Jul 5, 2006

WaPo on Texas rice "farmers" [LINK]

If you do not respond to positive arguments in favor of free market economics, perhaps a negative one will suffice. There's a rather maddening article in the Washington Post that reports on the state of American agricultural policy, concentrating on subsidized "farmers" in Texas rice country.

Following the Republican takeover of Congress in 1994, GOP leaders crafted legislation that promised to wean farmers from government subsidies. It didn't work; the legislation was a compromise that is referred to rather laughingly:

[The legislation] offered farmers annual fixed cash payments as a way of weaning them off subsidies.
Hey, trade you some crack cocaine for your heroin! The article doesn't examine whether that legislation was a net plus or minus, but rather concentrates on continuing perversities that render that question largely academic. Indeed, the hardest thing is to keep track of all the unintended consequences.

After all these years, farmers continue to be paid not to farm. Some of those defined as "farmers" have never farmed and have no intention to do so. Some of them are very rich indeed. The promise of subsidies increases the value of land to perverse heights, crowding out undercapitalized players who hope to enter the market or expand -- the poor farmers for whom Willie Nelson staged concerts. Since your residential land can be labeled "agricultural" without growing anything on it, it qualifies for a much lower property tax rate, distorting the local tax base. While the program was implemented to help save the local rice industry, the result was a huge decline in acreage devoted to rice production. "Farmers" received payments regardless of whether prices were high or low, and regardless of whether they planted. You can raise cattle or timber while collecting money for a crop you didn't plant. And since actual farmers who rent land qualify for the payments, owners' incentive to rent out the land vanishes; owners keep the payments themselves. Alternately, landlords increase the rent to capture the payments.

Clearly, agriculture requires further reform. Is there any reason to hope for anything meaningful in my lifetime? I keep thinking that the Soviet Union seemed premanently entrenched, then one day it simply disappeared. While this is a comforting thought, so is the idea that your football team can win if the quarterback throws a "Hail Mary" pass.

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