“A dead man farming? That was the unsettling image that came to mind last November, when a Miami television station analyzed the records of federal farm subsidies paid to South Florida residents. By cross-referencing payments against death notices, the reporters found that at least 234 people listed as deceased were still getting checks from Washington; some had been dead for as long as eight years. All told, about $9.5 million in farm subsidies went to folks who were pushing up plants, not harvesting them.” Michael Crowley, ‘Phony farmers’, Readers Digest.com June/July 2010
Well in happier times, Chicago economists used to condemn ghost freight charged for transported steel under the Pittsburgh-plus price conspiracy. One never expected that they would praise farm subsidies to ghosts under a corrupt Washington farm support program. Yet that is exactly what they did.
In April 1987, the prestigious Chicago Journal of Political Economy published an article by Bruce L. Gardner entitled: ‘Causes of U.S. Farm Commodity Programs’. The research for this paper was under-written by Chicago’s Center for the Study of the Economy and the State, directed by George J. Stigler, who also edited the JPE at that time. The paper gratefully acknowledged the advice and suggestions of Gary Becker and Sam Peltzman, also of the University of Chicago.
The paper identified the various farm programs of the United States federal government as “attempts to redistribute (income) efficiently to the farming community, in response to pressure from interest groups. The paper essentially ignored all relevant institutions, sheltered behind some very dubious econometrics, and concluded that farm subsidy programs that minimized excess burdens, or deadweight costs, fared better than those that did not do so. For the most part, the paper is fallacious about efficient redistribution, accepting unquestioningly Stigler’s and Becker’s rational choice nostrum that all surviving government programs are redistributionally efficient. At that time, such was the Chicago doctoral student’s intellectual burden. Gardner was on the right track about the importance of political pressure, though his paper is sadly deficient with respect to institutional details, and inexplicably ignores Mancur Olson’s much superior analysis of the logic of collective action.
If farm commodity support programs truly were redistributive in nature, they would take the form of lump-sum cash transfers. Mr Gardner, was surely taught that at Chicago. Or perhaps alternatively he was taught that complex price supports, opaque output restrictions, and non-transferable food stamps, minimize the cost of redistribution? Pray do not tell me that he learned that lesson at the feet of any free market economist. Adam Smith and David Ricardo would turn in their graves.
Professor Bruce Gardner, sadly, has passed on, but not before he became aware of the fallacy of that initial paper, I am quite sure. He would have benefited greatly had he been able to avoid the deconstructionist thinking about politics advanced by George Stigler and Gary Becker, and to have read instead Michael Crowley’s much better informed paper in Reader’s Digest.
Let me draw attention to a few statistics therein outlined. Redistribution from rich taxpayers to poor farmers does not hold up even to a cursory review, though that is a professed goal for the program. A government audit determined that of 1.8 million so-called farmers in receipt of federal funds between 2003 and 2006, 2,702 had adjusted gross incomes in excess of $2.5 million; and that many of these were foreigners, not generally eligible for U.S. government handouts. This group alone syphoned off $49 million in taxpayers’ monies. Seventy five per cent of all farm subsidies go to just 10 per cent of the nation’s wealthiest corporate farms. Small struggling family farms are at the bottom of the heap; and, if you are a poor black farmer, please do not even bother to apply. So much for the farmers’ poverty program!
As for the poor consumer, well that is a real joke. In 1996, Congress approved subsidies to farmers as long as they did not develop their land, even if they planted no crops at all. Between 2000 and 2006, the government doled out $1.3 billion to farmers who do not farm. Import quotas on sugar cane, that subsidize U.S. suger beet producers, double the retail price of sugar, a staple ingredient of a poor person’s diet. Food stamps effect income transfers to the poor at enormously high excess burdens. What such families would not do for cash instead of food transfers.
As always, follow the money when attempting to explain the inexplicable in the Washington cess-pit. The agricultural industry employs 1,200 registered lobbyists in Satan’s City, and outlays some $133 million per annum to grease the farm support program. Lawmakers from agricultural states and districts access key congressional committees and feed out the grain that transforms itself into pork. For example, Senator Kent Conrad (D: North Dakota) makes sure that North Dakota, almost half of whose 647,000 residents residents live in urban areas, receives an annual average of $715 million in agricultural subsidies. Other members of Congress pump out the grain into their own pockets. For example, honest millionaire Senator Chuck Grassley (R: Iowa) pulled in $238,000 in federal subsidies between 1995 and 2006, while Senator Blanche Lincoln (D: Arkansas), no close relative of Honest Abe to be sure, has shifted out more than $700,000 to her family over a ten year period.
Any serious attempt to cut the federal deficit would do well to start with eliminating the entire farm subsidy program. Unfortunately, the probability that this will happen is lower than a snowflake’s chance in hell:
And shall the farm support program die,
Here’s 1,200 lobbyists, armed with $133 million per annum,
Will know the reason why.
(With apologies to R.S. Hawker’s refrain, warning King James II to restrain his executioner, when Sir Jonathan Trelawny was held in the Tower of London for resisting the Second Declaration of Indulgence):
“And shall Trelawny die,
Here’s twenty thousand Cornishmen
Will know the reason why.”
Hat Tip to Marjorie