July 09, 2005

Ending Farm Subsidies

I'd love to see the end of U.S. farm subsidies. President Bush would definitely bolster his free market credentials with me. But the President can say stuff like this all he wants:

Let's join hands as wealthy industrialised nations and say to the world, we are going to get rid of all our agricultural subsidies together.

Bush can't just wave his hand and make the subsides disappear. Congress is in the way. Way back in 1996 the Freedom to Farm bill was passed. That looked like a path to a true agricultural free market. But almost immediately Freedom to Farm was weakened:

Although opponents of the reform legislation were disgruntled because it reduced the level of government control over the nation's agriculture industry, once the bill was passed, most farmers supported the flexibility it provided. Within two years, however, the bill's benefits were dimmed by worldwide economic problems and weather-related disasters in the United States.

This provided the opening that opponents of reform had been seeking--an economic downturn in the farm economy that they could pin on freedom to farm. A return to subsidy-laden government micromanagement of agriculture quickly followed. Since 1998, congressional efforts to gut the farm reforms have resulted in massive annual multibillion-dollar "emergency relief" packages for U.S. farmers, the lion's share of which have gone to large, high-income farms.

Farmers have become a tiny part of the workforce yet they have tremendous clout in Congress. Part of it is the romantic notion of saving the family farm--too bad economic reality has shown most family farms aren't sustainable. Part of the fear is the general fear of international trade. They feel the U.S. shouldn't need foreigners to feed us. That goes against the centuries-old economic concept of comparative advantage. Many lessons have to be relearned constantly.

"Bush: We'll Drop Farm Subsidies If You Will"