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Farm Subsidies

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Published: Tue, 25 Oct 2016 00:00:00 -0400

Last Build Date: Tue, 25 Oct 2016 01:38:20 -0400


EpiPens and Government Cheese

Tue, 04 Oct 2016 06:00:00 -0400

At the end of August, the U.S. Department of Agriculture bought 11 million pounds of cheese—that's a cheese cube for every man, woman, and child in America—in order to bail out the nation's feckless cheesemongers. Secretary of Agriculture Tom Vilsack touted the aid package, worth $20 million, as a win-win: "This commodity purchase is part of a robust, comprehensive safety net that will help reduce a cheese surplus that is at a 30-year high while, at the same time, moving a high-protein food to the tables of those most in need." (Most of the federal government's new stockpile will go to food banks.) This bailout of Big Cheese came on top of an $11.2 million infusion earlier in the month to dairy farmers enrolled in a 2014 federal financial aid scheme. The deal comes after months of lobbying by the National Farmers Union, the American Farm Bureau, and the National Milk Producers Federation, who were too antsy to wait for their next big cash cow to come ambling in with the farm bill. The same week, Sen. Chuck Grassley (R–Iowa) wrote a letter to the pharmaceutical company Mylan, demanding an explanation for why EpiPens, the epinephrine auto-injectors that severely allergic people carry in case of an emergency, have quadrupled in price since 2007. Grassley cited constituents paying $500 to fill their prescriptions. Hillary Clinton issued a statement about the price increases as well: "Since there is no apparent justification in this case, I am calling on Mylan to immediately reduce the price of EpiPens." Donald Trump used the occasion to score points, tweeting out a story about hundreds of thousands of dollars in donations to the Clinton Foundation from the disgraced company. Sen. Amy Klobuchar (D–Minn.) echoed Clinton's sentiment in a letter to the Federal Trade Commission: Lamenting that "antitrust laws do not prohibit price gouging," she asked the regulatory body to look into whether Mylan has used "unreasonable restraints of trade" to keep prices high. The summer's cheese bailout and EpiPen price scandal are ideological Rorschach blots.Where one observer sees only the evils of the profit motive, another looks at the same fact pattern and sees the perils of an overweening regulatory state. Vox sided solidly with the profit shamers, declaring: "We are the only developed nation that lets drugmakers set their own prices, maximizing profits the same way sellers of chairs, mugs, shoes, or any other manufactured goods would." But pseudonymous blogger Scott Alexander of Slate Star Codex responded with a tidy reverse Voxsplanation: The cronyist Food and Drug Administration (FDA) and other government forces have squelched nearly every effort to compete with Mylan's EpiPens, distorting the market beyond recognition via a process he chronicles in painful detail. Mylan acquired the EpiPen from Merck in 2007, by which time the product was already 25 years old, which means the question of paying back research costs was moot. In 2009, Teva Pharmaceuticals tried to enter the market—and Mylan sued. Teva managed to get its product to the FDA anyway, only to be told that it had "certain major deficiencies," unspecified. In 2010, Sandoz Inc. tried its luck and got bogged down in the courts, where the case still dwells. In 2011, the French drug company Sanofi made a bid to gain approval for a generic, which was delayed for years because the FDA didn't like the proposed brand name. Which brings us to this year, when Adamis decided to sell plain old pre-filled epinephrine syringes directly to patients without the fancy injector. Cue an FDA recall, on the rather vague basis that insufficient study had been done on standard administration of a drug whose medical properties have been known since the turn of the last century. And sometimes the tangled, dysfunctional relationship between big business and big government gets even more personal. The CEO of Mylan, Heather Bresch, is the daughter of U.S. Sen. Joe Manchin (D–W. Va.), which probably makes things awkward in the Senate cafeteria. But Manchin has joined his colleagues in saying th[...]

Can You Have Your Subsidized Peanut Butter Cake and Eat It, Too?

