Let’s return to the sugar quota discussed in Chapter 9. As you may recall, the government restricts how much sugar can be imported into the United States. As a result, the U.S. price of sugar is about double the world price. American consumers of candy, soda, and other sweet goods pay more for these goods than they would if the quota was lifted. Why does the government harm sugar consumers, many of whom are voters?

Although sugar consumers are harmed by the quota, few of them even know of the quota’s existence. That’s rational because even though the quota costs consumers more than a billion dollars, the costs are diffused over millions of consumers, costing each person about $5 or $6 per year. Even if sugar consumers did know about the quota, they probably wouldn’t spend much time or effort to oppose it. Will you? After all, just writing a letter to your local newspaper opposing the quota might cost $5 or $6 in time and trouble, and what’s the probability that your letter will change the policy?

374

Sugar consumers, therefore, won’t do much to oppose the quota but what about U.S. sugar producers? U.S. sugar producers benefit enormously from the quota. As we saw in Chapter 9, if the quota were lifted, most sugar producers in Florida would be outcompeted by producers in Brazil where better weather makes sugar cheaper to produce. But with the quota, U.S. producers are shielded from competition and sugar farming in Florida becomes very profitable. Moreover, although there are millions of sugar consumers, sugar production is concentrated among a handful of producers. Each producer benefits from the quota by millions of dollars.

Sugar producers, unlike sugar consumers, have a lot of money at stake so they are rationally informed. The sugar producers know when the sugar quota comes up for a vote, they know who is pictured on the previous page, they know who is on the House and Senate agricultural committees that largely decide on the quota, they know which politicians are running for reelection and in need of campaign funds, and they act accordingly. Table 20.1, for example, lists the members of the Senate Agricultural Committee in 2008 and the amount of money from 2006 to 2008 that they received from the American Crystal Sugar Political Action Committee (PAC), an industry lobby group in favor of the sugar quota.

As you can see, 13 of the 21 senators on the Agricultural Committee (perhaps not coincidentally just over a majority!) received money from the American Crystal Sugar PAC. Many senators on the committee also received money from the American Sugar Cane League, the Florida Sugar Cane League, the American Sugarbeet Growers Association, and the U.S. Beet Sugar Association! Nor is that the end of the story. The owners and executives of the major players in the sugar industry also donate campaign funds as individuals. The “sugar barons” José and Alfonso Fanjul, for example, head Florida Crystals Corporation, which is one of the country’s largest sugar cane growers. The Fanjuls donate money to the Florida Sugar Cane League and they give money to politicians in their own names. Interestingly, José directs most of his support to Republicans, while his brother Alfonso supports Democrats. Do you think there is a difference of political opinion between the two brothers? Or can you think of another explanation for their pattern of donations? Other Fanjul brothers, wives, daughters, sons, and even sisters-in-law are also active political contributors.

375