Excerpt: The steamboat conveying Andrew Jackson up the Ohio River toward his tumultuous 1829 inauguration had brooms lashed to its bow, symbolizing Old Hickory’s vow to clean up Washington. But sweeping out Washington’s Augean stables, like painting the Golden Gate Bridge, is steady work, so steady it never ends. Neither do the policies that cosset sugar producers.
These immortal measures just received the Senate’s benediction because they illustrate the only law Washington can be counted on to respect. It is the law of dispersed costs but concentrated benefits.
The provisions by which Washington transfers wealth from 316 million American consumers to a few thousand sugar producers are part of a “temporary” commodity support program created during the Great Depression. Not even the New Deal could prolong the Depression forever. It ended. But sugar protectionism is forever. The Senate recently voted 54-45 against even mild reforms of the baroque architecture of protections for producers of sugar cane and sugar beets.
The government guarantees up to 85 percent of the U.S. sugar market for U.S.-produced sugar. The remaining portion of the market is allocated for imports from particular countries at a preferential tariff rate. Minimum prices are guaranteed for sugar from cane and beets. Surplus sugar — meaning that which U.S. producers cannot profitably sell — is bought by the government and sold at a loss to producers of ethanol, another program whose irrationalities are ubiquitous.
All this probably means $3.7 billion in higher sugar costs. It also means scores of thousands of lost jobs as manufacturers of candy and products with significant sugar content move jobs to countries where they can pay the much lower world price of sugar.
The big companies like Mars and Hershey can locate plants around the world. The hundreds of family-owned American candy companies cannot. In the last four years, the U.S. price has averaged between 64 percent to 92 percent higher than the world price. The costs are dispersed to 316 million consumers. The benefits accrue primarily to 4,700 sugar beet and sugar cane farms.
What begins in Washington as simple garden-variety grasping becomes an entitlement, the argument being that the longer the benefit has lived, the more its beneficiaries have built their lives around it, so ending it would be disruptive. Again, the Senate voted not on ending sugar protectionism but on making it slightly less irrational.