Fri, 29 Jul 2016 00:01:00 -0400

The federal government is packed full of crony programs, such as the Export-Import Bank and the ethanol mandate. When it comes to the unhealthy marriage between government and the private sector, however, the U.S. Department of Agriculture may take the cake. With the exception of food stamps, which should have nothing to do with the farm bill, every program in the agency is meant to subsidize or boost the profits of farmers. We have such programs as the Dairy Margin Protection Program and the Dairy Market Stabilization Program. The former effectively guarantees profits for dairy farmers, and the latter is a complicated program meant to drive up milk prices to benefit small-scale dairy farmers. Then there are sugar tariffs, which are meant to artificially boost the profits of a few companies by keeping the price of sugar high in the United States at the expense of consumers and taxpayers. In the same vein, we also have the peanut programs. The USDA recently announced that U.S. peanut farmers will produce 6.1 billion pounds this fall, on top of 2.9 billion pounds in leftover stockpiles. Total peanut demand isn't that high, and we will start the next year with a 3.2 billion-pound stockpile. And unless you like your peanut butter and jelly sandwich with a side of government subsidies, you should care. An excessive supply of peanuts depresses the price of peanuts. Unfortunately for us, Uncle Sam won't let the market work its magic to eliminate excess supply. Instead, it subsidizes the farmers whose income might have otherwise suffered from the reduction in price by paying them most of the difference between a reference price of $535 per ton and the market price. Obviously, the lower the price the higher the payout. That's a terrible incentive structure, if you ask me. In addition, the government takes on the extra peanuts and stockpiles them at a cost. Finally, the loans that peanut farmers may have taken based on the value of their crops, which they may not be able to repay, are guaranteed by your hard-earned tax dollars. Let me sum this up for you: First, the government gives an incentive to peanut farmers to take on loans that they wouldn't have to pay back if the price of peanuts were to fall under an arbitrary price set by politicians and bureaucrats in Washington. The result of this mad-scientist peanut plan is something like this: Overproduce peanuts and depress peanut prices; don't pay your loans; and collect taxpayers' money. According to the Congressional Budget Office, this year's overflow of peanuts will cost about $2 billion in subsidy payments to farmers by 2018. But misery, as we know, loves company. In a May article for The Wall Street Journal, James Bovard documents how the U.S. government uses its stockpiles of peanuts to decimate peanut farmers' earnings in poor countries by dumping free peanuts under the cover of foreign aid. In particular, he writes about the devastating impact of a plan by the Obama administration to unload a million pounds of its excess peanuts in Haiti through its food donation program. The country has its own peanut farmers—about 150,000—and they provide the foundation for the livelihood of about a half-million Haitians. Image what happens to these people when the U.S. government floods the market with free peanuts. Who will buy relatively expensive peanuts if they can buy subsidized American ones? This has been going on for so long that farmers have long known not to even bother bringing their crops to market when the American government is feeling "generous." But the USDA's bureaucrats don't want to hear it. They claim that American "peanuts won't hurt Haitian farmers because they will be packaged in one-ounce bags that 'are to be consumed at school only,'" Bovard reports. Never mind that after the massive 2010 earthquake in Haiti, the then-president of Haiti begged the United States to "stop sending food aid" so that Haiti's economy could "recover and create jobs." Make no mistake; all of the wasted money and the devastation created in Haiti only ser[...]

Food Policy and the 2016 Presidential Election

Sat, 28 May 2016 06:00:00 -0400

With the Libertarian Party picking its nominee this weekend, and with Democrats and Republicans having all but chosen their respective nominees already, it's as good a time as any to chew on some of the key food-policy issues candidates should be discussing as we inch toward the general election in November. In that spirit, here are nine key issues I'd like to see the presidential candidates discuss this year. 1) Ending farm subsidies and other protection/promotion of food crops. Farm subsidies waste billions of taxpayer dollars every year; promote growing a handful of crops (like corn and soy) that are more likely to become sweeteners, ethanol, or animal feed than they are to become food for people; and likely play a role in America's high rates of obesity. Sugar tariffs, USDA marketing programs (for dairy, nuts, fruits, and vegetables), and U.S. Department of Agriculture (USDA) checkoff programs (for dairy, beef, pork, and other foods) waste billions more dollars to promote and protect wealthy incumbents that deserve neither support nor protection. 2) Embracing GMO neutrality. The government should neither disparage nor favor farmers who raise GMO (genetically modified) crops. Mandatory labeling and bans would do the former, while subsidies and other laws, including the lapsed Farmer Assurance Provision (dubbed the "Monsanto Protection Act" by its detractors), have unfairly promoted GMO crops and protected GMO farmers. Farmers and consumers—not government—should be the only ones choosing whether they prefer GMO crops, organic crops, conventional crops, or some combination thereof. 3) Ending federal support for state unpasteurized (raw) milk bans. The Food and Drug Administration's (FDA) ban of interstate raw milk sales only came about in 1987 in the wake of a federal court ruling that forced the agency's hand. Whether you believe that court ruling makes sense, the federal government should not encourage states to ban raw milk sales (as the agency does today). 4) Reining in the FDA. The FDA's crackdowns on salt, sugar, caffeine and trans fats; its overreaching food-safety schemes that have targeted farmers markets, organic farmers, beer brewers, startup food entrepreneurs, and artisanal cheesemakers alike; and its misbegotten food-labeling rules have made the FDA under President Barack Obama the most activist in history. The FDA has a role to play in ensuring the safety of our food supply. Reining in an unfocused and misadventurous FDA can help the agency to refocus on its core mission. 5) Ending the federal ban on sales of locally slaughtered meat. In 1967, Congress delegated to the USDA a power it did not have: to require that all meat sold commercially in this country—even meat that is (or could be, were it not for the law) raised, slaughtered, processed, and sold in just one state—be slaughtered and processed at a USDA-inspected facility or equivalent state facility. The result? Massive industry consolidation, a depressed supply of locally raised beef (at a time of rising demand), costly food recalls, and dangerous lapses in food-safety oversight. 6) Ending federal policies that promote food waste. Food waste is a costly and largely preventable problem that is often the unintended consequence of bad lawmaking. For example, the USDA's behemoth National School Lunch Program hemorrhages money, has seen participation plummet, fails to feed schoolkids adequately, and promotes more than $1 billion of food waste each year. Let's end the National School Lunch Program. In its place, encourage states to combat food waste locally by having families who can afford to do so pack brown-bag meals for kids (which reduces food waste at home and at school), and encourage businesses to prepare and donate food to kids whose families cannot afford to pack a brown-bag lunch (which reduces commercial food waste and school food waste). Abolish, too, other federal policies and programs that promote food waste (i.e., those that needlessly force fishermen to discard their catch, o[...]

