Tariffs

Cronyism Yields a Bumper Crop With Farm Bailouts

The ugly results of bad economic policies.

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Stan Veuger of the American Enterprise Institute recently complained on Twitter that those who cared about cronyism when Barack Obama was president are suddenly very quiet about President Donald Trump's bailout of farmers. There is some truth to his complaint.

But first, it's wrong to say that everyone has been silent. The National Taxpayers Union, the Cato Institute, and others have complained and written against the bailouts. It's also wrong to assume that those, like me, who haven't made the bailouts a central focus of their work in spite of their past opposition to cronyism are silent for political reasons. Many of us are simply overextended, fighting the multifront attacks against freedom launched by Trump, the Democratic House, the Republican Senate, and the Democratic presidential candidates.

Cronyism is the unhealthy marriage between corporations, or other special interests, and the government. And farmers have been willing participants in this relationship for decades, at the expense of taxpayers and good economic policy. They've received subsidies and other government-granted privileges despite being relatively well-off and part of an industry that's not more subjected to adversity than many others. Conservative, free market, and even left-wing advocates have used buckets of ink complaining about the handouts.

On closer inspection, it's obvious that these farm bailouts are the culmination of everything that is wrong with cronyism. They came about after the president imposed duties on steel and aluminum in order to protect those industries from competition, which is cronyism. Then China, the European Union, Canada, and Mexico retaliated by targeting U.S. agricultural exports. From soybean to corn farms, from steel nails to bicycles, this trade war is hurting many businesses, some of which are closing their doors.

But none of Trump's trade war victims are as powerful and important a voting bloc as farmers, who secured two agriculture bailouts over the past two years, totaling $28 billion—so far. For perspective, Bloomberg reminds us that this "farm rescue is more than twice as expensive as the 2009 bailout of Detroit's Big Three automakers, which cost taxpayers $12 billion." Many Republicans at the time rightfully decried the auto bailout, yet most have nothing to say about the farm bailouts. Many have even joined in and demanded more for the farmers in their states.

Like regular farm subsidies, these bailouts are designed to shower largesse on the biggest farms. According to the Environmental Working Group, an outfit that has long opposed farm subsidies, one-tenth of the bailout recipients last year have received over half of the bailout payments, and 82 farmers have each received more than $500,000. Their report also notes that the top 1 percent of recipients of trade relief received $183,331 on average. The bottom 80 percent received less than $5,000 on average. It doesn't sound right, because smaller farms must be hurting the most. But it's naive to expect sensible policies from those who tried plugging a hole created by the trade war by paying out farmers rather than lifting the tariffs.

But that's precisely what's so disgusting about cronyism. It is, at its core, an exchange of government favors for loyalty in the voting booth. Nowhere is that more obvious than here. In fact, Trump almost seems proud of it, as he demonstrated during a recent call with farmers when he reminded them of the bailouts, saying, "I hope you like me even better than you did in '16." It's likely no coincidence that Midwestern states such as Indiana and Iowa, which backed Trump in 2016, will receive large payments just before the midterm elections. It could also explain why fruit growers in California or lobster farmers in Maine, both victims of the trade war but in Democratic territories, are receiving little to no bailout.

To recap: Trump started a trade war to protect his friends in the steel industry. That triggered severe retaliatory tariffs from our trade partners. Then the president, rather than lift all the tariffs, decided to extend two bailouts to farmers and farmers alone in order to ease their pain in time for the next election. And most Republicans now appear to be OK with—or silent about—this crony solution to protectionism. Paired with the fact that some of us haven't given the issue the attention it deserves, I can see why others, like Veuger, would think that conservatives are acting hypocritically. So much for principles.

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  1. the multifront attacks against freedom launched by Trump

    While far from ideal, Trump is still better than any president since Coolidge. And I’m one of those Republican partisan hacks that will rate Bill Clinton as only the 3rd ( or maybe 4th if you prefer JFK ) least bad president of my 57 year lifetime

    1. That’s why Trumpsters get laughed at as much as Bernie’s and Elizabeth’s bots. Trump is the ABSOLUTE worse (a hair better than FDR, so far). Reagan and Kennedy alone prove how totally uninformed you are.

      Do the math. I’ll help you.

      Trump inherited the longest recover EVER for an incoming President .. handed to him from Obama, who started with the third worst economy since the 1930s.

