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Repairing Years of Protectionism

June 28, 2008, 1:42 pm

Often, government interventionism is like a wack-a-mole game, with one set of regulations that create unintended consequences that are the justification for more regulation, and so on.

On the bad-worse scale of government interventionism, this is probably one of the better ideas, the State of Florida's buyout of US Sugars cane growing operations around the Everglades  (via bird dog).

Not mentioned anywhere in the article is the fact that sugar-cane production in the US likely would not even exist at all were it not for the substantial import quotas and tariffs placed on foreign sugar.  The US government has had a policy of propping up US Sugar via enforced higher prices.  So after years of the government in effect paying US Sugar to grow cane around the Everglades, the Florida government is now paying it not to.

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Category: Government
  • Bob Smith

    I still have a general problem with government sponsored land buying. It takes the land off the tax rolls, which further exacerbates budgetary pressures, and as Milton Friedman said, spending other people's money guarantees it won't be spent wisely, or that it will be spent to benefit the spender not the contributor. Also, the billion-dollar land grab is a huge fraction of the state's total budget. You might think ~2% is not "huge", but as a special-purpose one-off deal it really is huge. This smacks of a "how can we blow our budget surplus" deal.

    In any case, the tussle regarding the issue obscures the fact that Florida voters elected a RINO. Crist is a genuine drink the environmentalist koolaid liberal who is actively trying to destroy Florida's economy with the enthusiastic support of the legislature. I am saddened so many Floridians support him. Too bad Jeb Bush was term-limited out of office, he was a superb governor and much more fiscally conservative than his father.

  • Dr. T

    Crist is a genuine drink the environmentalist koolaid liberal who is actively trying to destroy Florida's economy with the enthusiastic support of the legislature.

    They probably think the entire Florida economy should be based on tourism and service to retirees. The orange groves are likely to be the next target for turning farmland back into swamps. (I wonder if there's an export market for mosquitoes?)

  • elambend

    Ironically, the sugar producers are the biggest supporters of the tariffs. They've grown small. However corn producers and corn product companies, particularly Archer Daniels Midland which makes a lot of high fructose corn syrup, which has replaced sugar in lots of products (check the ingredients on any soda, loaf of bread, or ketchup).

  • http://CoMuse.Blogspot.com Allen

    So what's next? Minnesota buying out American Crystal Sugar shareholders on the MN-side of the Red River Valley after the next big flood?

    Elambend --> I've often wondered the same thing. How do they not realize their protections are penny wise but pound foolish? I was disappointed that press around the role of fructose in America don't touch onto these subsidies and their role in the rise of non-sugar sweeteners. Not that I buy into those being the cause of obesity. But come on, King Corn didn't touch on it once. How do you do 90 minutes on fructose corn syrup and not even touch on sugar subsidies?????

  • Bob Smith

    They probably think the entire Florida economy should be based on tourism and service to retirees.

    With all the ethanol, global warming, and anti-drilling mandates Crist is pushing for that's exactly the economy Florida will end up with, and the legislature is all too happy to accomodate him.

    The orange groves are likely to be the next target for turning farmland back into swamps.

    I agree Crist would go for that philosophically. I think the orange is a little too iconic for that, though if he tried it he would probably be hailed a revolutionary hero by a disturbing number of people. There are a number of Everglades area towns that he could turn back into valuable swamp, though.

  • macquechoux

    I think some other questions need to asked about this buyout. If the state of Florida is going to spend 1.75 billions dollars is this the best use of 1.75 billion dollars of taxpayers' money? Can the state afford to do this? Might it not be a good idea to involve the voters to see what their desires might be? How much is the loss of tax base, jobs and the like going to cost the citizens of Florida? Not only 1900 jobs are going to be lost but there are also thousands of jobs built around supporting US Sugar and their employees in the surrounding area. Anybody put a cost to the state on this? I'm anxious to see more of the details and the reaction of Floridians as this unfolds.

  • Bob Smith

    Yes, a heck of a lot of corporate income, sales, payroll, and property taxes will be disappearing with this deal. Since when do environmentalists care about cost-benefit and side effects? That's why things like this always happen by fiat, voters might say no.

  • Margaret

    A report on Lehrer news hour said that the sugar growers have huge waste and waste water problems they they were going to have to manage and this was more economically favorable to them

  • Corky Boyd

    The big question is why US Sugar threw in the towel at this moment. It was't Gov. Crist making an offer US Sugar couldn't refuse.

    US Sugar has always been the master of the politicians, not the other way around. They do this through one of the best money machines in political history. They curry favor in Washington and Tallahassee for import restrictions (doubling the price for American sugar over the world price) and water. Sugar needs water, lots of water. And US Sugar always gets what they want.

    Here's my take on what probably happened.

    US Sugar is located just south shore of Lake Okeechobee and relies on it for water. The lake was leveed in the early 30s about the time US Sugar began operations there.

    Over the years the lake became a resevoir, and the levees embankments to store water at far higher than natural levels. In South Florida, rain comes in four months, June, July, August and Sept. The South Florida Water Management District (a federal entity) controls lake levels. The wet season is the time to max out the water storage for the balance of the year, especially for Sugar.

    But we also have hurrricanes which can easily dump 12 to 14 inches in a 24 hour period. This can traanslate to 4 feet of water because the watershed is far larger than the lake. So when a hurricane threatens, SFWMD dumps the water into the Caloosahatchie. This water is loaded with agricultural nutrients/pesticides and the massive releases have caused all sorts of problems.

    After Katrina, the Corps of Engineers inspected the Okeechobee levees and found them unsafe. Max levels were substantally reduced. The choice for the feds was to continue the reduced levels and possibly lowering them further (unacceptable to US Sugar). Or the feds could build new levees, a very expensive proposition and unacceptable to the communities downstream.

    The growng communities of Southwest Florida are fed up with US Sugar. They are an unwanted neighbor that is damaging the prime industries here, tourism, real estate development and fishing. Being a friend of US Sugar is now considered a serious liablility to any politician.

    I think Sugar is facing the inevitable and cutting the best deal possible.

    Corky Boyd
    Sanibel, FL