In another thread:
I’m not sure I would put agricultural subsidies in the former group, honestly. I don’t know a lot about it, but I’d be leery of someone who was against ag subsidies in general. Surely subsidies for dirt farmers would be of some use.
Then again, if ADM & Yum! are getting heavily subsidized, I’d be glad to revisit that. If that’s all Stranger meant, then I take his criticism as reasonable.
So, fight my ignorance, or dump a lot of libertarian propaganda in the thread, whatever.
Because it’s a handout and it distorts the true value of the goods.
There’s the libertarian propaganda, or really an apparently Objectivist generalization. Whoo! Any specific facts? Or at least something I couldn’t just construct myself by reference to Bastiat & Hayek?
I think the chart on this page points to one problem with ag subsidies. The food groups that we are supposed to eat the most of get the least subsidies. Adjusted for inflation, meat, dairy, and soda are cheaper than they were 30 years ago, yet meat, dairy, sugar, and grains (some ending up as high fructose corn syrup) continue to get the lion’s share of subsidies. Fruits and vegetables have risen in cost and hardly get a pittance.
Subsidies encourage overproduction which artificially drives down the price of the goods, below what the market would be willing to pay otherwise. Most of this food is exported out of the U.S. and as a result is cheaper than locally produced food in countries where it is imported.
The biggest beneficiaries of the subsidies are large multinational corporations, who have receive an unfair advantage in the market place to their competition in other parts of the world.
As a result, even domestic companies that don’t neccessarily philosophically agree with subsidies, apply and receive them, because to not take them would put them at a competitive disadvantage to other companies. It breeds further dependencies.
Companies and markets that can’t sustain themselves without subsidies, should be let to fail.
OK, those are some good answers.
Agricultural subsidies aren’t wrong, just out of whack. It is a very good idea for the nation to produce an overabundance of food to ensure that there is enough in the lean years. The problem is in the many, and crazy, systems of subsidies, quotas, price supports and God knows what else we use to make that overabundance happen.
As I understand, that’s basically it. For instance, there’s heavy subsidization of corn, as a result, a lot of farmers will grow corn compared to some other crop that, without the subsidies, isn’t as profitable to grow. So we end up growing more corn than the market will bear, forcing prices down, and causing the farmers to make even less profit and need even more subsidies. Then, the other crops end up going up in price farmers that could be growing them are growing corn instead, which results in a shortage of supply.
This is also why you end up seeing corn in everything, particularly in the form of high fructose corn syrup, because the subsidies make it cheaper than sugar, where this isn’t the case in many other places. With no subsidies for corn, chances are sugar would be equally priced or cheaper than HFCS, and all those concerns in recent years about how much less healthy for us it is would pretty much vanish.
Besides, why should farmers be paid by the government to grow crops that won’t sell? We’re still paying for the extra cost, it just comes from taxes instead of showing up on our grocery bills.
By the time policy on a particular subsidy is enacted, market conditions likely will have changed to the point that the subsidy is at best, ineffective.
I’m not opposed to subsidies on that the principle of providing more stability to the food supply and market, it just seems a bit arcane and heavy-handed to truly do what is intended.
So meat is suddenly a prime beneficiary and victim of subsidization? That smells like bullshit… hopefully, the bull propagation was subsidized.
See the EU’s Common Agricultural Policy making up a whopping 48% of the EU’s entire annual budget.
The EU wine lake, the EU butter mountain, the EU milk lake, etc. All overproduced by farmers because they can be bought at an inflated price or they are paid to produce. And then the surplus rots, or worse is dumped on international markets, driving down commodity prices and spoiling competitiveness for third world countries, keeping them poor.
I think really the question is what is good about subsidies*?
*I am aware that they support “custodians of the land”, without which development would encroach as farmers fail to make ends meet from crops, but I still think there has to be a better way.
There was been a better way… federally subsidized/owned insurance for farm lands. The question is why did that cease being good enough?
Subsidies are even more pernicious, because they encourgae the production of inferior quality crops-if the farmer knows the stuff he grows will be stockpiled and dumped, he will produce as cheaply as possible-who cares when nobody will actually consume the stuff!
That is why a lot of the french wines produced under subsidy are crap.
In the US, the subsidizing of corn (for use in making ethanol) is even worse-the US taxpayer pays double for a product (ethanol) that actually increases oil imports.
The farmers don’t care!
Specifically, corn is highly subsidized. Because it is so cheap, it is used for everything, including feeding cows. Unfortunately cows weren’t designed (by God…5000 years ago) to eat corn so they have to inject them with all sorts of antibiotics and chemicals and whatnot so they can digest it. Obviously those additives aren’t that great for people.
It may be a good idea for the nation to stockpile food during surplus years. But you don’t need ag subsidies to do that and the food production doesn’t have to be domestic to do that either.
For another nasty effect, look at the sugar market. Sugar is a bad, bad market to grow in the states. We really dn’t need to be making it except in very limited areas. And the farmers who do grow it could easily move on to somethign else.
but they won’t, because their market is absolutely locked. You pay a lot more for sugar than you need to, while this also hurts poor countries who need to export sugar. But they can’t, because quotas keep almost all the imports out. And the farmers would rather keep their nice, safe regime instead of actually working and worrying. Theior rich, and they control a lot of Congressmen because nobody can really fight their influence effectively.
Good point about sugar-the high price of US sugar has resulted in unemployment (in the US candy making industry). Candy mfrs. are moving to Mexico to escape the high sugar costs. Of course, the beneficiaries of the sugar subsidies (the Fanjul brothers of Florida), like the gravy train-and so do the corrupt senators/congressment whom the brothers contibute campaign “contributions”(bribes) to!
The default position is that subsidies are wrong, in the same way that taking money off people at gunpoint is wrong. Because a subsidy involves the government using its irresistable force to take people’s money and give it to someone else. (Subsidies which don’t meet this definition needn’t concern us here).
Of course, government forced redistribution is often the optimal course of action. So, my conclusion is that anyone arguing for a new subsidy or for the continuation of an existing subsidy faces a heavy burden of proof that that subsidy is clearly in the public interest.
From what little I’ve heard of American agricultural subsidies, they often seem even more absurd than European agricultural subsidies (impressive!) thought there are far fewer of them. (I read this on the internet so it may not be 100% true.)
It is the default for a pretty good reason.
Farmer Brown can raise wheat and sell it for $1 a bushel and make a profit. Farmer Schlobovnik has to sell at $2 a bushel to make the same profit, because he is less efficient than Farmer Brown. Farmer Schlobovnik gets a subsidy of $1 per bushel.
Everyone who buys Farmer Brown’s wheat is better off than those who buy from Farmer Schlobovnik - they have a bushel of wheat, and $1 left over to buy other things. This is what economists are talking about when they mention efficiency.
Also, Farmer Schlobovnik has no incentive to become more efficient - he is guaranteed a profit without the bother of having to change anything. At its extreme, this leads to things like Soviet farmers feeding their livestock bread instead of grain - bread was so heavily subsidized that it was cheaper. The whole process of making grain into bread in the USSR actually subtracted value from grain.
Unfortunately, farm subsidies rarely go away, because of the “Peter and Paul” principle - if you rob Peter to pay Paul, you can be quite sure of Paul’s support no matter what. And if you rob enough Peters so that you don’t take too much from any one of them, they will care about being robbed less than Paul cares about his subsidies.
Regards,
Shodan
Also, argricultural subsidies are mostly a way for politicians from the agricultural midwestern states to cater to their constituents.