Cabbage 'Spills,' Hog-Hunting, and Farm Aid Vetoes: Three Food Policy Stories from the States

Sat, 21 May 2016 08:00:00 -0400

I often write about pressing national food-policy issues like farm subsidies, the FDA's war on added ingredients, and dietary guidelines; key state stories pertaining to food freedom, cottage food laws, and GMO labeling; and local stories like food truck regulations, soda taxes, and restrictions on gardening. But plenty of interesting stories fly far enough under the radar that I never get a chance to comment on them. That's why I decided this week to focus on a handful of quirky state food-law stories. Let's start in Hawaii, where, reports West Hawaii Today, the state's Supreme Court just ruled in a case that centered on whether it was proper to fine a farmer for failing to retrieve a handful of cabbage leaves that flew out the back of his truck. The case began in 2013, when a police officer saw several cabbage leaves fall from a truck owned by farmer Max Bowman. The ticket meant a $250 fine for Bowman. "Vehicles carrying agricultural produce from fields during harvesting shall be exempt from the requirements of this section[,] but the owner of the vehicle must provide for the reasonable removal of all such produce spilled or dropped on the highway," reads the Hawaii statute at issue in the case. Ultimately, the case hinged on whether Bowman's refusal to risk his life to pick up a few cabbage leaves was "reasonable." "I feel risk of life and limb, running onto the road, grabbing three or four leaves of cabbage as opposed to letting it decompose naturally does not sound reasonable to me," Bowman had testified before a lower court. That court—and an appellate court—ruled against Bowman, who represented himself in court. But the state's highest court overturned those decisions, ruling "that it was unreasonable for Bowman to risk 'life and limb' on a busy highway in order to pick up cabbage trimmings, especially if the trimmings posed no threat to the safety of other motorists and would naturally decompose on their own." Moving on to the issue of wild hogs, we travel to Oklahoma, where a bill would allow a resident to use a spotlight at night to hunt wild pigs without a hunting license. Critics fear the bill would promote poaching of other species. But proponents suggest expanded hunting opportunities will help rein in the state's wild hogs, a huge problem in parts of the American interior. Much of the problem with the pervasion of wild hogs—Oklahoma estimates there are at least 1.6 million in the state—centers on their ravenous destruction and consumption of crops that were intended to be eaten by people. If wild hogs are eating our food, why not hunt and eat them? In fact, eating invasive species is a popular strategy for limiting or eliminating their numbers. "We can eat the shit out of [invasive species] because they eat everything in their path and it's a real problem," says chef, author, and television host Ben Sargent, whose alter ego I profiled in a Reason piece in 2011, in comments that appear in my forthcoming book, Biting the Hands that Feed Us. Sargent singled out snakehead fish, an invasive species in the mid-Atlantic states, and one I've eaten and enjoyed thoroughly, noting that it tastes fantastic. He told me we should "fish the crap out of" the snakehead. While I agree with Sargent, that solution could pose its own challenges. Josh Galperin from Yale Law School has pointed out to me (and, more broadly, in a variety of lectures and publications) that promoting the eating of invasive species can, at least theoretically, have the unintended consequence of creating a self-perpetuating market for those species. That, in turn, can create commercial interest in propagating the species—which runs counter to efforts to eradicate the species via consumption. He's right. But it's illegal to sell hunted wild game, including wild hogs, in Oklahoma or elsewhere. So the prospect of a market encourage wild hogs to further multiply seems unlikely. One solution to the issues raised by Galperin and the prohibition on sales would be to p[...]

