Ag Subsidies: Advantage McCain

Professor Mankiw links to Ernesto Zedillo's article in Forbes. Zedillo is concerned that people are blaming globalization for food shortages, and says "Blame Policies, Not Markets."

It is clear, however, that the most damaging distortions in agricultural markets originate in rich countries. There's little doubt that the present spiral in grain prices is closely linked to U.S. and EU policies enacted to boost production of biofuels. The American and European governments subsidize the production of biofuels, limit their import and mandate their use. The exact extent to which these policies have impacted food prices is still a matter of contention, but not even the most enthusiastic proponents of ethanol can deny that by inducing a greater allocation of agricultural resources toward biofuel production, the amount of grain available for food has been reduced.

Mankiw then reminds us to "Remember where the two presidential candidates stand on ethanol and the farm bill."

2008 Posted by jk at August 4, 2008 5:25 PM