I was reading this today, and it made me a little angry. I read about cotton subsidies when I studied African politics a couple of years ago, and I’ve read a lot about how governments subsidize everything from cows to fast food.
I’m wondering, though, if this is one of those things that at face value seems like an unfair, ineffective practice, but actually serves a purpose, or is it just the agricultural lobby (biggest lobby in the US, isn’t it?) getting its way?
I tend to think subsidies are bad policy economically except in certain very special cases. It can be argued that subsidies were okay during the Great Depression, for example. It can also be argued continuing agricultural subsidies on food products is essential to insure that the United States maintain an ability to not only produce enough food for itself but a huge portion of the world (the food surplus from the American “bread basket” is enormous.)
Where I would probably differ from the pro-subsidy crowd is I don’t think agribusinesses in the United States need these subsidies to stay in business by any means, agriculture while it employs a very small number is our biggest export category by far the last I checked.
What do subsidies have to do with conservatism? Most conservatives who aren’t elected officials oppose them. Most elected officials – liberals and conservatives – support them.
The rationale for subsidies is that farmers need them to stay in business (preserve the family farms!) and that the U.S. needs them to continue producing food domestically, which helps keep us from relying on unstable foreign governments for food.
There may be kernels of truth for those beliefs, but it’s mainly a way for farmers to get free money. And politicians are wary of doing anything to piss off farmers. It doesn’t look good to be “anti-farmer,” and most states still have a healthy rural vote. So we see bipartisans support for subsidies.
You’re right, I didn’t finish my thought. I meant to ask why conservatives, controlling all branches of gov. right now, haven’t reduced subsidies…
It doesn’t seem to groove well with competition, you know?
I fully agree. However, conservatives also have a base of support in rural areas, which just happened to be populated with farmers. They aren’t going to piss off these folks.
I’d eliminate all subsidies, and let farmers grow legalized marijuana instead. Suspect it might put more money in the farmer’s pocket, and would also generate tax revenue–since I’d only allow it to be sold at liquor stores, and tax it heavily…
That’s a good question, and I think it has to do with how a lot of government spending gets left in place. If a politician makes a big effort against farm subsidies, most voters, the ones would stand to gain, don’t care all that much, but the farm vote gets particularly galvanized against him.
I think the last congressman to really go up against the farm subsidies was my congressman at the time, Dick Armey.
Let’s not forget the farmer’s costs would also go up substantially, what with that extra chain link and barb-wire fencing, not to mention the 24-hour armed guards protecting the marijuana fields. In time it woun’t be the family farm growing legal marijuana. Only agri-business would have the necessary capital for such an operation and they would exert pressure to keep the subsidy system going.
That wouldn’t make any business sense. You can make a lot of money from corn, potatoes, wheat and etc. Basic foodstuffs are always going to be in demand to a much higher degree than a plant used recreationally for its psychoactive properties.
Furthermore you don’t open yourself to lawsuits by growing wheat or potatoes, whereas big tobacco has been hit by so many enormously costly lawsuits it’s almost beyond belief. The only reason marijuana escapes such scrutiny is because it’s currently illegal. If marijuana had been legal for the past 80 years and marijuana cigarettes were sold in every convenience store in America the big marijuana companies would be paying billions in punitive damages right along with the big tobacco companies.
It’s also questionable to ever involve yourself in a crop that is in such legislative debate, you’d feel pretty foolish if you abandoned all of your staple crop production and when the next Congress came in session it was outlawed again.
Unfortunately this is bogus. At one point, the subsidies were in fact short-term government loans that helped to support the price of agriculture. In the event of a bumper crop or a systematic increase in productivity, farmers could borrow at a low rate of interest from the government in order to keep their margins intact and to cut production. When the price returned to normal, the farmers would pay this money back. This system worked fairly well.
The above rationale for the current subsidies scheme is absolutely false for two reasons.
First, the vast majority of corn, America’s largest and most heavily subsidized crop, is utterly inedible. It is fit for processing and animal feed. You couldn’t eat this stuff if you tried.
Second, farmers are not the actual beneficiaries of subsidies. Consider the economics of agriculture. The most critical metric to a farmer is yield per acre. Farmers invest an enormous amount of money to increase this yield. This drives the price of corn down. Rather than take out loans to cut production, farmers are subsidized based on how much they produce. In order to maintain their farms, farmers have assume enormous debt to purchase technology to drive up their their yields just so they can collect enough subsidies to survive. Meanwhile the price of corn never climbs out of the toilet.
The real beneficiaries of agricultural subsidies are DowAgro, Cargill, and Archer Daniels Midland. They purchase the majority of this inedible corn and process it. These products inform a huge proportion of the food in Americans’ diets. Because corn products are so cheap, cattle are fed corn and pumped with antibiotics. Several companies are experimenting with breeds of salmon that can be fed corn. Coca Cola from Mexico tastes to much better than US coke because there, sugar is cheaper than high fructose corn syrup.
Legislators in the farm belt don’t give a shit about the farm vote. They don’t have to. Their elections are bought and their services are paid for by the likes of ADM.