Runaway Farm Subsidies and Diet Guideline Fights: Federal Food Policy Is a Mess

Sat, 16 Apr 2016 08:00:00 -0400

Recently, a pair of controversial federal food issues has made the news. The unpredicted increase in USDA farm subsidies and continuing fallout from the new dietary guidelines have captured headlines. They're worth focusing on together, as they represent some varied and truly awful federal food law and policy. Earlier this week, House Agriculture Committee Chairman Michael Conaway (R-Tx.) blasted critics of farm subsidies, claiming we live in a "fantasyland" where such subsidies aren't needed. Conaway's remarks come as news broke this week that Congress has woefully underestimated the cost of farm subsidies. The latest figures show taxpayers are on the hook for $13.9 billion this year, according to reports. A separate estimate shows congressional predictions fell more than a billion dollars short of actual predicted payment figures. When the most recent Farm Bill passed, Sen. Debbie Stabenow (D-Mich.), then-chair of the Senate Agriculture Committee, touted the law as "an opportunity to cut spending." What's happened since? Spending has only risen. Last year, the nonprofit Environmental Working Group predicted subsidies could reach $30 billion by 2018. I'm no economist, but doesn't encouraging farmers to plant as much corn and soy as they can help depress prices, which in turn triggers the very conditions (depressed priced, supply gluts) under which taxpayers are then put on the hook to pay for crop insurance subsidies? It's facts and factors like these that make Rep. Conaway's "fantasyland" comments appear beyond the pale. If we are indeed living in such a fantasyland, then it's a fantasyland designed by Rep. Conaway, Sen. Stabenow, and their fellow lawmakers in Congress. There's nothing inherently wrong with crop insurance. But taxpayers shouldn't have to pay to insure farmers against risk any more than they should be on the hook for subsidizing NASCAR drivers' auto insurance. "If crop insurance is an important element of farming," I wrote in 2012, "then let farmers buy such insurance on the open market—without taxpayer support—and, if need be, pass the costs on to consumers." While farm subsidies stink, consumers and taxpayers are treated no better by the federal government's malleable and controversial dietary guidelines. I interviewed journalist Nina Teicholz, a thoughtful and leading critic of the guidelines, last year. Teicholz, author of the bestseller The Big Fat Surprise: Why Butter, Meat and Cheese Belong in a Healthy Diet, was invited to speak at a national food policy conference in Washington earlier this month. That was, until the conference's sponsor, the Consumer Federation of America, disinvited her. Asked to comment on its snub of Teicholz, a CFA spokesman told Politico curtly that "it didn't work out." Teicholz, who would have been the lone dissenting voice on the panel over the issue of saturated fat, was forced to book space at the National Press Club to deliver the talk she would have given at the CFA event. While the CFA is a private group and should be free to invite or disinvite whomever it wants for its panels, Teicholz told Politico she was disinvited after other panelists said they wouldn't sit on the panel with her. Those other panelists included a USDA official and a member of the congressionally mandated Dietary Guidelines Advisory Committee. It's one thing for the CFA to stifle dissent. It's quite another for it to apparently do so at the behest of those in government who help set federal nutrition policy. "To my mind, this is an effort to exclude uncomfortable realities, where you simply don't allow alternative viewpoints to be part of the conversation," Teicholz said. Needlessly using taxpayer money to pay farmers. Attacking critics of the policy as living in some sort of "fantasyland." Helping to stifle dissenting voices in the debate over federal dietary policy. This is federal food policy at work.[...]

Matt Welch: ‘Every single GOP strategist under the age of 40’ Might Be Unacceptably Libertarian

Thu, 19 Mar 2015 10:07:00 -0400

Last night I appeared on MSNBC's All In With Chris Hayes to talk about Scott Walker hastily firing online campaign consultant Liz Mair (a past Reason contributor) over some mildly intemperate prior comments Mair had made about Iowa (and after a heavy-breathing article about Mair's allegedly untenable views in favor of gay marriage, abortion, and legal immigration). Watch the whole segment below:

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Who Can Save Us From the Farm Bill's False Savings?

