January 23, 2013

"I Am Not Making This Up!"

Were it a Dave Barry column, no doubt this WSJ guest editorial would be so captioned. But as close as Burleigh C.W. Leonard can get is "You read that right."

When the farm bill (why do we have farm bills again?) expires, the rules reset to the New Deal's "permanent law." These are so awful as to present a fiscal cliff style food bomb.

Permanent law is embodied in the Agriculture Adjustment Act of 1938 and the Agricultural Act of 1949. It directs the federal government to provide financial help to farmers by artificially inflating the prices of the commodities they produce.

Price supports for eligible commodities are set according to a formula known as "parity," which is based on a price index from the period 1910-14. You read that right--permanent law's subsidies are calculated based on farming conditions a hundred years ago.

This formula does not take into account the technological advancements and productivity gains that have dramatically altered our agricultural system over time. Consequently, parity prices bear no resemblance to today's market prices.

Parity for corn is $12 per bushel versus an actual market price of $7.01; for wheat $18.30 versus $8.33; for rice $42.20 per hundred weight versus $14.80 and for milk $52 versus $21.10. The disparity between parity and market prices is even starker when one considers that current commodity prices are at historically high levels.


For all their faults, I think my bright but misguided Facebook Friends can understand this. I have most of them converted against ethanol subsidies. Here's the same deal and I suspect they'd say in their best Mr. Mackey voice: "That's bad, mmkay."

And yet -- how do you get them to make the leap to view whatever thing they're grinding for today: more education subsidies, free abortifacients, wind farms, &c. Mohair and ethanol subsidies are "bad," as are billion dollar checks to Ted Turner from the US Taxpayer. But their thing is good.

We're from the government, and here to help. Posted by John Kranz at January 23, 2013 12:24 PM

If I may explain, the disconnect is that your BBM Facebook Friends (TM) are evaluating, not the abstract principle "government subsidy" but the specific physical item being subsidized. If enough people can be convinced that an item is desirable, government may subsidize it with other people's money. The name we give to this manner of government is "democracy."

Posted by: johngalt at January 23, 2013 2:43 PM

I take this opportunity to ask Brother Keith to remind us of the early American story he recounted here once before, of a Senator on the stump encountering a constituent who lectured him on the immorality of aid to veterans' widows from the public treasury.

Posted by: johngalt at January 23, 2013 2:48 PM

You have probably tried asking BBMFF, "If oil company subsidies are bad, why?" And they probably answered, "Because they're rich." All the while, the concept of 'subsidy' goes unexamined.

Posted by: johngalt at January 23, 2013 2:52 PM

Correct, brother jg. Sadly, correct.

& I actually know this one: it was Davy Crockett and Horatio Bunce.

Posted by: jk at January 23, 2013 2:53 PM

Yes, the famous Horatio Bunce story. If I could send every legislator in both houses of Congress to the re-education camps and hammer just one lesson into them with aversion therapy, it would be this one - and when their subconscious memories of the electric shocks and the pliers prevent them from ever voting the wrong way on a similar bill again, the Republic and fiscal sanity will have been restored.

Posted by: Keith Arnold at January 23, 2013 3:05 PM

Amen. The other angel in American History was President Cleveland. The Republican Congress would send up bills to give $25 to a Civil War widow just to embarrass him. But he did it again and again. I am pretty sure he still holds the veto record. HOSS!

Posted by: jk at January 23, 2013 3:20 PM

Cleveland holds the two-term record at 584. FDR had 635, but had to go into overtime to get there.

Of course, Cleveland's were in defense of limited government, where Roosevelt's were about monkeying with the economy. There are good vetoes, and bad ones.

Posted by: Keith Arnold at January 23, 2013 6:52 PM | What do you think? [7]