The United States has a rather long history of subsidizing farms and agriculture, and in fact, currently shells out about $20 billion per year on direct farm subsidies. Many Americans believe that these farm subsidies are necessary, for they only make more profitable the job of the farmer; to provide healthy and organic food to the consumers. Without these subsidies, they say, the farms could not survive, and that needed nutrition would be lost. However, these subsidies have a number of effects on the market and on public health, but none of which are good. These farm subsidies make people less healthy, they stifle competition and innovation in the industry, and they exist solely on the premise of taxing successful businesses and industries for the sake of propping up unsuccessful ones.
Ludwig von Mises wrote in his magnum opus, Human Action: A Treatise on Economics, in regards to these farm programs, “The boon of these privileged farmers is paid for by the taxpayers who must provide the funds required to defray the deficit. It affects neither the market price nor the total available supply of agricultural products. It merely makes profitable the operation of farms which hitherto were sub marginal.” What Mises means is, if the consumer were left to their own judgment which businesses to fund, and which industries to divert their revenue to, then many of these farms would not be in business. This is significant because the argument for many of these subsidies is that they are needed in order to better the consumer, yet if that were true, the consumer would pay enough into the services of these farms and farmers so that the subsidies would not be needed to keep so many of them afloat.
This is far more devastating than meets the eye, as the situation is not so simple as the government, once more, abusing its monopoly on extortion. The money used to fund the subsidy to the otherwise unsuccessful farm, is extracted involuntarily from other successful persons and businesses. The Austrian Economist Henry Hazlitt states this bluntly in his book Economics in One Lesson as “When the government makes loans or subsidies to business, what it does is to tax successful private business in order to support unsuccessful private business.” This money could be used by those consumers to satisfy a more desired need than the arbitrators have determined it will be used for, and once it becomes clear that every dollar spent by The Leviathan is a dollar that cannot be spent by the working class, or the non-state capitalist class, then public support for these redistributive measures will likely recede.
Still though, the fiscal burdens of farm subsidies have not yet been exhausted. This is a situation where the goods in question, i.e. farms, are completely finite. As in, there are, at this moment, only so many farms in the world. When the state and its political arbitrators decree which farms will be subsidized and to what degree, and therefore making possible the continued existence of a farming business not backed by real consumer demand, then it is also making it so that the unsuccessful, subsidized farm, is occupied and therefore not available to be used for the true satisfaction of the needs of the masses by a more competent, or efficient capitalist. Such a capitalist would, if there was any real consumer demand for this particular service; cause prices in the industry to fall via cutthroat competition, while improving the overall output of the industry itself. History itself is, if anything, the study of the truth of that very observation. Take for example, the Carnegie Steel Company. When Andrew Carnegie began his business in 1875, the price per ton of steel was $160, but after just 23 years of rampant, unregulated capitalism, in 1898, the price per ton of steel, thanks to the entrepreneurial brilliance of Andrew Carnegie, was down to just $17. Of course, this price decrease extended to everything that used steel, and was not limited strictly to the steel itself. History is a timeline of events such as these, and there is no reason to think that the farming industry would be any different. Yet instead, people pay taxes so that they can pay more for a lesser good.
Still though, there’s still the food and agriculture luddites to be dealt with, those who believe falsely that these subsidies make people healthier, according to their own arbitrary applications of the word. According to Professor Dan D’Amico, since 1995, just the corn industry alone has receives nearly $74 billion is subsidies. These subsidies have artificially lowered the cost of corn, and henceforth, products containing corn, such as HFCS (High Fructose Corn Syrup). This causes the consumer to, rationally choose the HCFS option, as opposed to the comparatively more costly “all natural” alternative. If there was an unregulated, untaxed, and unsubsidized farming industry, the seemingly more unhealthy options would likely die rather quickly due to a lack of favorability in a commercial setting. Though humorously, the very same government that takes people’s money to subsidize farming and makes say, HCFS soft drinks so much cheaper, also takes people’s money to fund a number of efforts to make those same commodities more expensive, such as soda taxes.
Finally, what really needs to happen in the world of farming and agriculture, is more competition and less subsidizing. Those who are subsidized will always have an undue advantage over the typical entrepreneur, and this throws a wrench into the entire market process. If people really do want the goods and services provided by farmers, and to have healthier food on the shelves at lower prices, it is the competitive, free market that will accomplish this. Ludwig von Mises, in his Critique of Interventionism, bluntly states this as, “The sharper the competition, the better it serves its social function to improve economic production.”
[bitmate-author-donate]
