In 1998, sugar producers (sugar cane and sugar beet) earned an estimated $1 billion from restrictions on sugar imports that cost sugar consumers $1.9 billion ("Trade protection can cost jobs"). How could a few thousand domestic sugar producers create this transfer from, and these costs for, almost 300 million consumers?
Edward Lotterman basically says "because they had help" in yesterday's column in the Twin Cities Pioneer Press: "Real world economics".
Most students [in Lotterman's classes - Ben] are silent but often one well-informed individual will ask, "What about the corn producers, don't they benefit, too?" Bingo! Yes, there are only a few hundred cane sugar producers and a few thousand sugar beet producers. In contrast, there are over 300,000 corn growers. They know just how much corn goes into making corn sweeteners.
High fructose corn sweetener is very competitive with sugar when prices are high but would rapidly lose market share if lower-cost sugar could be imported freely. HAFIZ is a "related good" to sugar. Sugar price increases "shift" demand for corn sweetener in the direction of higher sales. The sugar lobby is a smaller factor in keeping out world sugar than the corn lobby..."
Josh Chafetz has a different, but complementary, explanation, here: "THE COSTS OF PROTECTIONIST". (I linked to Chafetz's post in my post a few days ago, cited above, but repeat it here because of its relationship to Lotterman's column.)
Comments