Wednesday, September 12, 2007

Farm subsidies: Good for whom?

Economist and columnist Robert Samuelson says:

The farm legislation proceeding through Congress symbolizes much of what's wrong with Washington. It's government by inertia.

We do today what we did yesterday, because politicians draw their power from distributing benefits and various interest groups feel entitled to receive them -- even if they serve no defensible public purpose.

Our extravagant farm programs capture the absurdity as well as any other.
Since 1970, farm subsidies have totaled $578 billion, according to the historical tables of the U.S. budget. What has the public gotten for this vast outlay?

Not much. Food would be produced without subsidies. Roughly 90 percent of commodity payments go to farmers raising grains (wheat, corn), soybeans, cotton and rice; these products represent about a fifth of farm cash receipts.

Meanwhile, meat, vegetable and fruit producers get no direct subsidies. Does anyone truly think that, without subsidies, Iowa's cornfields and Kansas's wheat fields would go fallow?
Samuelson goes on to answer his question:
If subsidies vanished, some high-cost farms would cut production or switch crops. Some land values would drop because one source of income (federal payments) would disappear. Still, food supplies would be ample.

The proof: the rest of agriculture that manages without federal largess. In 2005, meat output alone (beef, chicken, pork, veal) totaled 86.8 billion pounds.
Well sure, but what politician running for President wants to go to Des Moines and say, “If I become President, I’ll work to gradually eliminate farm subsides?”

No, they don’t do that, do they? Instead they wax poetic about how much they love “the family farm” and how hard they’ll work to preserve it.

If you can tell a plow from a cow you know that’s nothing but a coded message: “I’ll keep those subsidies flowing and growing."

Samuelson notes:
Farm subsidies date to the Great Depression. In 1932, there were 6.7 million farms, and the farm population was 25 percent of the nation's total.

By 2002, the number of farms had dwindled to 2.1 million, and the farm population was about 2 percent of the total. More mechanization, better seeds and cultivation practices have enabled fewer, bigger farms to produce more food.

There is often a life cycle in government programs. They start for good cause or with good intentions, then perpetuate themselves by creating a protective web of interests -- constituents who believe that they have property rights in benefits, politicians whose power derives from renewing or expanding the benefits, and lobbies that exist to influence crucial politicians. Farm programs adhere faithfully to this cycle.
They sure do.

And now that both major parties have farm subsidies firmly in place, they’re looking around for more fertile ground where they can plant new spending programs that will help them reap votes.

Hey, how about more government involvement in health care?

Samuelson’s column is here.

Hat tip: