Farm subsidies

I was asked by a reader to comment on this article, so here's my take: Oxfam is dead on. Agricultural subsidies raise the amount of food that is produced. The increase in supply places downward pressure on prices. Lowered prices mean less money for farmers in developing countries.

Now, there is an argument that subsidies benefit the developing countries because most are food importers, and without subsidies would have to pay more for imports, thus worsening their terms of trade. Maybe. But even so, I believe that this would only be a short-run phenomenon, with producers ramping up production in the longer-run to take advantage of the higher prices.

Perhaps the most encouraging aspect of the article was the realization that salvation for the developing world lies in trade, not aid.

"People think more aid will help, but it won't," said Ms. Driver, an actress who is working on her second music CD. "Trade is the surest way of decreasing the savage amount of poverty in our world. These countries have got to be able to trade fairly."

The third world needs a hand up, not a hand-out. Read more here.