News from the Tennessee Valley Business
SUNDAY, AUGUST 5, 2007
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Volunteers a backbone of capitalism

In an economic system fueled by controlled greed, the trust we place on services outside the system is sometimes a shock.

A case in point last week was the ammonia leak at Wayne Farms.

The company exists for profit, yet its first reaction was to call for help from the volunteer Trinity Fire Department.

Receiving no pay for their efforts, three Trinity firefighters left their beds at 3:30 a.m. and hustled to the scene. Hours later they left the scene, reporting to their paying day jobs. Then the exhausted firefighters reported to the fire station for three hours of training. Again, without pay.

The importance of non- economic motivation in a capitalist economy spread further.

The ongoing debate about whether Decatur EMS should retain a monopoly on ambulance services in the city is replete with criticisms of the company.

Would-be competitors complain that Decatur EMS has inadequate equipment, training and pay for its paramedics.

Underlying these criticisms, however, is an unstated knowledge that the paramedics — whomever they work for, and however low their pay — will do what they need to do to get the job done.

They will do so not in the hope of economic benefit, but to save lives.

Subsidize or not?

China’s generous subsidies to its steel exporters was center stage in Washington this week.

The main event was a U.S. International Trade Commission hearing debating whether to renew tariffs on China’s hot-rolled steel, which competes directly with products manufactured by Nucor Corp.’s Decatur plant.

A study released the day before the hearing, funded by a trade group that includes Nucor, said the market-distorting result of the subsidies is that even as U.S. demand for steel has slumped, China’s exports of the commodity to the U.S. have escalated.

That spells disaster for Nucor and other domestic steelmakers.

Nucor posted an ugly second-quarter earnings drop. Its share prices dropped almost as much as its earnings after the most recent earnings conference.

While Nucor and area lawmakers complain about China’s subsidization of steel and the damage it has caused to North Alabama’s economy, this region benefits hugely from subsidies on cotton.

According to a recent study by Oxfam America, U.S. cotton subsidies — like China steel subsidies — create artificially high production. U.S. cotton producers grow more cotton than worldwide demand dictates.

According to Oxfam, U.S. cotton subsidies hit those who can least afford it the hardest.

More than 10 million people in West Africa depend directly on cotton as a major source of income.

Their average per capita income is $200 per year.

Elimination of U.S. cotton subsidies, according to the study, would raise world cotton prices between 6 and 14 percent.

That translates to an increase in net cotton income for West African farming households of up to 20 percent.

Contact Eric Fleischauer at eric@decaturdaily.com.

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Eric Fleischauer
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