Uncle Sugar

Once again, Congress is considering taking actions that would eliminate subsidies for domestic sugar—subsidies that cost American consumers and taxpayers billions. Once again, those benefiting from sugar subsidies are lining up in opposition.

Currently, refined sugar sells for around 60 cents a pound in the U.S. market and 25 cents a pound on the world market.

Why are U.S. sugar prices so much higher? Under the law:

  • At least 85% of sugar sold in the U.S. must come from domestic processors.
  • The U.S. Department of Agriculture (USDA) dictates to domestic sugar companies how much they can sell and limits how much cheaper sugar can be imported.
  • The USDA buys up excess sugar and sells it to ethanol makers.
  • U.S. sugar producers are guaranteed minimum prices by the USDA.

According to the Los Angeles Times, “American sugar companies and their trade associations have doled out more than $2 million in campaign contributions since the beginning of last year.”  In addition, during the first quarter of 2012, they spent 3.6 million dollars on lobbying politicians. Their return on their “investment” was high indeed. The government spends over 2 billion dollars a year, of your money and mine, supporting sugar prices.

In addition, consumers are stuck with considerably higher bills for processed food—perhaps over $3 billion a year in higher prices. Further, in sugar beet growing areas such as the Red River Valley of North Dakota, subsidized sugar beet farmers push up the price of farmland: They outbid growers of other crops, such as soybeans, for scare farmland.

Another side effect of sugar subsidies has been that many food manufacturers substitute lower priced high-fructose corn syrup for higher priced sugar. Of course, neither is a health food; but high-fructose corn syrup has been linked to health issues such as diabetes, liver damage, and mercury exposure. In other words we use tax money to increase health care costs and create disease.

In a seemingly unrelated news story, identity thief scammers have been successfully using a new ruse to extract important information from their victims. The scammers claim that there is a new government program, authorized by President Obama, to pay for people’s fuel bills: a bailout due to this summer’s unusually high summer heat.

Thousands have fallen for this scam. How could they be so gullible? Caroline Morales of Bethlehem, Pennsylvania, told the Allentown Morning Call this story:

My neighbor comes running with a paper that had a routing and account number. My neighbor said, “Obama was helping people pay their utility bills, mortgage and any bills you had.” While Morales had her doubts, she said her mom told her, “It’s probably true since he is looking for votes.”

So this is what we have come to in America!? After decades of subsidizing more and more industries and more and more Americans, and after billions of dollars of bailouts to automakers banks and insurance companies in recent years, ordinary Americans now expect government to subsidize everything. They believe the president has the power to simply give them other people’s money.

Matthew Mitchell, senior research fellow at the Mercatus Center at George Mason University summarizes the destructive force  behind such subsidies: “Whatever its guise, government granted privilege is an extraordinarily destructive force. It misdirects resources, impedes genuine economic progress, breeds corruption, and undermines the legitimacy of both the government and the private sector.”

Who pays for all the subsidies? Those who are not subsidized, of course: the millions of ordinary Americans who simply work for a living. The non-subsidized part of the economy is shrinking every day. Not surprisingly, America’s future prospects shrink every day as the monster called Uncle Sugar, with his vociferous appetite for the people’s money, ravages America.

3 Responses to Uncle Sugar

  1. Lyn says:

    Barry, thanks for this. As I suspect you’ve seen, particularly in your recent undergrad econ classes, there’s been a broad shift in people’s understanding of where “the government’s money” comes from. It’s as if it appears magically, and can be rightfully bestowed upon anyone “in need.” (Unfortunately, QE on the part of the Fed only fuels that misapprehension; where that money ends up going, and resulting currency debasement is never discussed.) I’ve also seen the disturbing assumption that the money people earn by working is first and foremost the government’s–and it is okay for the earner to receive only what’s left after the government has first taken whatever fraction their ever-growing need requires. (Seems like a literal implementation of this was proposed for UK some time back.) On the off-chance that you missed it, Charles Hugh Smith’s recent piece on the real tax rate for middle-class Americans led to a startlingly high number: http://bit.ly/NaE6Ug.

  2. Lyn says:

    PS: I’d be remiss if I didn’t mention that Big Sugar’s enlistment of US military force in the 1890s was the means for the coercive annexation of the Hawaiian Islands. Over a century later, they still have a tight grip on water rights throughout that state. Hawaii’s citizens struggle to regain those rights, with few successes: http://bit.ly/MZdiIi

    • Barry Brownstein says:


      Thanks for the two great links. They are excellent additions to my post.

      I can tell you good news about students. (Of course, most of my sample are graduate students. By and by they are open-minded and receptive to considering ideas that they have never been exposed to.

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