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Which brings us to the fundamental question of subsidies. The entire history of our farm programs is one of periodic government meddling, rule reversals, and course changes. This very changeability is one of the most damaging aspects of farm subsidies. And the only way to introduce some predictability into our programs is to make structural changes that leave no avenue for political intrusion. That is why the best route for U.S. farm policy-albeit a gradualist one, to give the many actors affected time to adjust-would be a policy of privatization. Take the whole thing out of the political process.
We have already suggested that such undertakings as disaster insurance: stockpiling, and credit provision could easily, and often more effectively, be done privately. The same is true of the income protection that subsidies aim to lend. It can be done outside government. One ought not underestimate the political difficulty of achieving this-former Assistant Secretary of Agriculture Don Paarlberg points out that scads of agricultural economists have railed against farm subsidies, as has “every Secretary of Agriculture since World War II.” Yet the subsidies persist.
We must understand, however, that it is only political will which is lacking. There are a whole host of alternatives to government manipulation of farm incomes. If not the private commodities markets discussed earlier, possibly the mechanism suggested in the last farm bill debate that would set income supplements by averaging the previous five years’ market prices. If not that, maybe a variation of the income insurance scheme run by the Western Grains Stabilization Board in Canada. There, every farmer pays into a pool in good years (with some government matching) and draws out funds during bad seasons. There are dozens of other possibilities if only we will consider them.
Certainly, it would help if any wind-down of U.S. subsidies were accompanied by similar actions in other nations. With agricultural trading thoroughly globalized, inequities in one place can cause pain far away. The United States is now pushing hard on this matter at the GATT international trade negotiations. Success in this area would be a boon not only to American farmers but also to consumers the globe over, who cough up an estimated $150 billion to $250 billion annually to protect crummy farming practices. An end to the agricultural cold wars would be of particular benefit to humankind’s poorest number-the peasants of the Third World.
The problem with current farm subsidies is not that they help farmers but that they also harm them, and other Americans, very much-by interfering in critical production decisions, by distorting food product prices, and by compromising producer and consumer freedoms. Our present subsidies are based on production, not income need, and so are lousy even as social transfers. They are also unjust in their effects on different kinds of growers. Worst of all, our farm programs don’t really help- as more than a half century of simultaneous subsidization and agricultural turmoil ought to suggest.
The fact is, we will continue to have grave agricultural problems in this country so long as we choose to get money to farmers in ways that prevent farm output from being sold at market prices. It is at this point a simple law of history: Market prices must be respected, they must arbitrate between supply and demand, because the only alternative is for a grossly less fair and efficient decision to be made by some bureaucratic functionary. This even communist governments in China and the Soviet Union have begun to recognize.
There is a creaky old argument that agriculture is a unique industry, a special case, because of its vulnerability to weather and other external factors and because of the importance of food to national security. All that, to the extent it was ever true, is now mostly nonsense, thanks to improved plant genetics and chemicals, modem transportation, new abilities to interchange resources, and a million other little earthquakes that have changed the world in the course of this century. Truth is, the reason we have farm programs today has very little to do with agriculture or the land and a great deal to do with naked political muscle.
The dead hand of diktat economics is something Americans have seen good reason to avoid in other sectors of our national life. It is just as much to be discouraged in agriculture.
Contributing Editor Karl Zinsmeister is a Washington, D.C.-based writer and an adjunct research associate at the American Enterprise Institute. He is writing a book on the American family. This article is the last in a four-part series.