Powell Versus Farm Subsidies

Here’s Suffolk University economist Benjamin Powell on farm subsidies and their effect on poor countries (like recently-decimated-by-flooding Pakistan. A question: is low volatility in food prices explained by protectionism and subsidies, or is it explained by prosperity? My hypothesis is that the US and Europe have stable food supplies and low price volatility because (a) we’re extremely wealthy and (b) we have extremely well-developed financial markets. I would also predict that eliminating all agricultural protectionism in the US and Europe tomorrow would dramatically raise the incomes of and lower the risks facing farmers in poor countries. HT: Will Luther.