Dear Farm Subsidies: Die In A Fire

farm subsidies

Veronique de Rugy of the Mercatus Institute has a new analysis out on agricultural subsidies, with a title that could have come from my own heart — Farm Subsidies Must Die. I dig it.

In 2012, the Department of Agriculture (USDA) spent $22 billion on subsidy programs for farmers. Introduced in the 1930s to help struggling small family farms, the subsidies now routinely draw condemnation from both left and right as wasteful corporate welfare. While the number of farms is down 70 percent since the 1930s—only 2 percent of Americans are directly engaged in farming—farmers aren’t necessarily struggling anymore. In 2010, the average farm household earned $84,400, up 9.4 percent from 2009 and about 25 percent more than the average household income nationwide.

What’s more, a handful of farmers reap most of the benefits from the subsidies: Wheat, corn, soybeans, rice, and cotton have always taken the lion’s share of the feds’ largesse. The Environmental Working Group (EWG) reports that “since 1995, just 10 percent of subsidized farms—the largest and wealthiest operations—have raked in 74 percent of all subsidy payments. 62 percent of farms in the United States did not collect subsidy payments.”

That is completely wasteful spending right there, something we could drop immediately and wouldn’t be hurt for it. In fact, repealing agricultural subsidies would have a very beneficial effect on the poorest of Americans:

In addition to the direct cost to taxpayers, these subsidies cause enormous economic distortions. Consider the domestic sugar industry. The USDA protects its producers against foreign competitors by imposing U.S. import quotas, and against low prices with a no-recourse loan program that serves as an effective price floor. As a result, the University of Michigan economist Mark Perry reports, Americans have had to pay an average of twice the world price of sugar since 1982.

That’s just one of many government interventions that have hurt the poorest Americans by increasing the price of food. The food stamp program—an $80 billion initiative designed to help poor Americans offset the high price of buying food—is embedded in the very farm bill that keeps those prices so high.

This mirrors what I wrote in an op-ed for The Blaze last year, when I laid out five policies that conservatives and libertarians should push for precisely because they would help the poor (and are free market based):

2 – End all subsidies, loans, bailouts, barriers to entry, and all cronyism
We all agree that government shouldn’t be picking winners and losers via corporate subsidies and bailouts, but we should also recognize how these programs hurt the poor. Natural competition makes goods and services cheaper, but these programs shortchange that. Take, for example, the federal Dairy Price Support Program. It has the federal government buy the ingredients for cheese and milk, thus raising the price of these goods. A 2004 Government Accountability Office report showed that “U.S. prices for butter averaged twice the world price, cheese prices were about 50 percent higher, and nonfat dry milk prices were about 30 percent higher.” What does this do for the poor, other than make them more dependent on government welfare?

Fortunately, there is increasing opposition to the farm subsidies. Americans for Prosperity, one of the largest free market activist groups in the country, has come out strongly against the farm bill, complete with updates and a very neato infographic that shows how the farm bill is really just another welfare bill:

FreedomWorks has also jumped on the opposition bandwagon. This is huge. Fifteen years ago—heck, just four or five years ago—there would have been little to no opposition to these subsidies. Most Americans wouldn’t have understood that they were being robbed, and would have just thought, “What cruel people, not caring about our farmers!” Nobody wanted to touch it. It was yet another third rail of politics. But all of that is changing.

I think Ms. de Rugy and myself will get a great present in the near future, with agricultural subsidies being thrown into the dustbin of history. They are simply untenable, and with the tiny number of Americans who are actually farmers, I don’t see how they will be defended. Even with the notion of “concetrated benefits and dispersed costs,” which permits a tiny group to basically get away with extorting a much larger group, if the liberty movement focuses on how these subsidies raise food prices at the checkout and especially on foods typically consumed by the poor, the subsidies will evaporate. People will not stand for that, especially in this recession.

Dear farm subsidies: go die in a fire. America will be so much better off without you.

 
 


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