The Farm Bill Bait & Switch

Posted: Feb 21, 2014 12:01 AM
The Farm Bill Bait & Switch

The greatest tragedies in public policy occur when policymakers claim that they’re solving a problem, when in fact they’re doing nothing (or worse, exacerbating the problem they’re claiming to address). All-too-frequently, this is because of the intersection of politics with policy (the two are distinct), with real solutions being sacrificed on the altar of political expediency. The truest policy tragedies of all occur when a problem that everyone recognizes—access to health care, crony capitalism, rampant violations of individual rights—go unsolved because political leaders simply find it just “too darn hard” to solve them.

The recent Farm Bill is a prime example. Everyone knows that the farm subsidy system is in dire need of reform. Yet rather than take on this subsidy system and engage in a thorough examination of what needs to be changed, Congress punted, just like it has in every farm bill for the last eight years. It was a classic “bait & switch,” in which some subsidies were publicly phased out, only to be replaced by other subsidies—fundamentally ignoring the problem!

The problem with punting a policy problem is that eventually reality intrudes, and someone steps into the gap to take action. In this case, the World Trade Organization. In the 1994 Uruguay Round of WTO negotiations, the WTO took the step of capping US subsidies—the WTO and not the US Congress! In subsequent years, because of complaints filed against US Cotton Producers in the WTO, America was forced to make policy changes, ensuring that our cotton farmers relied more on private sector crop insurance.

Is it possible that when it comes to ensuring some semblance of free-market sanity, that conservatives’ best hope is the World Trade organization?

This is certainly the case if policymakers in the US fail to act!

Even more interesting is that one positive side effect of US inaction (and WTO action) is that it allows for multiple problems to be addressed in one-fell-swoop. It allows us to address the issue of subsidies around the globe, not just those here at home. It should come as no surprise, for instance, the European subsidies are far greater (and therefore more egregious) than our own. The same holds true for China, while other nations (like Thailand and Brazil) are heavily ramping up the subsidization of industries within their own borders.

In fact, the Organization for Economic Cooperation and Development has found that such subsidies are starting to grow again, for the first time in years. That report can be found here!

Now, there are logical and rational plans out there—and amazingly (given the criticism that free-marketeers and limited-government activists have levied at them over time), the US sugar industry, has come up with one!

All sugar producers around the globe want something. Our sugar producers want an undistorted market. Foreign sugar producers want access to the US market. And the rational answer the US sugar industry is straightforward: end the kinds of sugar policies that were just renewed for 5 years in the Farm Bill in exchange for other nations ending their massive subsidies to their sugar producers.

The only venue for this would be the WTO—who can address the policies each nation has towards their sugar industries all at the same time. It can, more easily than in any other arena, broker an economic cease fire with regards to international subsidies—and it could serve as a model for other areas of agriculture as well.

It’s probably the best opportunity we have for curing misguided protectionist policies. It certainly prevents the kinds of bait & switch that we seem to be seeing far too often from the US Congress. It actually solves a problem, a problem that desperately needs to be solved.