April 15, 2005
HURTS SO GOOD: A PROPER USE OF TAX DOLLARS?
John “Cougar” Mellencamp used to bemoan the neglected family farmer. Reason’s Matt Welch dug up a good database showing that the Mellencamp’s of the performer’s hometown (though apparently not the singer himself) rake in over $1 million in taxpayer funds on corn subsidies. Is this form of rural remuneration welfare or wisdom?
Posted by Matthew Hogan at April 15, 2005 09:13 PMIs this important or anything? I mean… really…
Posted by: Zeek at April 15, 2005 09:39 PM“Is this important or anything? I mean… really…”
Massive farm subsidies…taxpayer dollars widely or unwisely spent on huge program….irony on celebrity complaints about government neglect….
I mean….really.
Posted by: matthew hogan at April 15, 2005 10:02 PMYeah. Farm subsidies. We need to get rid of those. How about we stop subsidizing oil and gas, too? And stop the corporate welfare - like that crappy bankruptcy bill that just passed, and the tort “reform”, and Cheney’s energy bill, and that farce of a prescription drug “benefit” that passed last year.
Given the power of the farm lobby, think of what could happen if there was a middle class lobby, or a staples consumer lobby ?
It is amazing the bulk of Americans just don’t get it. They bitch and moan, but, they don’t join. They vote in the ballot box thinking this is how democracy is run, failing entirely to recognize that the vote of the dollar is worth 3 in the booth.
But, the opiates of the masses are plentiful, TV, movies, CD’s, MP3’s, booze, and working for a paycheck. Opiated into the belief the two major parties actually care about them…. Hilarious.
Posted by: David R. Remer at April 15, 2005 10:44 PMIf many of the farmers where I live (which is rural mid-America) they would not be able to continue producing the food that is put on America’s tables every night. Everyone wants to get rid of the farm subsidies, but has anyone really thought about that?
Posted by: kate at April 15, 2005 11:52 PMSorry, I ment to say that if the farmers did NOT receive their subsidies.
Posted by: kate at April 15, 2005 11:55 PMHi people, would you like me to explain to you what exactly subsidies are, why the exist, and what would very likely happen if they were to cease to exist? Or would you like to keep on believing that farm subsidies are some sort of social entitlement like welfare. Either way being a farmer I don’t much care, because it honestly effects me less than you, and I of course know that subsidies aren’t going anywhere, ever.
America with its ever increasing population, and ever decreasing land resources, and with less than 1% of its population involved in agriculture is still the unquestioned agricultural superpower of the World. A huge reason for this is subsidies, which allow the U.S. government to artificially deflate the price of our agricultural goods on the world market. Food is one of the very few products that America actually has a Trade SURPLUS in, meaning we sell more food on the world market than we import, and still manage to VERY CHEAPLY feed well over a quarter billion hungry U.S. mouths. I mean honestly, how much of your monthly budget goes to food costs, as opposed to gas, electricity, clothes, or other necessities? Not very much I’m almost certain. How are we able to do this? Subsidies are a big part of the answer.
The income source for the American farmer is two fold (1) the commodities exchange, on which we sell our goods (2) government subsidies. One hand washes the other, farmers except subsidies from the government, in exchange we agree to certain restrictions on the prices we set for our goods. These two systems work together to ensure the finical solvency of the American agricultural system, and reduce the cost of food to both the consumer at home and the export market. It is a system that works so well, it is protested wildly by many third-world countries. They claim America’s artificially low, or subsidized food prices amount to essentially “dumping” of American food on the world market, making foreign competition, especially from underdeveloped markets, virtually impossible. (This is actually what allot of those goofy tear-gas dodging protestors at all the G-8 summits are there for.) Whether or not this system is ethically sound, you can debate, I really don’t care, what is not arguable is that the system is very good for the U.S. economy.