Sat, 06 Dec 2014 08:00:00 -0500

When the U.S. Senate voted in favor of passage of the 2014 Farm Bill in February, the buzz on Capitol Hill was that the bill would "save" taxpayers lots of money. A giddy press release put out by the Senate Agriculture Committee, hailing the passage of the Farm Bill as it awaited Pres. Barack Obama's rubber stamp signature, used some version of the word "save" at least eight times. The Farm Bill "[s]aves $23 Billion.... save taxpayer money... finding savings... save taxpayers billions.... saves taxpayer dollars...." and so on. Many of the savings claims in the press release are attributed to the Ag Committee chairwoman, Sen. Debbie Stabenow (D-Mich.), who authored the bill. Stabenow issued a slew of her own press releases touting the bill's cost-saving ability. The bill will "reduce the deficit," boasted one. And she touted the bill's savings in comments to the media. "Specifically," read a New York Times report on passage of the Farm Bill, "Ms. Stabenow pointed out that the bill eliminates a much-criticized $5 billion-a-year crop subsidy to farmers who received the payments whether they grew crops or not." She also put this shift front and center in her press releases. "Eliminates unnecessary direct payment subsidies, a significant reform in American agriculture policy," her office wrote in a prominent bullet point on the Farm Bill. "Direct payments are paid out every year whether or not there is a need for support." Stabenow is right that direct subsidies are an enormous waste of money. But instead of simply eliminating such subsidies, critics like me suggested Stabenow and her bipartisan, bicameral colleagues in Congress were simply replacing them with another form of subsidies—taxpayer supported crop insurance—which could end up costing taxpayers even more money. Still, Congress estimated the switch could save up to $14 billion per year. How's that working out? Not so well. In fact, crop insurance subsidies in the Farm Bill could cost billions more than predicted. "U.S. farmers are about to reap a bumper harvest not just in corn and soybeans but also in new subsidies that could soar to $10 billion, blowing a hole in the government’s promise that its new five-year farm bill would save taxpayers money," reported Reuters last month. The news agency notes that would be "more than 10 times the U.S. Department of Agriculture's working estimate" of crop insurance payouts. Not surprisingly, advocates I spoke with by email this week are outraged. "While it's not surprising that the Farm Bill is outstripping cost estimates before its first year is over, it certainly is appalling," says Andrew Moylan, executive director of the R Street Institute. "When Washington fails to honestly account for how much the federal government spends on food and farm programs, it gets in the way of much-needed reform," says Christine Harbin Hanson, national issue campaign manager with Americans for Prosperity. "These latest reports serve as a reminder of why it's so important not to accept promises of spending reform at face value," says Coalition to Reduce Spending president Jonathan Bydlak. "The next time Congress wants to spend nearly a trillion dollars and promise reform, elected officials and voters alike ought to remember this case." "Conservatives warned lawmakers that Farm Bill apologists were pulling a bait and switch by swapping the discredited direct payments program for even more costly open-ended 'shallow loss' subsidy schemes," says Joshua Sewell, senior policy analyst with Taxpayers for Common Sense. "We’ve been proven correct." As if all this bad news weren't enough, news of the Farm Bill's massive waste coincides with the release of a damning new GAO report on crop insurance and climate change. The National Sustainable Agriculture Coalition characterizes the report as demonstrating the Farm Bill "may actually encourage shortsighted farming practi[...]

Foodie Elite Push Obama to Create National Food Policy

Tue, 11 Nov 2014 12:35:00 -0500

A group of prominent foodie intellectuals are calling for President Obama to cement "his legacy" by implementing a national food policy. In a recent Washington Post op-ed, author and Berkeley professor Michael Pollan, New York Times food columnist Mark Bittman, Union of Concerned Scientists researcher Ricardo Salvador, and Catholic University human rights professor Olivier De Schutter laid out their plan for driving American agriculture, food production, and eating habits in the right direction via increased federal micromanagement of the food economy. The national food policy Pollan et al. dream of wouldn't simply guide federal nutrition recommendations, public health campaigns, or farm subsidies. It would include everything from environmental policy to rules on food marketing to raising fast-food workers' wages. "When hundreds of thousands of annual deaths are preventable—as the deaths from the chronic diseases linked to the modern American way of eating surely are—preventing those needless deaths is a national priority," they write. A national food policy would do that, by investing resources to guarantee that: All Americans have access to healthful food; Farm policies are designed to support our public health and environmental objectives; Our food supply is free of toxic bacteria, chemicals and drugs; Production and marketing of our food are done transparently; The food industry pays a fair wage to those it employs; Food marketing sets children up for healthful lives by instilling in them a habit of eating real food; Animals are treated with compassion and attention to their well-being; The food system’s carbon footprint is reduced, and the amount of carbon sequestered on farmland is increased; The food system is sufficiently resilient to withstand the effects of climate change. Only those with a vested interest in the status quo would argue against creating public policies with these goals. That last little flourish is fun, because it positions anyone opposed to massive federal intervention in the "food system as a whole" as at worst cartoonishly evil—you're either with us or you want Americans to live on Cheetos and three-eyed fish!—and at best suspiciously interested in perpetuating the status quo. There is no rhetorical room here to care about advancing nutrition science, fixing federal farm policy, expanding access to healthy foods, promoting humane treatment of livestock, or anything related to agriculture and eating without endorsing intense government action as the best way to accomplish these goals.  The good news, they tell us, is that "solutions are within reach"—and it's here that this piece really start to get amazing. The authors acknowledge that many of the problems with America's food economy are not market failures at all but "largely a result of government policies." So the solution surely must be to get goverment meddling out of food and farm policy as much as possible, no? Ha! "We know that the government has the power to reshape the food system because it has already done so at least once—when President Richard Nixon rejiggered farm policy to boost production of corn and soy to drive down food prices," they write. And because government can, it should, apparently. The authors are somehow able to see the corrosive effect of previous government overreach on our food system, but they feel confident that this time! they'll get it right. "As Obama begins the last two years of his administration facing an obstructionist Republican Congress, this is an area where he can act on his own—and his legacy may depend on him doing so," they suggest, urging Obama to "announce an executive order establishing a national policy for food, health and well-being."  The idea that cooking, eating, and enjoying nutritious foods is elitist is a silly and destructive one, and I[...]

