Editor's Note: Steve Chapman is on vacation. The following column was originally published in October 2007.
Here's how the American free enterprise system works. You have an idea for a business. You find the money to start it up. You try to give customers something they want at a price low enough to keep them happy but high enough to earn a profit. Either your plan works, allowing you to make a living, or it doesn't, indicating you should find a different line of work.
Unless, of course, you are a farmer, in which case all this may sound unfamiliar. A lot of American agriculture operates in an environment where none of the usual rules apply -- where the important thing is not catering to the consumer, but tapping the Treasury. It's a sector that, ever since the Great Depression, has been a ward of the government, both coddled and controlled.
By any reasonable standard, federal agriculture policy is past due for a major overhaul. But judging from the latest farm legislation moving through Congress, not much is going to change.
Back in the 1930s, when the economy was a wreck, the survival of capitalism was in doubt and Oklahoma was blowing away, you could understand the impulse for Washington to intervene on behalf of farmers. But the days when agriculture meant a lifetime of toil for a meager living are just a memory. Today, farmers monitor soil conditions by computer, drive air-conditioned tractors and have a higher average income than nonfarmers.
Yet many of them continue to enjoy treatment other industries can only dream about. Imagine the government rigging the market to assure high prices to people selling concrete or cameras. Dairy farmers and sugar growers get exactly that, courtesy of the Department of Agriculture. Farmers who plant a host of other crops receive compensation anytime their prices fall below a fixed minimum.
That's not the strangest part. These days, you don't have to grow anything at all to harvest federal crop subsidies. Instead, Washington will send you a check based on the amount of a product you raised in the past, even if you don't feel like growing it anymore.
Homeowners in one Texas subdivision found themselves getting federal money because their land was formerly used to cultivate rice. Some farmers pocket the payments they get for one commodity but plant something else, enabling them to earn two incomes for the price of one crop.
All this is sweet for the lucky few who happen to be holding buckets when the federal cash falls out of the sky. But someone has to foot the bill, and that someone is anyone who 1) eats or 2) pays taxes. Government meddling raises the price of products at the grocery, while burning up billions of dollars in federal revenues. A study by Sallie James and Daniel Griswold of the Cato Institute, a free-market think tank, put the total cost of farm programs at $430 billion over the past decade.
Some farmers, and some urbanites, assume that agriculture would plunge into a death spiral if the government ever stopped furnishing all this help. In fact, the majority of people plowing fields would never miss it. In 2005, 85 percent of all federal payments went to just four crops -- corn, wheat, cotton and rice. Two-thirds of all farmers are locked out of the largesse.
"For most commodities (such as fruits and vegetables, hay, meat products, ornamentals), there is little government involvement or income support," report economists Bruce Gardner of the University of Maryland and Daniel Sumner of the University of California at Davis. Not only that, but the commodities that get no help are just as profitable as those that do.
Yet Congress shows little interest in ridding us of this extravagant waste. President Bush proposed to trim costs and reduce payments to the richest growers, but the five-year farm bill approved by the House of Representatives in July omitted these modest reforms. A more ambitious bill to significantly reduce the federal role in agriculture, meanwhile, was cut down like a weed. The Senate is currently considering its own version, but the Agriculture Committee has indicated it's quite content with the status quo.
The American economy has undergone radical transformation in the past 75 years, and the majority of farmers have shown they can prosper outside a government-run hothouse. Yet our leaders seem to think that what was good enough for Ma and Pa Kettle is good enough for us.