22% of people living below the poverty line and that no figures were given for Argentina. Do you know any more ?