Shortly after the Food Summit, Argentina chooses to maintain export taxes on grain

MSNBC

President Cristina Fernandez dug in her heels Monday over contentious grain export tax hikes, rebuffing farmers who are seeking talks to end a three-month standoff that has crippled Argentina’s farm sector

First off, I should recognize Jeannette Neumann’s ever-so-clever method of reminding us Argentina’s President is a woman.

On to the real issue here, Fernandez finally gave plans for the destination of the revenues from export taxes, social programs such as building hospitals, roads and housing. Nevertheless, can we really forget about the great social service that is helping to provide cheap and affordable food to the poor? These taxes discourage farming, reinvestment in lands, and gains to productivity, all in the face of high food prices. The President speaks of redistributing wealth, but must she take from those in control of the nation’s food security?

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One Response

  1. This is just a bad policy. I don’t doubt that there needs to be some redistribution of wealth, but that would be a strictly normative argument. The argument against export restrictions is strictly common sense. Free trade is best from the world welfare point of view. Free trade is best for the small economy. The only time free trade is not ideal is when a country’s economy is so huge that it has the monopoly power to influence great control over world prices. Argentina would be better served to open trade, and just redistribute progressively after individuals have maximized output.

    Besides, in labor-rich countries, the working-class benefits the most from free trade (relative to autarky) . The most abundant type of good (labor-intensive) is produced in greater quantity at a higher, world-wide price.

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