Corn, globalization and an election in Iowa

The price of corn is rising in the Midwest. So is globalization bashing.

Andrew Leonard
November 6, 2006 11:59PM (UTC)

Since mid-September, the Wall Street Journal reports this morning, the price of corn has risen 55 percent. The reason: a surging demand for ethanol. The result: Corn farmers are delighted, but livestock farmers who depend on corn for animal feed are grumbling, and packaged food producers may soon see their profits tighten as the price of a key ingredient in just about everything ramps up.

The ramifications don't stop there: Consumers worried that the price of milk, steak, corn flakes and Coca Cola might rise can take heart that corn subsidies paid by the federal government to prop up low prices, currently to the tune of $8 billion annually, might fall, to as little as $2 billion.


Let's put aside the question of whether it makes any sense for corn-based ethanol to be the booming biofuel of choice in the American economy (most likely, it doesn't). In the big picture, the surging hunger for ethanol is a response to rising oil prices, which has been propelled by tightening supply and rising demand, worldwide. It is, in short, a global story. Economic growth in China is pushing up the price of corn in Iowa, even if ethanol produced in Iowa isn't going directly to Shanghai.

How the World Works is thinking about Iowa in particular, because of another Wall Street Journal article about a congressional race in that state in which the Democratic candidate, Bruce Braley, is making inroads by bashing globalization.

In one of the most closely watched congressional races, Mr. Braley has made opposition to the Bush administration's free-trade agenda a centerpiece of his campaign. He has run ads blaming the state's job losses on President Bush's "unfair trade deals." He has urged more focus on labor rights in national trade policy and talked of using economic sanctions to keep America competitive. "Our workers aren't on a level playing field," he says.

Mr. Braley's stance has helped propel the 49-year-old lawyer, who is running against an unabashedly free-trade Republican, into position to reverse recent trends and secure a Democratic win in Iowa's First District. His strong showing not only underscores how trade concerns have emerged as a central issue in many of this year's races but also suggests a more-protectionist U.S. trade policy if Democrats take Congress.

Even if Democrats don't win control, the campaign rhetoric may have a lasting effect, because some Republicans are finding it more painful politically to defend free trade.

How the World Works supports, in principle, the proposition that increased trade among the nations of the earth will benefit the world in the long run. And we would rather see substantial improvements in the American safety net -- unemployment insurance, wage insurance, healthcare, job retraining -- than economic sanctions against countries that are poorer than the U.S. But there is zero sympathy here for Republicans wringing their hands at the prospect of anti-free trade Democrats taking power in Congress. Never mind the economic case for "free trade": If Republicans wanted to make a solid political case for trade then some effort should have been made to ensure that the gains from trade were shared equally among all sectors of the electorate. That has demonstrably not been the case. The stunning thing about politics in the United States is how long it has taken for popular resentment at how the rich keep getting richer while the poor and the middle class run in place to translate into results at the ballot box.

(And before we get ahead of ourselves, it's worth noting, at this penultimate electoral moment, that it is by no means clear that this election is about the economy. Without the Iraq debacle, and the stunning string of Republican-dominated political scandals, would Republicans be in danger of losing their majority in the House?)

Thinking about the price of corn in Iowa adds a distinctive taste of corn syrup to the pros and cons of globalization. If oil prices stay high or go higher, a world market for biofuels will inevitably grow -- regardless of the substantial negative environmental implications of industrial corn production, or endless debates about the energy efficiency of soybeans vs. palm oil vs. sugar vs. corn. Farmers in the U.S. -- more efficient, more technologically advanced, more productive than farmers anywhere in the world -- will stand to benefit from such markets. That would make them, in my mind, pro-globalization.

Democratic candidate Bruce Braley may be running against globalization with some success in Iowa, but what he's really campaigning against are the results of the unequal distribution of the benefits of globalization. That's harder to make a catchy campaign slogan out of, but I'll bet Iowa farmers understand the nuances.


UPDATE: Mark Thoma at Economist's View has more thoughts (and links) on this subject (minus the corn factor.)

Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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