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Arkansas' Attack on Chinese-Owned Property Is Reckless and Crony-Driven

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Citing national security concerns, Arkansas ordered Chinese company Syngenta to sell off the 160 acres of farmland it owns in the state. The national security concerns are, as will be demonstrated, bogus; however, there may be more crony motivations for this order as well.

An article of mine published in July 2023 by the Libertarian Institute addresses these national security concerns. Walter Block also recently published a piece examining the issue. As it turns out, China owns hardly any farmland in the United States, composing 0.03 percent of total farmland “privately” owned in the US.

Additionally, if China were to use the land for strategic purposes, the US government would not hesitate to seize it. If anything, Chinese land in the US signals a commitment to peace rather than conflict. It can be thought of as a hostage; if China “acts up,” whatever investment they put into the land is essentially sacrificed and transferred into American hands.

The foreign policy benefits of allowing Chinese ownership are aptly summarized by Walter Block in citing this old free-market adage, “If goods don’t cross borders, armies will.” Whether war breaks out in an effort to secure resources or war simply becomes less costly due to trade being cut off is not entirely certain. However, what’s clear is that if this order and similar policies are allowed to be promulgated, it will incrementally threaten the explicit goal of national security policy, which is keeping the US safe.

Aside from the national security concerns, thinking about this issue in terms of China versus the US is not helpful. Despite Syngenta being a subsidiary of a company owned by the Chinese, the entities they buy land from are not state-run. The sellers of land in the US are American citizens. Preventing American citizens from selling land, whether they are private or public entities, is an intervention that would not occur in a free society.

American citizens and companies should be free to sell to whomever they want. To say that they should not be able to sell to a Chinese company because it is government-owned sets up a dangerous precedent. Where should the line be drawn? Should we not interact with or patronize companies that receive payments from the US government as well? It would be highly impractical and sometimes impossible to determine which companies receive advantages from the government.

If Chinese citizens were to abide by the same principle, it would be almost impossible. The Chinese government owns about 61 percent (as of the first half of 2023) of major Chinese companies. It must be permissible to use government resources and services in the absence of private alternatives. Likewise, in the absence of private Chinese companies, trading with government-owned companies must be sufficient until they are privatized, just as trading with companies advantaged by the US government is permissible in the US.

In anticipation of the question, “Is it consistent with free trade to buy from and sell to a government-owned entity?” I retort by saying it is definitely not free trade to promote government intervention that regulates or entirely prohibits trading with government entities.

National security and moral issues aside, Syngenta referred to this order as “a shortsighted action,” citing that the land they own in Arkansas is used for research, development, and regulatory trials that directly benefit and are purchased by US farmers. This is just a clear example of politicians neglecting the unseen detriments of government intervention. American farmers will be negatively affected as a consequence of this order.

“This is about where your loyalties lie,” Arkansas governor Sarah Huckabee Sanders (R) said at a news conference. This is completely true. Based on the consequences of this policy, it is clear that Sanders is not loyal to private property or American farmers. However, who is she and the government of Arkansas loyal to?

It is not always best to assume policies are chosen simply out of good intentions or to satisfy voters. Crony intentions are typically a factor. Speculating about who benefits from this sale (cui bono?) requires finding the beneficiaries of Syngenta divesting their Arkansas landholdings.

Bill Gates is one of the largest owners of farmland in Arkansas. He also donated to Republican political action committees in 2022, the same year Arkansas governor Sanders ran for office. Tyson Foods is another prominent agricultural business so their political contributions should be under scrutiny as well. Republicans often appear on the list of their political contribution recipients, some from Arkansas.

It should also be noted that Weyerhaeuser is the largest owner of land in Arkansas; however, they are mainly a timber company so the extent to which the farmland can be alternated into use in the timber industry will determine their stake in this decision. They should not be ignored though, due to their large presence in Arkansas. Their political contributions are filled with Republicans, some of which are from Arkansas.

Why is all this relevant? Though the previous two paragraphs are mainly speculation, the real beneficiaries of this order are prospective Arkansas farmland owners, and the flow of money to Republicans from some of these beneficiaries lends credence to this point. Pressed against a two-year deadline to divest their land holdings, Syngenta has become a much more willing seller than before. This will only benefit the demand side of the Arkansas farmland market, who will now face a lower price for Syngenta’s land than they otherwise would have had to pay. Gates, who continues to acquire farmland, would certainly benefit.

This order essentially benefits the politicians who issue and enforce it as well as domestic farmland buyers at the expense of Syngenta, domestic farmers who use Syngenta’s research, and Syngenta’s employees who reside in Arkansas.

Unfortunately, the anti-China farm policy is becoming more popular. Conservative commentator Matt Walsh states that “every state in the country should follow suit.” Democrat senator John Fetterman has expressed support for this policy in response to the minor provocation of China reclaiming their pandas from US zoos. Earlier this year, Ron DeSantis took steps to curb Chinese land ownership of land in Florida. Arkansas’s order will definitely not be the last we see of this wrongheaded and likely crony policy. This is precisely why the lessons of this article (and my article from July as well as Walter Block’s piece) should be internalized.


Source: https://mises.org/node/65289


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