For all the soft talk we hear on the environment, the dynamics of our economy, more than anything else, reveal the intent of our society. Nothing mirrors the true motives of an individual more than the way he or she manages their money. The same is true of governments. Follow the money and it will show you the priorities behind our world leaders' choices. Industry subsides are particularly revealing.
The use of government subsidies all around the world exposes painful contradictions between the policies espoused at international roundtables and those enacted on the economic playing field. More than $500 billion of taxpayers and consumers money is spent annually around the world supporting industrial methods that are hazardous to the environment.1
Farm subsidies have been a part of American agriculture for over seventy years. And yet these subsidies have always amounted to poor business for all but the distributors in the round about way of the market. Because of U.S. farm subsidies, no one in the world can grow grain as cheaply as it is grown in the United States. This essentially eliminates all sense of a free market for the farmers of competing developing nations and sends many of them packing to urban centers for factory jobs. In the case of corn, America's biggest crop, the price of a bushel of corn today is less than the cost of growing it when the scale of the farm is small. For the family farmer, only the subsidies make growing corn profitable at all. Not only is this system illogical in terms of the market, but it also changes the way corn or other grains are grown. Large scale industrial farms, known to be entirely unsustainable, can thrive while family farmers struggle in a sea of paperwork and government bureaucracy to make ends meet.
Incredibly, the original impetus behind these subsidies that were initated during Franklin D. Roosevelt's first term as president was to protect the small farmer, yet "the number of U.S. farms fell by two thirds between 1930 and 1990."2 And continues to fall today. In other words, subsidies have done exactly the opposite of what they intended. Real prices, depressed locally and globally, have driven the small and mid-sized farmer out of business both in the United States and worldwide, enabling the spread of huge soil-destroying industrial farms which also have access to these same subsidies. It is nothing less than manifest absurdity to find ways to support industries that contribute to our own demise. These faulty economic signals confound the so-called "free market" mechanism and pervert any capacity it might have for environmental correction.
The industrial costs of mining vital natural resources don't always reflect the whole cost of extraction. In more instances than not, the downstream costs of environmental or social impact are not paid by the ones who profit most from extracting the resource, whether it be soil, oil, lumber, or fish. These encompassing costs are passed on to the public as a whole, both in terms of lost environmental quality and tax dollars spent on clean up. Even a cursory review of the way subsidies are used in the mining of some of our most critical natural resources shows that many nations' priorities are wasteful, minimally confused, sometimes corrupt, and often plain insanity:
"Government timber sales in parts of the United States and Australia, especially where young trees or steep terrain make logging expensive, bring in less than agencies spend administering the concessions, particularly building logging roads. Annual losses on forest administration hovered in the range of $300-400 million in the United States in the early nineties. In effect, the general taxpayer is paying timber companies to raze public forests. The biggest money-loser is the Tongass National Forest in Alaska, the world's largest remaining temperate rain forest. Providing roads and other services to private clear-cutting operations there cost the government $389 million between 1982 and 1988, yet earned it only $32 million. In the Australian state of Victoria, the pattern is strikingly similar: there the government is losing some $170 million a year net. Losses like these lead to the perverse conclusion that taxpayers would be better off banning such resource-intensive activities on many public lands and splitting the savings with the industry–in other words paying the ranchers not to ranch and loggers not to log."3
"In 1982, the German government granted the coal industry $30 in subsidies for each ton of coal it sold; by 1995, the figure had nearly quadrupled to $119. Overall, the cost of protecting a mining job for a year with per-ton subsidies rose from $15,400 to an extraordinary $72,800. It would be cheaper now to shut down the mines and pay miners a handsome salary not to work"4
The fishing industry provides but another example. Subsidies have allowed fish harvests to advance when advancement was unwise. In the 1970s and 80s, the global fishing industry lost huge portions of what the government invested. One FAO calculation estimated that the fishing industry lost $54 billion in 1989 alone, half covered by government assistance.5 Today, thanks to unwise subsidy expenditures, the world's fishing fleets have been so heavily outfitted with equipment, they have the capacity to catch twice the amount of fish available. This is the case even as thirteen of the world's fifteen major fisheries are on the decline.6
Similarly, water supplies are being spread increasingly thin by agricultural, industrial, and domestic use all around the world. Yet water use is subsidized, more often than not allowing users of all variety to buy water at a fraction of its real cost. In the United States, China, the former Soviet Union, India, and Pakistan public water projects annually lose money at increasing rates.7 The situation screams of foolishness. Misplaced subsidies merely contribute to the further waste of our most precious resource. Where is the mythic free market when we need it? Higher prices might be a way to moderate use, eliminate waste, and save for the future–or is that save it for the wealthy? In any case, one day, when these subsidies can no longer be maintained, water costs will explode around the globe, pricing out huge portions of the population. Time and again we see the economic system accelerating toward depletion, not conservation.
"In 1992, around the time world leaders were signing the first international treaty on climate change at the Earth Summit in Rio de Janeiro, two economists at the World Bank in Washington, D.C., decided to perform a simple mathematical exercise. Bjorn Larsen and Anwar Shah gathered information on what people paid for energy in countries such as the United States, China, and the Soviet Union–those that burned most of the world's fossil fuels, which are the major source of the greenhouse gas carbon dioxide. They found that particularly in centrally planned countries, coal, oil, and natural gas cost much less than they did on world markets–a sure sign of subsidies. When they multiplied the price differences by the amount of fuel bought, they came up with a staggering figure. Collectively, the signatories of the climate treaty paid their own citizens more than $200 billion in 1991 alone to use fossil fuels and thus emit carbon. To put that figure in perspective, only 15 nations earned that much in 1991."8
How ludicrous can it be? When environmentalists rage about the need to conserve nonrenewable resources, the capitalists respond that the free market will take care of everything in the long run. But here again we see the exact opposite happening to maintain an economic status quo that should be reversed or erased entirely. If free market price dynamics hope to produce a gradually slowing use of increasingly scarce products–which has yet to be demonstrated–unwise subsidies only further pervert any self-regulating tendency there might be. And it isn't that the concept of subsidies is wrong. It is a useful public policy that could be valuable in correcting dangerous environmental gradients. Subsidize taking the bus to work instead of the car. Subsidize couples who have two children or less. Subsidize those who adopt. Subsidize the worker whose job is in jeopardy in the nonrenewable resources industry so he can retrain for another job. Don't subsidize the industry owner who already has the financial wherewithall to diversity. Tax those that profit most from industries that generate partially hidden and/or long-term environmental costs. Charge for the loss of the forest's air cleaning capacity; charge for the flooding of and erosion to land adjoining forest clear cuts; charge for public range land desertification caused by the grazing of privately owned cattle herds. Instead the buck is passed along to the public. It may be that maintaining the status quo is precipitous in terms of the global environment, but feeding the fever by senseless subsidizing in the opposite direction of sustainability is suicide or worse. We may as well steamroll the entire place, pave it over, and burn the life right off the planet. Good-bye, Earth. Hello, Venus.