      Kennedy and Reagan inherited the 1st and 2nd worst economies (in that order) since the 1930s … and both tax policies (whicgh were identical) created the ONLY economic booms since the 1920s. Trump, well …

      1) As this fiscal year ends shortly, Trump will have likely added more new debt in three years (2024 forecast) than Obama added after EIGHT years!

      2) Trump is the first President EVER, to increase the deficit by over 40% .. in one year … during a recovery.

      3) Did you “forget” that Trump promised to pay off the entire federal debt … in 8 years … but instead has the worst EVER 8-year debt?

      4) His average GDP growth is only a hair higher than Obama’s recovery … and his higher spending causes almost all of that gap. You do know that government spending is “double-counted” for GDP, right? (GDP growth averaged over 8% per year during the Great Depression, from massive New Deal spending)

      Reject tribalism. Question, think and explore.

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      1. ‘ “tit for tat” “game theory” forgiveness ‘… makes a good Google search string; results include this: http://www.psychologytoday.com/us/blog/evolution-the-self/201607/the-prisoner-s-dilemma-and-the-virtues-tit-tat … It turns out that Jesus H. Christ was correct, and modern science now validates it, that “forgiveness” is a way-vitally important element of good strategy and good results! So I do not give one flying hoot about who started the trade war; it needs to STOP!!! At the VERY least, we need to stop trying to put the fire out with gasoline! Otherwise we end up with an endless loop of shitting on each other… For the lack of a TINY bit of forgiveness thrown into the game!

        Politicians aren’t usually known to have much decency, common sense, morality, or ethics. So now that the trade wars have started, NONE of them (here or abroad) are very likely to say “let’s forgive”, or, “we’ll take down our trade barriers first, and trust you to do the same, later”. They are almost all evil bastards, who cannot or will not recognize the wisdom of Jesus H. Christ, as has now been validated by science. They are more into pride, boasting, “winning”, and posturing, than they are about looking out for the common good.
        And that goes doubly-tripled for Der DumpfenFuhrer!

        And finally, this is especially for LC1789… Please note that the founding fathers had the wisdom to add the “Interstate Commerce” clause, early on, to prevent trade wars between the states… For the common good. And they didn’t act like grade-school kids, arguing about “he started it”! They just forgave, and moved on. Were they stupid? Shall we re-start the trade wars between states; will THAT make us all rich? Is the US Constitution WRONG here?

        The spoiled-brat states had to be hauled up and whacked by bigger-government, meaning the feds. THAT is how the trade war was stopped! So by extension, we should be supporting international agencies to haul us stupid nationalistic, jingoistic duh-heads up, and whacking us a few times, for the greater good!

        Oh, but Americans Good; furriners BAD, will be the response of those who are full of false, destructive pride. I have never heard God or karma or the Universe or Momma Nature or evolution or ANYONE with REAL moral authority, tell me that Americans are created superior!

      2. +1000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000

        MAGA!

    3. While far from ideal, Trump is still better than any president since Coolidge. And I’m one of those Republican partisan hacks

      A partisan Republican hack would rate Trump higher than Reagan?

      1. Bingo! 95% of Trumpsters are as bullshitty as he is.
        They HATE Reagan, as an impossible standard for Trump to meet.

    4. Trump is the best leader? We have a record number of open positions in the government, including the secretary of defense. I have 0 confidence Trump could lead us in the event of a major catastrophe.

  2. Veronique my be late, but that’s one of the best summaries.

    1. You’re right troll, that was one of the best false summaries that I have every seen.

      1. Go ahead and argue with some substance then.

        1. He’s too busy trolling ME! (lol)

  3. The beneficiary of these bailouts is the farmland owner. Yes – that can be the farmer as most farmers do try to own land they farm and prob half or more of the subsidies end up in their pocket. It can also be a hedge fund or TIAA-CREF or all those who drive farmland prices higher as a mere portfolio investment based in large part on the assurance that in the long term govt bailouts/subsidies will jack up and hugely stabilize their rental income. And roughly 30% of the grain farmland that receives these bailouts is exactly that ownership.

    Because economics simply ignores land now, those who continually prate on about farmers receiving bailouts completely ignore where those bailouts actually end up. Which also means they ignore the big cronies behind the curtain who are far more politically powerful than an ag lobby from a few low population states.

