Reply on Agricultural Subsidies-BECKER

Good discussion between the commenters, so I can be brief. Inertia plays an important role in politics, but I do not believe that inertia can explain the importance of subsidies to agriculture in rich countries. For one thing, the form of the subsidies has in fact greatly changed over time; in particular, acreage restrictions are less important than they used to be. As someone pointed out, countries like New Zealand have radically changes their approach to agricultural subsidies. So it is necessary to find more basic causes, and the size of the agricultural sector is an important one. Other small sectors also are often successful politically. I disagree with the assertions that subsidies are needed to keep prices of food and other farm goods down. In fact, the majority of the subsidies, such as acreage restrictions and export subsidies, raise prices to American consumers. The OECD study that I referred to concurs that the majority of the subsidies to agriculture in OECD countries increase, rather than lower, prices of farm goods to consumers. Is there an important externality to the rest of us from having more people and land employed in agriculture? If so, it is not obvious what it is, especially since these subsidies mainly go to the larger and the more prosperous farmers. That does not prove there is no favorable externality to urban dwellers from farming, but it cautions against accepting that argument easily. People employed in virtually every sector believe their contributions exceed what they receive in pay or other ways, and farmers are no exception.

Comments

[Arun Khanna]

I wonder if there will be a future trend of living in suburbia with a backyard having a large fallow agricultural field for earning subsidies to pay off one's mortgage.

[Zathras]

There is no more basic cause, of anything, than inertia. It even explains why academic economists insist on looking for more complex explanations of various phenomena.

With regard to the two additional points Becker raises here: first, changes in the form of farm subsidy programs look much more significant from the outside than they do from the standpoint of the farmers receiving program benefits or the Congressional staff (and lobbyists) that write most farm legislation. What counts is the income support provided by the relevant program; more or fewer restrictions on things like what crops can be planted on cropland entered in the program are incremental changes only. If situations develop in which such changes result in greatly decreased income support to farmers, the force of inertia is behind Congressional efforts to restore the status quo ante. This actually happened when bad weather and foreign currency crises disrupted farm commodity markets after the passage of the 1996 farm bill.

Secondly, New Zealand's farm sector and that of the United States are not comparable. New Zealand produces vastly more of nearly every agricultural commodity than its tiny population consumes, and the number of other goods and services in which this country can maintain a trade surplus is very limited. Accordingly New Zealand, while deregulating the production side of agriculture (along with much else) as part of the Douglas reforms of the 1980s maintained a substantial government presence via unified marketing boards that controlled (and still do) how farm commodities are exported. In short, New Zealand defeated inertia through the application of great force, something possible because of the vital and widely recognized importance of the farm and fisheries sector to that country's economy. I do not believe such a thing is impossible in the United States, but for the reasons I laid out in my earlier post on this subject it would be substantially more difficult.

[N.E.Hatfield]

As for the OECD reports, after a quick review of the literature, it may appear that the conclusions drawn, may be in error due to certain problems surrounding it's measurement methodology. Especially surrounding the international pricing and price support methods used.

Much like the use of subsidies to remove arable land from production. In the long run, this actually creates more production by "land banking". It's one of the old methods of agronomy known as crop rotation or leaving land in a fallow state for a number of years to allow it's productive capacity to return. When the land is returned to production the acerage yields are once again higher.

But once again this points out the problem of a non-consistent and non-coherent measurement methodology that is international in its outlook.

[Nelson]

It all comes down to political economics. Farmers make an investment in politicians via campaign contributions and politicians pay back farmers many times over with subsidies and favorable laws. Consumers pay for this, but only by a little bit per person. The advertisments, etc... bought with the campaign contributions often influence voters by more than the increased cost in food and/or taxes they pay to support this political corruption.

The problem comes down to all or nothing voting. One votes for people, not for laws. You may only vote for at most one person per seat. Even if this canidate goes against your wish to abolish farm subsidies, that is only a small percentage of the total platform of that canidate. Perhaps the consumer/taxpayer funded political ads have convinced you to support this canidate on other issues. Or perhaps these ads have convinced you not to vote for the opposing canidate. Or perhaps both canidates are taking advantage of the system and agree in their support for farm programs. At any rate, these programs continue due to low political costs and large political benefits

[Wyatt williams]

Or perhaps these ads have convinced you not to vote for the opposing canidate

[James]

I don't see how it follows that "New Zealand defeated inertia through the application of great force, something possible because of the vital and widely recognized importance of the farm and fisheries sector to that country's economy." You would have thought the opposite would apply - that the importance of the sector would have given it leverage to extract subsidies. In sweeping aside the inertia of the subsidies, the Douglas government was coming up against a formidable lobby. It perservered nonetheless and NZ has benefitted greatly. The producer boards survive as a bizarre exception, operating as some sort of exclusive club protecting existing producers and hampering those who prefer to strike their own deals, as with the Geo. H. Scales group a few years ago. They were a company who wanted to export apples privately. They were rebuffed by the producer board because it wasn't "in the interests" of the other producers (presumably undercutting them). When asked if it was going to abolish the boards, the government said it would only do so if the boards themselves recommended it. The turkeys have yet to vote for Christmas, as far as I'm aware.

[Joshua]

I disagree with the assertions that subsidies are needed to keep prices of food and other farm goods down. In fact, the majority of the subsidies, such as acreage restrictions and export subsidies

[Anonymous]

مركز تحميل

[Anonymous]

thanks for your post.perhaps you will like ed hardy

[Anonymous]

بنت الزلفي

[Anonymous]

العاب
___
ÿ¥ÿßÿ™

[Anonymous]

ÿßÿ®ÿ±ÿßÿ¨
___
دليل

[Anonymous]

ÿØÿ±ÿØÿ¥ÿ©
___
صور

[Anonymous]

ÿ¥ÿßÿ™ ŸÖÿµÿ±
--
دردشة مصرية

[Anonymous]

RK7GXI

[Anonymous]

Thank you, you always get to all new and used it
ÿ¥ÿßÿ™

دردشه

[Anonymous]

Great site. Keep doing.

[Anonymous]

Great site. Keep doing.

[Anonymous]

Great site. Keep doing.

[Anonymous]

I bookmarked this link. Thank you for good job!

[Anonymous]

Excellent site. It was pleasant to me.

[Anonymous]

If you have to do it, you might as well do it right.

[Anonymous]

Excellent site. It was pleasant to me.

[Anonymous]

دردشة برق

دردشة الخليج

[Anonymous]

Great site. Keep doing.