29 September 2009

Good Subsidies?

(via JWT), Japanese rice farmers are strongly protected against competition from other, "unsuitable" farmers (more here). What do they do with prices that are about 6x world prices?

They do this (with rice paddies):


While very pretty, I am not sure that such art (the result of planting different colors of rice next to each other) is the best way to grow food or art.

Bottom Line: If you want to help farmers, pay them cash. If you want to help artists, pay them cash. Trade barriers cost more and deliver less money to the farmers. Of course, politicians are not going to end these inefficient programs because they are harder for citizens to understand and oppose. (Same for US programs on ethanol, sugar, steel, etc.)

3 comments:

  1. ... but one thing you need to ask is whether the cost of planting different types of rice together on some farms in a small town in northern Japan is more expensive than the benefits they gain from it, right?

    If the annual plantings increase revenue for their town through tourism, then perhaps it's not such a bad thing?

    ... and are you saying that farmers can't be artists? You seem to be making a rather sharp distinction there...

    ... and what is the "best way" to grow art?

    If the article was meant to be about the problems of subsidies, then I don't think you did a very good job. If it was about water use, then I don't think you did a very good job. But then again, it was (apparently) quite early in the morning when you posted...

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  2. I can certainly think of two reasons why rice subsidies are no longer the best solution to helping the industry:
    1) These subsidies were much more appropriate in the early part of the 20th century when Japan began to engage in the Industrial Revolution later than other nation-states, and so needed to protect its infant industries from mature industries in other countries. (ofcourse rice wasnt an infant industry in Japan, but in the sense of engaging in national/international commerce, it was). Ergo, today, the farmers no longer need the subsidies, despite the economy. As the Japanese should know, Protectionism only leads to isolation, which results from a lag in technology and innovation in the protected country. Case in point:A very large portion of Japanese rice farmers still use the same plows used in the 1920s.

    2) The politicians will certainly not initiate the halt in subsidies because ever since the Iron Triangle formed, the government feels that the only way to secure the rural vote is to provide subsidies. As they see it..if it ain't broke, why fix it? Trouble is, it IS broke, they just will not accept it. The rice farmers would have to come up with another way to maintain their relationship with the government,other than by Protectionism.

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  3. @Umlaud -- I'm saying nothing about farmers as artists. If they incur the cost (planting) and reap the benefits (tourism), then great. If the costs are borne by taxpayers/rice buyers, then the subsidy to "art" is inefficient.

    If you want more on subsidies, read these 180 posts: http://aguanomics.com/search/label/subsidies

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