  4. It’s not as simple as cronyism. There’s a reason the strongest party in Minnesota is the Democratic-Farmer-Labor Party that’s elected the likes of Ilhan Omar – they’re straight-up socialists. One of the first things FDR did to alleviate the suffering of the poor and the hungry during the Great Depression was to destroy large stocks of crops in order to drive up the cost of food because raising farm income was more important than feeding everybody else. Even before then, the Grangers were an organized political special interest bloc that had lobbied for, and won, such things as free rural postal delivery, price controls on railroad shipping rates and public interest regulation of grain warehouses – and they were big proponents of the “more democratic” direct election of Senators, women’s suffrage and prohibition. Here’s a pretty good idea of what farmers thought about themselves – note the label on the bottom left center banker “I fleece you all”. Salt of the earth!

    1. Should probably mention they were big supporters of William Jennings Bryan – as somebody noted, the Bernie Sanders of his day – and the Free Silver campaign – the Free Shit of its day.

      1. That’s how liberty works, sonny boy. Even Ayn Rand accepted Jefferson’s consent of the governed.

        Blame Republicans for STILL having nothing on health care, jobs, the economy, or ANY major issue.

        Complaining about a problem, without posing a solution, is whining.
        -Theodore Roosevelt

        Any fool can criticize, condemn and complain, and most fools do.
        –Benjamin Franklin

        “Wise men speak because they have something to say. Fools speak because they have to say something.”Plato

        Left – Right = Zero

        1. “Blame Republicans for STILL having nothing on health care, jobs, the economy, or ANY major issue.”

          The best thing the government can do about any of those issues is GET OUT OF THE WAY and let free markets work! So I do blame most Republicans in office – for often choosing to increase their own power by increasing government power at the expense of their constituents, just like Democrats.

    2. Umm, it’s a center-left party, despite your tribal hysteria. Is Amy Klobuchar a commie in your remote universe? Or is she among the most moderate of the Democratic Presidential candidates?

      Should probably mention they were big supporters of William Jennings Bryan – as somebody noted, the Bernie Sanders of his day – and the Free Silver campaign – the Free Shit of its day

      It was formed in 1944!
      My work here is done.

    3. Well said/explained Jerryskids! +100

  5. Hell, I’d sell my vote for $500K too. Lol. That’s a pretty good deal.

    1. It’s acceptable as long as it’s taxpayer money. Don’t try to buy votes with your own money.

    2. What’s funny is even with all that motivation to vote Democrat (Yes, Subsidies is a democratic pitch). The last “farm bill” was nothing but a renewal of the old Obama Farm Bill and the last one had 13-R’s against and 0-D’s against.

      1. Most rural farmers still vote Republican and actually despise subsidies! And the real kick in the shorts is how the Democrats crying about tariffs are the very REASON Trump is even going to sign off on the farm bill renewal.

  6. Hey, what’s the sense of having a HUGE federal budget if the pols can’t spend it to advance their pet causes. And given that their top pet cause is often themselves, spending to ensure re-election makes perfect (evil) sense.

    And it will always be so, as long as democracy is coupled to commerce.

    1. Most/All started by FDR (D).

  7. To recap: Trump started a trade war to protect his friends in the steel industry. That triggered severe retaliatory tariffs from our trade partners. Then the president, rather than lift all the tariffs, decided to extend two bailouts to farmers and farmers alone in order to ease their pain in time for the next election. And most Republicans now appear to be OK with—or silent about—this crony solution to protectionism.

    False. More TDS from reason staff.

    Trump didn’t start tariffs or any “trade war”. There has been a “trade war” since America’s founding.

    Trump offered Free Trade at the G-7 Summit and that was rejected.

    Trump changed America’s trade policy to get lower trade restrictions for the US businesses and Americans. This already worked with Canada and Mexico. The EU already caved but has not approved lower trade restrictions. China is hoping for Trump to lose Election 2020 before they cave when he is reelected.

    1. As for farm cash subsidies, they should be ended immediately.

      Farms can form CO-OPs or other joint ventures to pool machinery, pool Capital, and have crop fail insurance. Government is not needed at all.

      1. +1000 – from a rural farmer

    2. Trumptard ALSO ignorant of what a Trade War is!
      What else from the phony conservative, who DEFENDS sucking the gummint teat … but only as long as HE gets to slurp.

    3. Trump absolutely started a trade war on multiple fronts simultaneously. You have to be living another version of reality to even try to argue that. He started a trade war with Canada, for fucks sake. One of my own ventures had to close up due to sudden 35% tariffs on Chinese goods. Thanks, Trump!