Now lets explore what might happen if subsidies were to cease to exist. With one of the two principle sources of U.S. farmer income gone, the other would have to compensate. Its not like American farmers are just going to start doing the same job for vastly less money, right? The restrictions on the commodities market would be gone, and farmers would be free to charge whatever they would like for their goods. What’s wrong with that? Well as a successful farmer, from my standpoint not much, I would probably still be just fine. The U.S. taxpayer however would not benefit at all. The small decrease in taxes would at least be made up for in the increase in food prices at the super market. At the same time the resulting raise in prices would cause us to lose our edge on the world market, potentially hurting the economy as a whole. This is, however, a best case scenario.
Worst case scenario, say we get rid of farm subsidies, and American consumers are unwilling to pay higher prices for food from American farmers. Foreign agricultural powers (Brazil, Argentina, China) are more than happy to sell to Americans at a lowered price. Unable to compete with cheap foreign competition American farmers go out of business by the thousands, making America as dependant on foreign sources of food as we are on foreign sources of oil. Can you imagine how bad that could get? If China or some other foreign power was in charge of the amount, or cost of food at your grocery store?
Cheap, abundant food is one of America’s greatest resources, and a key reason why we are the most powerful nation on Earth. The system of government subsidies to U.S. farmers is such an efficient, cunning, and effective, economic system that some accuse it of being illegal. Regardless of its ethics, or view in public opinion, it assures that few Americans will ever need go hungry (we are after all the fattest nation on Earth), and that in an age of outsourcing and massive trade deficits America still has one product that dominates the global marketplace. That is why, while people may complain, or not understand, farm bills move swiftly through congress, and you’ll meet few farmers that worry whether or not they’ll be getting their subsidy check
Actually, this is a really important issue, one of the greatest international battlegrounds of our generation.
At the moment, the US and EU have the most hypocritical, unfair, two-faced and cynical positions of international trade possible. They simultaneously force developing countries to take down their trade barriers whilst maintaining or even building up their own subsidies and tariffs.
Now, it’s possible to have a left-wing vs. right-wing debate (in the truest sense of that phrase) about whether or not tariffs and subsidies are useful. I personally believe they are, for developmental, environmental and welfare reasons, but that is not to excuse the destructive way they are used in the world at the moment.
A couple of examples if you’ll allow me… The EU subsidises sugar beet production in Europe. This sugar beet has one use - to produce sucrose - table sugar. Sugar beet is an incredibly inefficient and expensive way to produce sugar when compared to sugar cane, as grown in many developing countries - the Carribean countries for example. Yet because of subsidies, growers of sugar cane are actually undercut by European sugar beet farmers. Likewise, the US subsidises cotton growers, which drives cotton farmers in West Africa out of business. The West African cotton growers have higher yields per area of field, and produce cheaper cotton, despite the lack of industrialised farming methods, advanced pesticides and fertilisers and efficient supply chain and distribution available to the US farmers, but they cannot compete with the subsidies.
It’s not just primary industries (primary industries being farming, mining, foresting, fishing etc.) which this affects. In fact, you could make a case that it’s not mainly about primary industries. The West’s trade policies on “value-added” industries (anything which is not raw material production - this includes manufacturing, R&D, marketing, service industries and so on) are condemning developing countries to a long-term future of being simply raw material producers for the West. Coffee, nuts, cocoa beans etc., are often not refined in the developing countries where they are grown, because their developing refinment industries simply cannot compete with the subsidised refinment industries in the West, and developing countries are not allowed to tax raw materials leaving their country to level the playing field.
So congratulations if you’ve made it this far. The length of this post is indicative of the fact that international trade is a complex subject. If you get the chance, try to see the documentary film “The Luckiest Nut in the World”, which explains this subject far better than I can.
I’ve tried to keep this post non-partisan and factual, but I can’t resist one dig at the Reds whose column this appears in. Even if you approve of Bush’s often violent attempts to spread “democracy” around the world to aid human development, with his policies on this issue he is doing more damage to freedom and development than any number of invasions and revolutions can ever make up for. I do, however, note that this vital issue has been raised in the Red column and not the other two, and also that Clinton’s, current democratic, and European Governments’ policies on this issue are equally hypocritical.
