02 November 2006

The Rice Solution

The recent failure of free trade agreement talks between the United States and Korea is frustrating. The "sensitive" issues of rice (for the Koreans) and textiles (for the Americans) are harming consumers on both sides of the ocean.

Korea is concerned that by opening up its rice market to imports, that it will effectively make their domestic industry obsolete. The Korean rice industry is practically obsolete and as such requires extensive subsidies to stay afloat along with highly punitive tariffs on imports. The United States feels similarly about its textile industry, although obsolecence isn't the problem in the US, it's the union monopoly on the labor supply that has resulted in anti-competitive wages for textile workers.

The solution is simple. Let the market solve the problem. Let consumers vote with their dollars (or Won.) Allow unrestricted rice imports from the US, but label that rice in the stores as "US Rice" in big bold letters. Label the domestic rice as "Korean Rice." The US rice will of course be dramatically cheaper, but if consumers don't want to lower prices, they would be free to buy the expensive domestic product. The same model could work for textiles. If the citizens of a particular country are truely interested in protecting inefficient industries, then let them pay for it themselves.

I am tired of overpaying for rice. I'm tired of overpaying for everything. Let the markets set the prices and the consumers set the demand.

2 comments:

Anonymous said...

dear sir/madam,

While you might be right in demanding that markets should decide prices and not government control, I would like to point out that its subisidies not markets that drive the US rice production. This means that by opening up your marekts you are supporting this unfairness in trade.
I think you need to be a little more sensitive to the government's stubborness on this issue. Though you might end up eating cheaper rice, you might be taking away from the livelihood of poorer Korean farmers.
Sometimes free markes are not always free.

SuperAcidJax said...

First, it is true that the US does subsidize rice production. However the government of Korea subsidizes domestic production as well. If I spend less money on rice, that means I can support other industries that are losing my business because of artificially high prices. So what about the poor garmet makers that aren't getting my business? What about the poor cab drivers that aren't getting my business because I spend too much on rice. What makes the rice farmer a "special" group deserving of protection? What about the entire South Korean population that is spending a disproportionate share of their income supporting the rice industry. While helping the "poor, defenseless farmers" sounds noble, the truth is that they've had years to prepare for the reduction of rice tariffs. The issue first arose during the 1994 Urugary Round WTO negotiations. It's been 12 years. In that time, rather than providing protection, the government should have been assisting the farmers with modernization. I don't want to hear about the plight of the poor farmer when they have equal access to education as the rest of South Korea. No one forces them to be farmers. They could easily sell their land and invest in other industries if they were so inclined. I've been to Korean rice farms, I've talked with farmers. They want to protest at the drop of a hat, yet with a similar expenditure of energy towards moderization, they would have nothing to protest -- they could compete. I propose ending all subsidies and tariffs. They are all counterproductive to any countries economy. How about subsidizing my income so I can afford expensive rice?