      1. Started a definitely needed (long time coming) “Trade War” with foreign countries who use the U.N. and corrupt treaties which were signed in by Communistic Democrats who want to steal from “the people” (peasants) and give to foreign governments/power (kings) because its easier to enact their beloved (Hitler) dictator and communism at the UN level [IPCC,Agenda-21,etc.. etc.. etc..].

  8. President Donald Trump’s bailout of farmers

    The money is appropriated by Congress, right? Why does Trump get the blame?

    1. Simple: Money was allocated because farmers were suffering from TRUMP’S TRADE WAR!!! Congress needs to grow some balls and STOP the trade war! Congress, not the POTUS, constitutionally has the power to levy taxes (such as tariffs).

    2. Is eyeroller serious? Trump has DEFIED Congress’s power of the purse … the very thing he CLAIMS to be defending!.

      1. The left, “Trump and his Trade War is killing the Farming Industry!!”
        Trump, “I don’t believe you but if you insist on making such a stink; I’ll sign a RENEWAL of the Obama Administration farm bill.”
        The left, “OMG! Trump and the GOP wants farm subsidies.”

        Oh wait — That a Lie. The farm bill renewal had 0(zero) Democrats vote against it but 13 Republicans vote against it.

        Seems like even in Congress Democrats are the “Farm Subsidies” supporters.

        1. A shameful distortion massive diversion from what we both said, TOTALLY irrelevant to a word I said, and almost total ignorance of what the farm bill included and why it passed.

          Mostly the lie that it was a “farm subsidy” bill, not the major agriculture bill.

          In a 386-47 vote, the House of Representatives Wednesday approved a bill which allocates billions of dollars in subsidies to American farmers, legalizes hemp, bolsters farmers markets and rejects stricter limits on food stamps pushed by House Republicans

          The REAL lie which has deceived you my even be hysterical.

          Congressional negotiators said they faced demands to complete the bill from farmers and ranchers who have seen steep declines in commodities prices as a result of the trade dispute with China.

          Still confused? It passed sso largely BECAUSE it repaired the massive damage to farmers … created by Trump.

          Further, might Democrats have supported supported as a face slzaurtd ppoprt

          1. Further, might Democrats have supported the slap in Trump’s face, on … FOOD STAMPS?

            Now, since I have addressed what you said, directly, cut your bullshit and address what *I* actually said … AND what I responded to .. the topic of the thread!.

            Trump has DEFIED Congress’s power of the purse … the very thing (eyeroller) CLAIMS to be defending

            Translation: For now, your hypocrisy and/or dishonesty is equal to eyeroller’s. And I’m gracious enough to allow your a correction.
            (And the apology you owe me) (And your bullshit dialog)

            Oh yea

            1. And you’re also full of shit on the vote. Here’s the history, from a major agricultural web site.
              https://www.fb.org/market-intel/who-supported-the-farm-bill

              The House passed the farm bill on June 21 by a vote of 213 to 211. At that time, 213 Republicans voted for the bill and 20 Republicans joined all 191 Democrats in opposition to the bill. There were two Republicans and two Democrats who did not vote on the farm bill in June.

              The House agreed to the final conference report by a vote of 369 to 47. There were 182 Republicans and 187 Democrats who agreed to the conference report, while 44 Republicans and three Democrats voted against it.

              I await your apology

  9. Bailouts are nothing more than bribe money to possible future voters to the party who is issuing out the bailout money.

  10. “The ugly results of bad economic policies.”

    Indeed !
    Reason supports coercive monopoly government like the U.S. state.

    These are the result of Reason’s policy and ideas too !!!

    1. Reason supports coercive monopoly government like the U.S. state.
      These are the result of Reason’s policy and ideas too !

      It’s crackers to slip adest to

      1. It’s crackers to slip a rozzer, the dropsy in snide!
        (gibberish is so easy)

  11. I don’t think the USDA fits into “regulating commerce between the states” either (Enacted only to resolve State-to-State battles). Maybe its about time to abolish that communist and UN-Constitutional agency too!!!

    1. That’s not quite as wacky as your earlier reply to me, above. The one where you owe me an apology.
      https://reason.com/2019/09/26/cronyism-yields-a-bumper-crop-with-farm-bailouts/#comment-7949636

      With the apology, I’ll excuse your blatant dishonesty.

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