And that’s not even to mention the democratic deficit in the international trade negotiations and organisations - the WTO, NAFTA, GATS, G8 et al… Ho-hum….
Posted by: Paul at April 16, 2005 08:18 AMWhat does Mellencamp really have to do with this?
He also got the city/county where he lives to let him build a house in a place that no one was supposed to be able to build one.
It’s who you know and how many greenbacks you have.
How about this one:
I know a family who has timber ground. The owners are 87 and 92 years old. They are selling the timber now so there will be less of a fight in their family over the ground, the timber and it’s value.
Turns out there is a BAT that lives on this ground. There are 4 caves and they nest in the trees during the spring, summer, and part of the fall. This BAT is on the endangered species list. There are fences around these caves which have sensors on them and they are monitored. Timber cannot be removed within 550 feet of these caves from April 15 to Nov 15th. Timber within 100 ft can never be cut.
The government requires a lot of paperwork and several permits to work the timber.
We have heard of this issue on GOVERNMENT ground but this time it is PRIVATE property. They moved in and took over their private property.
The government has made no offer to buy this ground or compensate for timber that cannot be cut due to the regulations.
I don’t know who put this BAT on the list but it is turning up everywhere.
Makes me hope a tornado or brush fire rips through there so they can find out that the BATS can adjust.
This may not have anything to do with subsidies but it does have to do with the government and what they do to private citizens.
Pretty well shoots to hell the whole notion of Republicans standing for free markets, doesn’t it?
Posted by: David R. Remer at April 16, 2005 11:25 AMOh yes, the good old republican way, talking about a couple million in tax dollars. Forget about the billion dollar contract’s that we didn’t even give other companies the opportunity to bid for. Forget about the corporate handouts and grants that are awarded to companies sporting huge profits. I’m all for decreasing waste, and I’m sure there are areas dealing with food subsidies that we could improve, but seriously, there are so many other issues that deal with so much more money, it seems somewhat pointless to talk about this.
Ivan
Well let’s try this one on for size. How about re-reading The Federalist Papers, The Madison Papers, and a variety of other founding fathers’s papers and see what they had in mind on government monies both taxes and spending. Then let’s look where we are today. The next step is to relieve the citizen taxpayer of the burden of all those agencies and taxes that are unconstitutional. This would be a gigantic step forward to bringing America back to where it should be. All the concerns about subsidies and control of exports/imports would fall into place. The first step is to follow what our founding fathers intended. It worked then and it will work now. Dump Congress and start anew, but only through the election process.
Posted by: Tom at April 16, 2005 12:19 PMRevolution in the US will come soon.
Posted by: Gary Thomas at April 16, 2005 08:16 PMTom, history has limits. Our Founding Fathers would be out of their element today. Then we had unlimited resources, untapped expansion capability, tremendous growth in population and geography and industry ahead.
It is a very different world today. Then slavery was tolerated and even capitalized. Then, women were chattel. Then, children were property as much desired for their work capacity as bearing parental genes.
One must recognize what the limits of the founding documents, letters, and correspondence are in modern times. Those ideas and thoughts were not generated in some timeless and everlasting context. They were the product of their day, culture, economics, body of knowledge and international relations of their time. We were so much younger then. Today requires a new wisdom that borrows from the past that which is transportable to the present and invent and create to meet unique needs and conditions of the present that did not exist in the 1700’s.
There is no wisdom in saying we should turn the clock back or saying we should live by prescriptions 3 centuries old. The simple fact is our government is not like it was, and it can never be what it was. The government is a product of the society it governs and you can no more turn the government back to an historical platform than you can turn society back undoing 300 years of change and adaptation, a great deal of which has been for the better.
