Man Without Qualities


Thursday, December 04, 2003


Paying For Prescription Drugs

The new prescription drug benefit is to cost $400 Billion over ten years. There has been much hand wringing over how to pay for it.

At the same time, the Financial Times reports: Overall support to US agriculture is estimated by the OECD at $50bn, or about one fifth of the value of output. Exports such as wheat, maize and cotton are transferred to world markets at prices far below production costs.

Nowhere are the double standards applied to Chinese agriculture more evident than in relation to agricultural export dumping. Under its WTO accession treaty, China agreed to a prohibition on the use of export subsidies. Two months ago, the refusal of the US and the European Union to contemplate such a prohibition was one of the factors contributing to the collapse of the Cancun ministerial meeting of the Doha development round.


Fifty billion a year for ten years is Five Hundred Billion Dollars. That's a lot of prescription drugs. And, as a bonus, if it stopped subsidising agriculture, the United States would get to stop acting like a foolish hypocrite in international trade talks.

Gee, isn't international trade economics supposed to be the specialty of Herr Doktorprofessor Paul Von Krugman? And isn't he very concerned about that Medicare bill?

Does he ever suggest moving money out of anything in the federal budget other than the military? There must be an example of that.

UPDATE: In today's column Herr Doktorprofessor comes tanatlizing close to advocating a cut in agricultural subsidy spending:

Nothing in our national experience prepared us for the spectacle of a government launching a war, increasing farm subsidies and establishing an expensive new Medicare entitlement

But he pulls back from the brink just in time to explain that his real criticism of the Administration is its not only failing to come up with a plan to pay for all this spending in the face of budget deficits, but cutting taxes at the same time.

I know it's reading a bit between the lines, but it seems that the increasing farm subsidies and establishing an expensive new Medicare entitlement would have been much more acceptable to Herr Doktorprofessor if taxes had been raised to pay for all this spending.

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