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Gary Blumenthal will be speaking at CoBank's Knowledge Exchange in Chicago. |
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Healthcare as a Paradigm for Food Policy |
If Food Were Treated as healthcare ...
The debate in Congress last year over Obamacare and in the GOP primary this year over Romneycare as well as the Supreme Court's consideration of the federal healthcare law can provide an interesting debate for food and agricultural policy. Right now Congress is trying to draft a farm bill, which includes food and nutrition programs such as the Supplemental Nutrition Assistance Program (SNAP). When it comes to SNAP, House Budget Committee Chairman Paul Ryan (R-Wisconsin) has said that the social safety net is at risk of becoming a "hammock." And that is one of the arguments against the new federal healthcare law. Indeed, one tenet in the Supreme Court oral arguments on the healthcare law is whether healthcare so important and unique that the federal government can require the purchase of certain services and standards.
Justice Kennedy said that mandatory purchase would "fundamentally change the relationship between the individual and the government." If a federal statute can make us buy health insurance, what constitutional principle prevents it from making us buy anything else? The Justice Department has argued that "not buying" health insurance foists costs on everyone else because the system ends up taking care of people anyway. In other words, those of us who do buy insurance end up paying more because others ride for free. The advocates of the law say that everyone will eventually need healthcare, so making us buy insurance just changes the timing of the payment and prevents people without insurance from imposing costs on others. But how is that different from food?
Friend of WPI and economist Brian Wesbury has commented recently on this and raises some compelling and interesting points: What is the "limiting principle" that would prevent the government from going further down the road on basic necessities when it comes to mandatory purchases? Based on the arguments put forth in defense of the healthcare law, it would seem to us that there is no limiting principle. Healthcare is a relative luxury in terms of human existence when paired directly with food. The need for food and nutrition is much more acute and near-term than healthcare. People need to eat every day -- or nearly so -- to live. Illness, accidents and other "demand creators" for healthcare services can be years apart in frequency intervals. That's the very reason why some low-income (and middle-income, too) people chose to forego purchasing healthcare services and health insurance, but virtually no one chooses to not buy food, even when down to the proverbial -- or even literal -- last dime.
So what if food were treated as healthcare and considered to be so unique as to require federal purchase? What would that impose? Think about what the food and ag commodities market would look like if food policy were treated as healthcare. As Wesbury notes, the tax deductibility of employer-paid healthcare costs, Medicare and Medicaid have driven consumers' out-of-pocket expenses down to about 10 percent of the total. Imagine if Americans bought food this way? It would be a radical change.
(This article was originally published in the 17 April 2012 issue of Ag Perspectives as part of a WPI analysis by Dave Juday. Click here to find out more about subscribing to Ag Perspectives.) |
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WPI Welcomes |
WPI's Newest Employee
Sarah Tung recently joined WPI in the position of Publications/Editorial Coordinator. A California native, Sarah attended Claremont McKenna College before receiving her Master's in Journalism from New York University. Most recently Sarah had been working with Hearst Newspapers in Washington DC. |
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Evaluation of SUSTA's Generic & Branded Programs |
U.S.A.
For four consecutive years, WPI has been hired to evaluate SUSTA's generic and branded programs. WPI has refined performance indicators, conducted 6-month post-activity surveys and interacted with staff, activity managers and contractors to identify and capture relevant performance measure findings.
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Tax Policy Distorting Palm Oil Trade |
The Battle Between Indonesia, India and Malaysia
Tax policy is causing brouhaha in the palm oil trade. India has traditionally favored its palm oil refiners by imposing a 7.5 percent tariff on refined oil imports. However, now the largest exporter of palm oil, Indonesia, has raised its export tax on crude oil while lowering it on refined oil. As a result, India's imports of refined palm oil have risen, and so too has the blood pressure of India's refiners. Closely watching this battle is Malaysia, the second-largest exporter of palm oil, and several countries which also are major palm oil importers, including China. Just to keep it more interesting, Indonesia actually has a variable export tax, presumably to ensure adequate supplies for domestic consumers.
To more than offset the differential export tax benefits of Indonesia, India's palm oil refining industry is pressuring the Indian government to raise its tariff rates on refined palm oil. This would hurt Indian consumers, but it would not be unusual for Delhi to protect the domestic industry. Because of the sharp increase in India's imports of refined palm oil, the country's 20 MMT vegoil refining sector is operating at only about 50 percent of capacity, according to the Solvent Extractors Association. Many of the plants likely will close if there is no change in India's import policies. China's refiners are also being hurt, and the Chinese government is also likely to make a change in import tariffs.
Meanwhile, Malaysia's exports of refined palm oil are being hurt. The irony is that a few years ago Malaysia declined to support a U.S. effort in the WTO to discipline the use of such differential export taxes. The shame is that governments are so rampantly using border measures for mercantilist purposes and at disservice to their poor populations.
It is very interesting that India and Malaysia are now concerned about the trade-distorting differential export taxes (DETs) of Indonesia. A few years ago the U.S. oilseed industry led an effort to establish, as part of the World Trade Organization (WTO), a level playing field for the oilseeds sector which would have led to the elimination of DETs. The level playing field also would have addressed other trade-distorting practices as well as import tariff rates among participants. However, Malaysia declined to support the level playing field initiative because it also utilizes them to support it palm oil refiners. Without Malaysia's participation, the level playing field initiative went nowhere. However, now might be a good time for Malaysia to reconsider its opposition to the level playing field idea.
(This article was originally published in the 13 March 2012 issue of Ag Perspectives as part of a WPI analysis by John Baize. Click here to find out more about subscribing to Ag Perspectives.) |
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Consulting Projects
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Value of U.S. Meat and Poultry Exports to U.S. Soybean Producers |
U.S.A
WPI was hired to assess the value of U.S. meat and poultry exports to U.S. soybean producers, including an analysis of the economic impact, by state, of indirect exports of soybean meal through meat exports. Additionally, WPI provides a calculation of the "cross elasticity of demand," analyzing the change in value of soybeans as driven by a change in demand for U.S. meat, all other things being equal.
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