Farmers’ Markets and Organic Farms: More Special Interests Get Millions in Government Handouts

Mon, 13 Oct 2014 12:00:00 -0400

Virginia Gov. Terry McAuliffe stood with two agriculture secretaries under overcast skies at the State Fair a few days ago to proudly announce exciting new ways they planned to give other people’s money to special interests. That’s not quite how they put it themselves. McAuliffe, U.S. Agriculture Secretary Tom Vilsack and Virginia Secretary of Agriculture and Forestry Todd Haymore were announcing $1.2 million in grants to support local and organic food and farmers’ markets. The grants are just part of a $52 million nationwide effort about which you should be absolutely thrilled—if you belong to the special interests getting the money or to the administrations doling it out. On the off-chance you are not among those happy bands, though, you might find reasons for skepticism. You could start with the officials’ statements, which consist of pablum that is, simultaneously, soporific and sinister. “The awards announced today,” McAuliffe said, would “help to achieve my goal of building a new Virginia economy through supporting local farmers and entrepreneurs. . . . These programs are smart, targeted investments needed to position our economy for new opportunities” yadda yadda yadda. Whoa. Where is it written that a governor’s job is to build a new economy? Who this side of Chairman Mao believes it’s a good idea to let politicians decide how economic resources should be allocated? And even if you do believe that, what makes McAuliffe—whose business ventures GreenTech Automotive and Franklin Pellets have not exactly caught fire—think he is remotely qualified for such a task? Furthermore, are these programs (e.g., the Farmers Market Promotion Program) truly “smart”—or, for that matter, “needed”? Well, Vilsack says “consumers are increasingly demanding more local and organic options.” They are? If so, then surely farmers can meet those demands without help from Uncle Sam. And indeed, farmers are doing just that: “The local food movement has been one of the fastest growing segments of” agriculture, reports The New York Times: “Farmers’ markets are proliferating around the country, increasing 76 percent . . . since 2008.” So why do we need a federal program to promote farmers’ markets? We don’t. But such programs were included in the farm bill, which was—like every other farm bill before it—a grotesquerie of handouts, subsidies, and special favors. The most recent iteration made some marginal improvements, such as doing away with certain price-support programs. But it replaced them with heavily subsidized crop insurance, about whose follies a great deal already has been written. And naturally, the farm bill included lots of money for entities such as (not making this up) the National Sheep Industry Improvement Center. And the National Clean Plant Network, which encourages farmers not to grow diseased crops (as if they would do so otherwise). And the Commodity Wood Energy Program, which encourages the burning of wood for heat at “schools, town halls, libraries and other public buildings.” Nothing says “homey” like a fire at the local library! Now we have programs to support organic farms and farmers’ markets. These include not only the programs mentioned above but also the Organic Research and Extension Initiative, which will spend millions this year on grants to help organic-food producers do what they would do anyway: grow and market organic food. Thanks to the extension initiative, though, they can do some of it on somebody else’s dime. Defenders of those programs will point out, correctly, that small farms face fierce competition from corporate agribusiness. For this we can thank ... the federal government’s farm policy, which for decades has conferred special advantages on large factory-farming operations, rendered small farmers ineligible for[...]

‘The Kronies’ Expand Their Winning Ways into Health Care ‘Reform’

Mon, 08 Sep 2014 15:20:00 -0400

I thought most cartoons wait a few episodes or a season before adding new main characters. But "The Kronies," those lovable crony capitalists who work hard to make sure all the right people reap the fiscal benefits of the relationship between government and industry, know they need to have the best connections anywhere the feds stick their thumbs. So in that spirit, they’ve just introduced "General Surgeon," who follows the comic book tradition of possibly being more powerful than the already established heroes, thanks to his ties to so many different connected health-related industries at once. Watch the introduction of the team’s "medic" below:

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Not to be outdone, Kaptain Korn, representing the massive agriculture industry kindly small farmers, invades the Saturday morning commercial sector with his own brand of super-sweet, absurdly-colored cereal only a kid could love, with a price tag jacked up to here thanks to farm bill subsidies and regulations that favor American agribusiness:

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Confused at what the heck these guys are and where they came from? Read more about "The Kronies" here at Reason or here on their own site.

