Since the founding of the United States, the world cotton industry has been dominated by the farmers from the American south. Despite the changing times, the southern farmers have been able to maintain a comparative advantage over producers from other nations through various means. The free and ever-present labor that the farmers had at their disposal due to slavery played a part in the control of the industry early on, as did the farmers’ ability to adapt and implement new technology to growing and producing cotton in the most efficient way. Today, the most hotly contested debate concerns the subsidies that farmers receive from the US government to help them maintain a comparative advantage over developing nations. Intelligent, good-intentioned Americans over the years have argued back and forth with each other on the issue of the government’s role in a “free market” economy. Some argue that the subsidies are not consistent with a free market economy, are unfair to developing countries, and give the farmers too much power. However, the most pragmatic and logical reasoning shows that the United States government has utilized the correct policy by subsidizing the American cotton growers and should continue to do so in the future.
It is by no means hypocritical for the United States government to subsidize cotton and other agricultural industries. First of all, it is a fact generally agreed upon by economists that some government involvement in the economy is necessary. Greg Mankiw, a conservative economist, listed amongst his ten universally agreed upon general principles of economics that governments can sometimes improve market outcomes. This is especially important because conservatives tend to seek less government intervention within the economy, but like Mankiw, most will admit that the government needs to have at least some presence in economic affairs. This is one of those instances.
According to the US Department of Agriculture, the U.S. cotton industry accounts for about 200,000 jobs in the industry sectors, which range from the actual farming to jobs on textile mills. If the subsidies were to be stripped, the US cotton industry would fall flat on its face and thousands of jobs would be lost. It would be nearly impossible to replace those jobs in any timely fashion, and it is hard enough as it is to keep jobs in the US with all the outsourcing that goes on today. As the world’s third leading cotton producer, we are also the world’s number one exporter of cotton, as annual exports exceed $3 billion. In this day and age when there is a growing movement to find ways to lessen the nation’s dependence on imports while simultaneously increasing exports, it stands to reason that the cotton subsidies are a good thing because they assist in helping the United States account for one third in global cotton trade according to the USDA. In addition, the US has a mixed economy, not a purely capitalistic one; if we are referred to as “the global champion of capitalism,” it certainly was not a phrase that we coined or consistently use. Other countries may call us that, but the US has never said that it is a purely capitalistic economy and it does not try to be one either.
