"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."