Geopolitics on food

March 30 The head of the Rosselkhoznadzor, Sergei Dankvert, did not rule out the introduction of a ban on the supply of products from Turkey. What will it cost us?

Each new restriction on international trade causes great harm to tens of millions of consumers and brings small - compared to the damage - benefit to the producers of goods whose competition is reduced by the new ban. Producers—dozens of owners and thousands employed in protected firms—are few, but their benefits are concentrated, and each of the tens of millions of consumers loses only a tiny bit from rising prices, so producers always win in the political space. If economists do not rush to defend their interests on their own initiative, no one will worry.

But in recent years, the situation is different in our country - there are so many events that it is not necessary to draw special attention. They are being discussed all the time. Hardly a week goes by without some foreign policy event causing a reaction - one of the officials announces new restrictions on trade. Last week, the head of the Rosselkhoznadzor, Sergei Dankvert, announced possible new restrictions on the import of Turkish fruits and vegetables. In addition to those restrictions that have been in effect since January 1. Is it worth talking about the economic consequences once again? The imposition of a ban will necessarily increase prices for tens of millions of citizens - they will be able to buy fewer oranges, tangerines, grapes and other fruits (because they will increase prices) and less of all other goods (because there will be less money left for these goods). As always, the ban will especially affect the well-being of the poor, because poor families spend more of their income on food than rich ones. The profits of the owners of competing firms (exporters from other countries) will increase, because they will be able to sell the same amount of goods at higher prices.

Imposing a ban is bound to increase prices for tens of millions of citizens

Of course, many factors affect prices. For example, a recession in the economy and a decrease in incomes of citizens leads - with a relatively tight monetary policy pursued by the Russian Central Bank - to lower prices. In any case, it “presses” downward. People have less money, including for food. Not surprisingly, by March 2016, “food inflation” even began to lag behind “non-food inflation”. In the same way, the slow increase in pensions "helps" the fight against inflation - that is, it really helps: citizens are getting worse not from rising prices, but from the fact that they have less money.

It must be admitted: the losses of each family from each specific ban are small. Even in general, the losses from the next restrictions are small. However, this argument - "the measure leads to a decrease in the standard of living, but only a very small one" - seems strange to me. Nothing good for this price, albeit a small one, the citizens do not get. Now, if we had a political force that protects the interests of the poor - the poor, say, half of the population - then there would be someone to raise this issue. However, no one represents the interests of the poor in our country at all - however, this is a completely different conversation, little connected with issues of international trade.