One Pizza, With Extra Federal Handouts

Tue, 18 Mar 2014 07:00:00 -0400

The debt ceiling debacle may have come to an end for now, but wasteful federal spending is still a center-of-the-table issue, perhaps not unlike an extra-large pizza covered in government pork. Take pepperoni, for example. Imagine that you’re producing pigs, parts of whom are destined to be on top of pizzas nationwide. Of course, most businesses operate under established economic laws. They produce enough to supply what demand there may be, and if they want to try to increase demand, they drum up business through the normal routes, like advertising. If they produce more than what the market demands, they shrink to better accommodate the circumstance. Not so, though, if you happen to be in the business of producing pigs. In that case, the basic principles of a free economic system need not apply. In fact, the federal government spends millions to bail out its friends in pork production—an industry notoriously resistant to even basic standards of ethical business conduct—divorcing pig production from actual demand. For example, when the industry took a hit from the all the swine flu media attention, TIME reported on the $30 million federal buy-up of surplus pork, noting, “If you're in prison, now might be a good time to develop a taste for pork.” Reason readers are likely already familiar with the perverse federal subsidy system that doles out billions to major agribusiness nationwide. When ag subsidies began, in the 1930s, then-Secretary of agriculture Henry Wallace called them “a temporary solution to deal with an emergency.” That temporary solution has now lasted nearly a century, in both good and bad times for farmers, and even today when farm household incomes greatly exceed our national average. But less well-known are the federal efforts to directly aid pork producers. The swine flu surplus buy-up was unfortunately not an isolated incident. In fact, when the country started experiencing drought, USDA stepped in to buy an additional $100 million of unwanted pork. Were public school kids, service-members, prisoners, and other recipients of federally purchased food demanding more pig on their pizzas? No. Agriculture Secretary Tom Vilsack was clear about the motivation: “President Obama and I will continue to take swift action to get help to America's farmers and ranchers.” No doubt many other industries wouldn’t mind the administration paying them for products they’re having a tough time selling. And it’s not just the pepperoni on the pizza getting a helping hand from Uncle Sam. The dairy producers supplying that bed of cheese for our pizzas benefit tremendously from federally supervised programs that spend millions of dollars to “get people to eat more pizza.” That’s right. As the first lady encourages us to eat healthier and get active, the administration is at the same time signing off on a dairy checkoff program that spends millions urging Americans to pick up another slice of Three Cheese Stuffed Crust Pizza Extreme. Do national pizza chains really need federal freebies? After all, as author David Simon points out in his new book Meatonomics, the dairy industry spends more on advertising in one week than the blueberry, mango, watermelon, and mushroom industries spend together in a year. Ironically, despite their reliance on big government handouts, pork and dairy producers desperately fight any proposed rules governing their conduct, whether they relate to animal welfare, environmental protections, food safety or other issues that affect our society. The meat and dairy industries may like to proclaim a libertarian mantra when it comes to regulation, but when they suffer from lack of demand, their clamor for socialism is stark. The industries consistently come to Congress with outstretched arms and cupped palms,[...]

25 years ago in Reason

Fri, 28 Feb 2014 07:00:00 -0500

"The only beneficiaries of any farm subsidy are domestic farmers. Home consumers lose. Foreign consumers lose. Foreign producers lose. Taxpayers everywhere lose. The environment loses. Debt-ridden Third World countries lose. Pleasing farms-and satisfying a vague need for 'food self-sufficiency'-is the only reason for agricultural subsidies."

-Marty Zupan, "The Farm Barrier"

"Now that Congress has decided that fiber optics, integrated circuits, and supercomputers have the same status as military bases, dams, and post offices, there is no going back. We cannot depend upon the universities themselves to reject pork-barrel funds. No matter how strongly a university president believes in peer review and the allocation of research money on merit alone, he can't afford to turn it down while other universities line up at the federal trough."

-Joseph P. Martino, "Pork Invades the Lab"

"It is far easier to get people to change their minds about ideas than it is to get them to vote for a third party embodying those ideas."

-Eric Garris, "Libertarians Belong in the GOP"

-March 1989

Big Banks, Food Stamps, and the Trouble With Vouchers

Tue, 18 Feb 2014 11:36:00 -0500

The American Prospect has posted a story headlined "How Big Banks Are Cashing In On Food Stamps." Here's an excerpt: Banks reap hefty profits helping governments make payments to individuals, business that only got better when agencies switch from making payments on paper—checks and vouchers—to electronic benefits transfer (EBT) cards. EBT cards look and work like debit cards, and by 2002, had entirely replaced the stamp booklets that gave the food stamp program its name. SNAP is the most well-known program delivered via EBT, but they also carry payments for Temporary Aid to Needy Families (TANF); Women, Infants and Children (WIC); childcare subsidies; state general assistance; and many other programs.... Distributing government benefits is a lucrative industry. According to the Government Accountability Institute, J.P. Morgan Chase, which currently controls EBT contracts in 21 states, Guam, and the Virgin Islands, made more than half a billion dollars between 2004 and 2012 providing government benefits to U.S. citizens. In New York alone, J.P. Morgan Electronic Financial Services (EFS) holds a nine-year, $177 million EBT services contract with the State Office of Temporary and Disability Services (OTDA). New York currently pays $0.95 per month for each its 1.7 million SNAP cases. In addition, J.P. Morgan EFS collects penalties and fees from benefit recipients: $5 to replace a lost EBT card, $0.40 for each balance inquiry, $0.50 each time their cards are declined for insufficient funds, and $1.50 per withdrawal if they use ATMs to get cash more than once a month. While information about profit margins on EBT contracts is neither collected at the national level nor released by banks, EBT is a significant growth area for big banks. Last year, the Federal Reserve Payments Study reported that the number of EBT transactions more than doubled since 2006. You can read the rest here. J.P. Morgan Chase's role in these programs has been covered before, but the Prospect piece moves the story forward with details about the new farm bill, which may have lowered benefits to the low-income Americans spending those subsidies but could end up actually sending more money to the banks, since the law's provisions for anti-fraud enforcement will mean there's more government contracts to be won. Food stamps, of course, are a voucher program, and free-market types have a history of proposing vouchers as an alternative to the direct state or federal provision of services. There are obviously good reasons to expect the market to do a better job of providing food (or education, or housing, or whatever) than the government, and in some contexts vouchers may be a step in the right direction. But voucher markets are tightly regulated, with special administration required and with strings attached for both buyers and sellers, and they thus open up new opportunities for rent-seeking. (The Government Accountability Institute has noted a steady increase in J.P. Morgan Chase's donations to members of the House and Senate agriculture committees.) Those rent-seekers then become new constituents for the program, a fact that should aggravate conservatives; and those constituents' chief interest is not the reduction of poverty, a fact that should aggravate liberals. If you want to propose a more market-oriented system that stops short of withdrawing the government's fingers altogether, it would be better just to send poor people money: That takes away a lot of these opportunities for companies to game the market, and it makes it easier to start collapsing all these different programs into a lump payment like Milton Friedman's negative income tax. (Indeed, it offers a gradualist route toward the negative income[...]