Posted by: David R. Remer at April 17, 2005 02:26 AMDavid
What I am talking about is the way taxing is done. The agencies in the federal government that are not in keeping with the constitution. The way spending is totally out of control. Washington is involved in far too much of the citizens life. The machinery of government is very good, but the operators of the machinery of government are not good operators. This includes every shade from left to right, from liberal to conservative. The operators abuse the system. They are slowly destroying it. Judges today legislate, which is unconstitutional. They are only to intrepret the law, not make law. So many times when legislation is passed by a large number of votes or an item is selected by the voters at large, a judge somewhere will bring forth his agenda and abolish what the people want and have voted into law. Administrations for years have abused the positions of power. Our founding fathers addressed many of these issues in a clear concise and prophetic manner. There is too much to be said on the subject. So I’ll rest for a moment right here.
Of course we should drop the subsidies. Yes, a lot of farms will go out of business, but there will be consolidation and more efficient ways to farm will be invented out of necessity. If Africa and Latin America are allowed to compete fairly than all the better. If we buy more of their goods, what does that do? It gives them more money to increase their standard of living. Where do you think they will spend that money? New tractors for the farm, refineries, components for new plants, machinery for production, and so on. Meanwhile, the price for goods comes down for the consumer. That means they are enriched with the goods they need and have more money left over. The money left over gets used to buy other other products further enhancing the economy. Believe in capitalism. It works. If China wants to subsidise cheap steel for me, I say great. Cars get cheaper, the autoworkers get to keep their insurance because the company isn’t taking such a hit on raw materiels. All thanks to the Chinese government. Yes, it would be painful for the American steelworker, and that’s why we need a flexible workforce that constantly upgrades and updates their skills. That is the key to maintaining our position as the world economic leader.
Posted by: jeff at April 17, 2005 11:14 PMJeff:
I agree. Life would be much more fluid for a while, but these things have a way of evening out over time. There are things the government could do in the short run to ease the pain of transition. But I am a free market believer, and I believe, as hokey as it might sound, in the ability of the American worker to adapt, improvise and overcome.
Posted by: Chi Chi at April 18, 2005 11:33 AMPaying farmers to NOT grow a crop is ridiculous by anybody’s standards. Talk about “entitlements”! Let the market determine what grows by what sells and by what is good for the soil. Let fields lie fallow instead of pumping chemicals into them. If the market sees a decrease in supply, then the increased demand will provide the farmers with the income necessary to move forward.
By the way, did you know that 100 years ago 12 million people were involved in agriculture? That represented over 10% of the population. Now, only 2% are involved in agriculture. Does that mean we have a huge job loss that no one is reporting? Someone tell a Democrat that the sky is falling! They’d believe it, I’m sure. Actually, we just retooled into other industries. That’s not just the American Way - it’s an historical pattern, as well. Stop regulation and subsidizing of farming!
Posted by: Hal Heiberg at April 18, 2005 12:26 PMI know it is popular to believe that economic dislocation has not created a lot of pain, but it has and continues to. The problem with our subsidies is that they are very complicated, they were instituted when times were different, and no one (I mean even the smartest conservative) can predict what the effect of removing them would be. It is interesting that the conservatives tend to pick on farm subsidies while ignoring the larger subsidies identified in AP’s first post on this thread. Anyone who owns a home receives a government subsidy. Want to give that up (without a compensating tax decrease, of course)? Does it continue to make sense? Subsidies are pervasive, but, contrary to Tom’s assertion, not unconstitutional. By the way, the power to make that judgement is actually given to the judiciary, not the voters, the Congress, or the President. Our grand old Constitution, by the way, gives a great deal of latitude in interpretation by asserting in the preamble that the government will promote “the general welfare,” among other intents. It is the principles embodies therein, not the particulars that are important. The first thing the framers did was amend the thing in its particulars.
Posted by: Mental Wimp at April 18, 2005 03:53 PMhi im doing a debate at school (motion:farming subsidies should be eliminated imediately in developed countries-i am opposing the motion)and i was wondering if anyone has any ideas about what i could say in my argument?
Posted by: sarah at April 21, 2005 02:05 PM