Here's another reason for Farm Belt states to mourn the re-election of George W. Bush: For the first time in 18 years, the United States has been running agricultural trade deficits.. Normally, agriculture is one of the only economic sectors that reliably produces surpluses.
According to the U.S. Department of Agriculture, the U.S. imported more agricultural goods than it exported in June and August, the first monthly trade deficits since 1986, when the Farm Belt was mired in a depression. "It's very worrisome," said Sung Won Sohn, chief economist of banking giant Wells Fargo & Co. "We need agricultural trade surpluses more than ever because the nonagricultural deficit is ballooning."
There are a lot of reasons for this, but here are the ones that are foremost on my worried mind. First, we're irrationally committed to biotech foods, which the EU and many nations utterly reject. Our farmers have been cajoled or bullied into planting GE crops, only to find that they produce a lower yield at a higher cost, and are unwelcome in several important international markets. That's not exactly a recipe for success in the global market.
Second, growing international anger at the Bush administration's arrogance and brutality is leading some international consumers to avoid U.S. products. Thanks to mismanagement and bad policies, we're at a point where even a limited but persistent formal boycott of U.S. produce could hobble our economy, because as Sung Won Sohn notes, agriculture surpluses usually offset deficits in other sectors. In addition to which:
[T]he problem with the widening overall trade deficit is that it is sustainable only as long as foreigners are willing to lend the U.S. large amounts of money. Many economists warn that this isn't likely to continue, and if they're correct, the risks are growing for a market-rattling crash in the value of the dollar.
A lot of the policies that led to this situation were propelled by agribusiness lobbyists with a product orientation rather than a consumer orientation; in other words, they forced the market to accept (and government to subsidize) what they produced, instead of producing things the market wanted. Not surprisingly (to anyone who's not a lobbyist or a Bushophile economist), the lobby's financial and political interests are suffering partially as a result of its own efforts:
During the 1990s, the agriculture sector's ability to single-handedly cut the trade deficit by as much as 16% some years gave it political capital in Washington, helping justify billions of dollars in annual farm subsidies. Now, agriculture's shrinking impact on the trade scene, plus the swelling federal budget deficit, could make it harder for the farm lobby to protect those subsidies.
Isn't it funny how that works? This is yet another example of how refusing to change course because of concerns over short-term economic issues can lead to far more significant long-term losses. Despite the fact that business writers make millions explaining the concept of adaptation to change in kindergarten-level books like Who Moved My Cheese?, the lessons never seem to stick.
Some experts are saying that we'll soon see full-year agricultural deficits. If that disaster happens, something tells me that the Midwestern "moral values" crowd will avoid blaming Bush for any part of it, and will see it instead as Yahweh's revenge against lesbian atheists.