Farm Bill Sugar Supports Cost Consumers and Business

Thu, 13 Feb 2014 12:00:00 -0500

The name "Chicago," according to local lore, came from an Indian word meaning "stinky onion." But for decades the city had a different aroma, wafting from an array of candy factories. It was a sweet bonus of urban life. Thanks to a little-known government program, though, it has largely faded away. In 1990, Brach's Confections Inc. threatened to close a West Side factory that employed 1,100 people. The candy maker said it would move abroad unless the federal government acted to reduce the artificially inflated cost of sugar. Washington ignored the threat, and Brach's found ways to keep the plant going. But in 2003, it closed the factory and sent much of the work to Mexico. The reason for the move was a federal undertaking whose entire purpose is to prop up the price of sugar for the benefit of a small number of growers. It does so by restricting imports, limiting how much farmers can plant and guaranteeing them a certain price. These methods work: The price of sugar in this country is usually double or triple the price in the rest of the world. That enduring accomplishment comes at a cost to companies that buy sugar, like Brach's. It also burdens a larger group of people: those who eat. In a typical year, the average American consumes nearly 100 pounds of sugar and other high-calorie sweeteners. The total cost to consumers amounts to as much as $3.5 billion a year. That doesn't count the jobs shipped to Mexico or Canada. Defenders claim the program saves American jobs in sugar production. But a 2006 study by the U.S. Department of Commerce found that for each job it saves in those sectors, it destroys three jobs in candy making. For decades, Life Savers were made at a facility in Holland, Mich. But in 2003, Kraft Foods shut it and moved the production to a plant near Montreal. What does Quebec have to offer that Michigan doesn't? The Canadian Sugar Institute is happy to explain: "The Canadian sugar industry is internationally unique in that it does not depend on government subsidies. Basing its prices on world raw sugar markets, it sells sugar at prices that are among the lowest in the world." Some companies can afford to eat the extra cost of operating in the U.S. But when the composition of your product is 99 percent sugar, it's not so easy. Ronald Reagan could have been thinking of sugar when he said, "Government programs, once launched, never disappear. Actually, a government bureau is the nearest thing to eternal life we'll ever see on this earth." Growers have been protected by import barriers since 1789, and the current complicated system dates back to the Great Depression. The country was a very different place then. In 1930, one of every four Americans lived on a farm. Today, it's one in 50. But the farm bill passed by Congress and signed by the president this month was a missed opportunity to enact changes that would reflect the vast changes over the past 80 years. The politicians could have started with this system, which bleeds the many to enrich the few. "No industry is as coddled as farming, and no industry as centrally planned from Washington," writes Cato Institute policy analyst Chris Edwards. "The federal sugar program is perhaps the most Soviet of all." Not only do the connoisseurs decree the appropriate price for this basic commodity, but they say who may sell the stuff and how much of it. They establish the correct division between sources of sugar: In 2011, it was 54.35 percent beets and 45.65 percent cane. They even decide how much can come from specific companies. Looking at sugar, it's hard to remember we live in a capitalist economy. But in other industries and many farm products, these matters do get resolved, without the intrusion of federal ove[...]

Obama Signs Farm Bill

Fri, 07 Feb 2014 18:15:00 -0500

President Obama signed the bipartisan farm bill Friday, saying it will promote agriculture, provide more money for research into the environment and energy, and feed hungry Americans through the food stamp program.

Comparing the massive new law to a "Swiss Army Knife," Obama told supporters at Michigan State University that the farm bill "multitasks. It's creating more good jobs, gives more Americans a shot at opportunity."

Obama also compared the bill to baseball star Mike Trout, saying both can do a little bit of everything.

The five-year bill -- approved by Congress this week after years of fierce debate -- expands federal crop insurance. It also changes the food stamp program, cutting it by $800 million per year -- about 1% -- and raising the automatic eligibility requirement.