This morning I found that a commenter on my post about government failure in feeding the poor in India had complained that we should not trust “corporations who own the government.” I think this is a point worth further consideration. After all, I would argue that in the United States we have lousy agricultural policy. We essentially still have policies from the Great-Depression era aimed at manipulating prices, and business interests predictably engaging in a form of regulatory capture.
Jordan Ballor and Ray Nothstine wrote a good piece in Acton Commentary on the issue of agricultural policy here. I particularly like their discussion on Abraham Kuyper:
What the Dutch theologian and statesman Abraham Kuyper said of the manual laborers of the nineteenth century is equally true of agricultural workers in the twenty-first. “Unless you wish to undermine the position of the laboring class and destroy its natural resilience,” he warned, “the material assistance of the state should be confined to an absolute minimum. The continuing welfare of people and nation, including labor, lies only in powerful individual initiative.”
When you look at the numbers, the simple fact is that most of the farm subsidies are given to large farms, not the small farmer whose image is used by those lobbying for welfare. I highly recommend Veronique de Rugy’s Washington Examiner op-ed on this issue. She points out that the median farming household earns a wage 25 percent higher than the median American household. Are these the people who need welfare?
The fact of the matter is that our agricultural policy is stuck in the depression era. We invite trouble when we seek to have the government interfere with the market, because this takes production decisions out of the hands of consumers and competing firms, and places it into a system where the politically connected make the decisions. Veronique de Rugy uses the term cronyism (I prefer the term mercantilism, which was always fundamentally about benefiting the politically connected) to discuss how backwards U.S. agricultural policy is. Veronique de Rugy writes:
The tragedy is that while cronyism benefits the haves, all other Americans — especially those with lower incomes — suffer from the resulting distortions. Take the domestic sugar industry as an example. The government protects its producers against foreign competitors by imposing U.S. import quotas, and against low prices generally with a no-recourse loan program that serves as an effective price-floor. As a result of these government actions, U.S. consumers and businesses have had to pay twice the world price of sugar on average since 1982, according to economist Mark Perry.
The irony is that the USDA also spends $80 billion a year trying to alleviate the high costs of food of poorer Americans through programs such as food stamps for 46 million Americans. The one hand takes, and the other gives.
In addition to imposing a fiscal costs on Americans by paying farmers to grow certain politically popular crops and then paying them to not grow food to keep prices higher, it is important to note that our policies have impacts on our trade with other nations. Our depression-era policies are hurting the ability of poor foreign farmers to sell goods to the United States, and other countries. Sadly, by allowing government to interfere in this market for so long, we have all at once divorced the industry from market directed decisions, harmed the foreign poor, and provided tax-payer support for a group that is already well off.