2007-11-13

American Twinkie Farms

From the Department of it-makes-sense-to-someone:
Americans have begun to ask why the farm bill is subsidizing high-fructose corn syrup and hydrogenated oils at a time when rates of diabetes and obesity among children are soaring, or why the farm bill is underwriting factory farming (with subsidized grain) when feedlot wastes are polluting the countryside and, all too often, the meat supply. For the first time, the public health community has raised its voice in support of overturning farm policies that subsidize precisely the wrong kind of calories (added fat and added sugar), helping to make Twinkies cheaper than carrots and Coca-Cola competitive with water. Also for the first time, the international development community has weighed in on the debate, arguing that subsidized American exports are hobbling cotton farmers in Nigeria and corn farmers in Mexico.
I would argue that lowering agricultural subsidies in order to improve overseas trade is one of the positive results of globalisation. Both Australia and New Zealand have reduced agricultural subsidies to zero and lead the world in market-based agribusiness. Not all forms of globalisation are useful - that I concede - but if Western nations removed their agricultural subsidies they would encourage the development of agriculture in third world nations. It would be far better, for example, for places like the Ivory Coast to grow rice or some other form of grain crop than it is for them to harvest coca beans for chocolate production. But, because of the way agricultural subsidies work, rich American farming corporations receive a form of government welfare to grow crops that would not be competitive in a real marketplace.

There are all sorts of benefits of removing agricultural subsidies. The first is a lowering of government spending which, in places like Europe, Japan and the US, would help to balance federal budgets more easily. The second is that farmers themselves get to choose what they want to plant and when, rather than having their work determined by government action. The third is, as I mentioned, the growth of grain crops in the third world (which would help feed their own nations while enriching their economies). The fourth is that farmers would be more easily able to adjust their crop according to climatic conditions. The fifth is that this form of government intervention is encouraging the wrong sort of crop being grown, leading to the example above whereby Twinkies cost less than carrots and Coke costs less than (bottled) water.

As many of you know, I consider myself a bit lefty in my economics. I'm more of a pragmatist. History has proved that food production is best left to the marketplace (although I concede that consumers often make unhealthy choices - consumption is certainly one area the government can modify). Both Europe and the US should look at the experience of Australian and New Zealand farmers, who are now the most entrepreneurial in the world and who survive and prosper because of their own business acumen, not because of government handouts.

Click here to view a summary of agricultural subsidies.

8 comments:

BLBeamer said...

History has proved that food production is best left to the marketplace (although I concede that consumers often make unhealthy choices - consumption is certainly one area the government can modify).

Neil, you have often berated American evangelicals for favoring laws and government actions that coerce non-believers to act like believers. I commend you for this. However, how is the attitude displayed in your quote above any different, really? Don't you both favor government as an appropriate vehicle to impose your views or ideology on those who would not otherwise wish to act in that fashion?

Laura said...

I'm SO conflicted about this whole farm-subsidy scenario, since I grew up in the grain belt and many of my oldest church acquaintances are recipients of farm subsidies that find their roots in the Great Depression. I recognize the need to do SOMETHING different -- the policies that worked to prevent another Dust Bowl and to restart the flatlining American economy in the 1930s don't necessarily work the best now. (Just like the school lunch program that was created in the 1940s to address the rampant problem of underweight school children -- irrelevant today, and contributing to, rather than helping mitigate, the problem of childhood obesity.)

Anyway, the problem is that we've created a system in which farmers are dependent on government subsidies and shackled by the regulations in place to prevent the kind of national tragedy we saw in the 20s and 30s. Agricultural science has seen some serious advancements since those years, but the system prevents innovation.

There are a few folks in my home church whose land is still subsidized by the government under the Agricultural Adjustment Act of 1933 -- they call it CRP (crop reduction program) Land. In other words, the government pays them the market price for all the wheat or corn or soybeans they didn't farm that year. Of course, that has to do with keeping prices up, as well...

One Salient Oversight said...

However, how is the attitude displayed in your quote above any different, really?

Not really. Look at Obesity. The imposition of a "fat tax" on unhealthy foods would dissuade people from consuming it. The same could be said for cigarettes. The idea is to look at the outcome and work out whether government intervention or "leaving it to the marketplace" has the best result.

I'm not talking here about banning Twinkies or KFC.

One Salient Oversight said...

Laura,

Farming is an emotional area. You have hard working folk dependent upon the whims of climate and the marketplace. It's the same the world over. Every time there's drought over here in Australia (which is often) we have charity collections from the city folk to help out our "country cousins" to survive.

When Australia got rid of most of its agricultural subsidies back in the 1980s the initial result was quite a number of family farms going bankrupt. For a while there people were screaming out for government money to help them.

What happened was that the new system (one without subsidies) encouraged the development of the "farmer entrepreneur" - farmers who had business acumen and who controlled medium-large size farms (rather than a small family farm). Since then Australia's farmers have seen the cutting off of subsidies as a great blessing since they have discovered that they can be more productive. One thing that farmers do in Australia these days is to have multiple crops and experience in farming them. So if a wheat farmer sees wheat prices plummet he can sell off his current crop at a loss and then prepare to farm something else more profitable (like Canola) once the wheat is harvested. In a subsidy system (like in America) he would be paid to grow the wheat (which would then be dumped on world markets) or paid not to grow anything.

One Salient Oversight said...

Beam,

Had a bit more of a think about what you were saying.

The government has two sorts of tools open to it in order to modify community behaviour. You have the carrot (reward for doing the right thing) and the stick (punishment for doing the wrong thing).

