Monday, December 31, 2012

Over the Dairy Cliff: How Farm Welfare Harms Consumers

Over the Dairy Cliff: How Farm Welfare Harms Consumers:
Writing in today’s Wall Street
Journal
, James Bovard highlights the absurdity of U.S.
agricultural policy:
Current farm programs—which consist of massive subsides, price
supports and various marketing restrictions—were enacted in 2008
and expire on Dec. 31. That should be cause for rejoicing, except
that the system is rigged against consumers and taxpayers.
Instead of Americans enjoying a bounty after the clock runs out,
federal farm policy will automatically revert to a farm bill drawn
up in 1949. That will compel the Department of Agriculture to
roughly double the price supports for dairy and other farm products
thanks to a mystical doctrine called "parity."
The doctrine was concocted by Department of Agriculture
economists in the 1920s to "prove" that farmers were entitled to
higher prices than the market provided. The official parity
calculation was based on the ratio of farm prices to nonfarm prices
between 1910 and 1914, the most prosperous non-wartime years for
farmers in American history....
The ultimate absurdity of the "dairy cliff" is that there is no
need for federal intervention in dairy markets. The supply and
demand for the vast majority of food products made in America
function just fine without government price controls. The worst
disruptions have perennially occurred for a handful of items such
as sugar and corn, as well as dairy products, which are under
political protection. Politicians have long exploited these
disruptions to help drum up donations to their re-election
campaigns.
Read the whole thing
here
.
In a recent column for Reason.com, Baylen Linnekin made the case
for
scrapping the farm bill
and replacing it with nothing at all.
In a recent column of my own, I explained how the Supreme Court’s
excessive deference to economic regulation
has its roots
in a protectionist New Deal law passed to benefit
America’s dairy industry.