Early American colonists, no strangers to the perils of intrusive government, protested the Molasses Act of 1733, which imposed taxes on imported sugar, rum, and molasses. Sugar taxes ignited a desire for trade freedom that helped lead to revolution.
In the United States today, sugar policy consists of regulations and limitations that put those of the Molasses Act to shame. In an attempt to protect domestic sugar producers from competition, the government has destroyed U.S. jobs in the candy and confectionary industries, increased prices for consumers, and undermined the American tradition of capitalism.
The U.S. government limits the market by placing quotas on the amount of sugar that can be imported and harsh tariffs on imports surpassing those quotas. As a result, American buyers paid 62.86 cents per pound for refined sugar in 2010, when the world price was only 27.78 cents.
In 2010, imports accounted for only about 23 percent of U.S. sugar consumption. Producers in other countries remain more than willing to sell their sugar for a fraction of the price U.S. sugar buyers are forced to pay.
One might argue that protectionism saves U.S. jobs, but a closer look reveals just the opposite. According to Senator Richard Lugar (R–IN), who has introduced the Lugar Free Sugar Act of 2011, sugar-using companies lost over 111,000 jobs between 1997 and 2009. Consistent with Senator Lugar, the U.S. Department of Commerce states that for every sugar growing and harvesting job saved by U.S. sugar policy, approximately three manufacturing jobs are lost.
In many cases, it is cheaper for companies to produce sugar-containing foods abroad and then import them into the U.S. Why would they want to operate in the U.S., where they pay inflated prices for sugar?
The U.S.’s sugar policy is another example of big government doing more harm than good. Over-regulating to “save” jobs has only sent confectionary plants abroad and sent prices for consumers through the roof.
With the U.S. dropping to ninth in the 2011 Index of Economic Freedom, perhaps Americans ought to take a lesson from our forefathers and abolish the sugar program. An increase in trade freedom, led by a relaxed U.S. sugar policy that promotes competitive enterprise, could help launch America back into the category of a “free” economy, where it belongs.
Jane Abel currently is a member of the Young Leaders Program at the Heritage Foundation. For more information on interning at Heritage, please visit: http://www.heritage.org/about/departments/ylp.cfm