The things that evangelicals want the government to do are based upon Christian morality. Evangelicals want the government to use the stick to eliminate abortion and to discourage the spread of homosexuality (among others).

The difference between this attitude and mine is that, in this particular case, public health is the broad area, and a healthy lifestyle would be the result. This is not an area of definite morality in which people have divergent opinions. There are hardly major groupings in the US that support the development of obesity.

The problem that evangelicals have is that they are not looking at the whole picture. As an evangelical myself I wish abortion in all countries would be reduced to zero, but I do not see the banning of abortion by law as an effective means of doing this. Pro-choice does not mean pro-abortion. Most, if not all, pro-choicers would love to see a reduction in the amount of abortion because they recognise the importance of prevention. And this is where the government can step in and help.

Why is it that abortion in some European countries - where there is little or no hangup about it - is lower (per capita) than America? Many nations have sex education programs that have helped prevent abortions from taking place.

Homosexuality is, I believe, a result of both genetic and environmental influences (but is still sin, regardless). If governments helped to promote good family life and educate people to look after their children properly, then instances of homosexuality would probably drop.

There are more effective and more subtle ways of approaching a problem than to create divisive laws - or invade.

BLBeamer said...

Sorry, Neil, but I think your argument why your attitude is different displays a distinction without a difference.

The reason why you believe your views should be okay for the government to impose but the views of certain evangelicals are not okay is irrelevant. Both of you believe that certain desirable things can't be achieved through persuasion or example. In other words, you are offended that people are making the "wrong" choices.

Therefore, you want the government to force or coerce those people to act in a way that pleases you, or "fine" them if they refuse to conform to your view.

There are hardly major groupings in the US that support the development of obesity. What about the obese people themselves? They obviously like obesity or the process of becoming obese more than the alternative.

One Salient Oversight said...

Both of you believe that certain desirable things can't be achieved through persuasion or example. In other words, you are offended that people are making the "wrong" choices.

Therefore, you want the government to force or coerce those people to act in a way that pleases you, or "fine" them if they refuse to conform to your view.


I'll start by talking about Evangelicals.

There are a number of reasons why I find evangelical influence in worldly politics to be bad.

The most obvious one is that such activity is not Biblical. Ever since I read and understood 1 Corinthians 5 I came to the conclusion that believers should act to root sin out of the church, but not out of society generally. The idea of Christians using the politics of the world to enforce Christian morals is not a Biblically sanctioned idea. In fact, letting the world get on with their sin and being judged eventually by God seems to be one of the big applications of 1 Corinthians 5.

So it is the Bible, and the Bible alone, which determines my attitude towards Evangelicals who misuse politics.

But since the Bible does not contain any form of command for secular powers to follow, thinking in areas such as the amount of power governments should have and how much power individuals should have is something that God has let us work out for ourselves.

It is obvious in society that individuals and groups make wrong decisions. You have people who eat too much, people who take drugs and people who use the system for their own financial and materialistic advantage - to the detriment of others.

Part of the attraction of Third Way politics is that it tries to balance the needs and responsibilities of the individual with the needs and responsibilities of the community.

The Community - which is represented by government - can then enforce laws upon itself to limit its harmful actions.

As I have noted, the problem with free market capitalism is that it is so enthralled with individualism that everything ends up being thrown into the "personal responsibility" pile. The result, as typified by America's example, is hardly endearing.

By the problem with "Old Socialism" and Communism is the belief that the state and the state only can solve everything. I am just as opposed to this idea as I am to letting the free market determine everything. Why? Because just as there are market failures there are also statist failures.

The good thing about the Third Way is that it takes both to task. If one part of the economy is best left up to the market itself to run then it should be done that way. If the state does it better, let the state run it. If it is a combination of the two (public money used to produce services provided by a private business) then do it that way.

I like the pragmatism of the Third Way simply because it focuses upon results without having to jump through all the ideological hoops that go with being a Communist or a Free-Market advocate. For example, it took 15-20 years of economic stagnation under Leonid Brezhnev in order for ideologues in the Kremlin to become interested in Gorbachev's reforms in the mid 1980s.

Of course, underpinning the ideas and thinking of many American conservatives is the free-market ideology that espouses freedom but, in practice, has ended up creating a form of monetocracy in which money, rather than people, speaks the loudest.

So while places like Australia, France, New Zealand, Norway and Sweden all have health systems that seem to be one third cheaper than the US and yet have better outcomes, those in America see "socialised medicine" as being something inherently evil and disruptive to individual rights.

BLBeamer said...

So while places like Australia, France, New Zealand, Norway and Sweden all have health systems that seem to be one third cheaper than the US and yet have better outcomes, those in America see "socialised medicine" as being something inherently evil and disruptive to individual rights.

Your last point, at least here in the US, is laughable. The advocates of universal health care never fail to demean those with qualms as being "anti-sick", "inhumane", etc. I actually had a universal health care advocate tell me that he didn't care whether or not sick people would suffer under universal care as long as corporations were eliminated from the health care system. Is that not inherently evil? He then proceeded to tell me my view was inhumane.

The link between a nation's health care system and its population's health is not as direct as you imply. I don't believe you ever addressed that issue from my earlier post.

In addition, those are all small countries relative to the US, which has 300M people.

Did you purposely leave out Canada and the UK from your list?

The difficulties involved in comparing the costs of each of our systems are significant.

I believe most Americans are unhappy with some aspects of our system, but recognize that many of the problems are due to the fact we already have a mixed system with significant government involvement which has resulted in perverse incentives and unnecessary costs. Why would we want more of what seems to be causing so many problems?

Yet people like Krugman invariably refuse to address that issue.