From: thant@void.esd.sgi.com (Thant Tessman)
Newsgroups: alt.politics.libertarian
Subject: Re: Real world example of society profiting from startup subsidies.
Date: 9 Oct 92 16:58:23 GMT
Organization: Silicon Graphics, Inc.  Mountain View, CA


Your agrigulture example proves only that the government has subsidized
an industry.  You have done nothing to show that the costs in taxes of
subsidization balanced against the beneifits are any better than would
have happened in the free market.  And given that grain-sales are
subsidized as well the research, I find it a particularly ironic choice
of an example.

And just for fun:

**************

Agricultural Policy:
How to Tell Your Ass from This Particular Hole in the Ground

by P.J. O'Rourke
from Parliament_of_Whores

There is one kind of interfering in private life that the federal
government has been doing for much longer than it has been proscribing
narcotics or hectoring poor people, and this is messing around with
agriculture.  The government began formulating agricultural policy in 1794,
when the residents of western Pennsylvania started the Whiskey Rebellion in
response to an excise tax on corn liquor.  The agricultural policy
formulated in 1794 was to shoot farmers.  In this case, the federal
government may have had it right the first time.

Like that of most Americans of the present generation, my experience with
agriculture is pretty much limited to one three-week experiment raising
dead marijuana plants under a grow light in the closet of my off-campus
apartment.  I did, however, once help artificially inseminate a cow.  And
you can keep your comments to yourself - I was up at the front, holding the
thing's head.

This was a dozen years ago.  My old friend George, who'd done all sorts of
madcap stuff such as join the marines, go to Vietnam, learn to fly a stunt
plane and get married, decided to raise cattle.  To that end George bought
a farm in New Hampshire, along with some cows (the technical term for
female cattle), and now it was time for the cattle to fructify.

Getting a cow in a family way is not accomplished, as I would have thought,
with a bull and some Barry White tapes in a heart-shaped stall.  It's like
teenage pregnancy, only more so.  The bull isn't even around to get the cow
knocked-up.  Instead, there's a liquid-nitrogen Thermos bottle full of
frozen bull sperm (let's not even think about how they get that) and a
device resembling a cross between a gigantic hypodermic needle and the
douche nozzle of the gods.

George got a real farmer to come by and actually do the honors.  So while I
held the cow's head and George held the cow's middle, the real farmer,
Pete, took the bovine marital aid and inserted it into a very personal and
private place of the cow's.  Then Pete squirted liquid dish soap on himself
and inserted his right arm into an even more personal and private place of
the cow's, all the way up to the elbow.  Pete did this not in order to have
Robert Mapplethorpe take his photograph, but in order to grasp the
inseminator tube through the intestine wall and guide the tube into the
mouth of the uterus.  It's an alarming thing to watch, and I'm glad to say
I didn't watch it because I was at the cow's other end.  But I'll tell you
this, I will *never* forget the look on that cow's face.

The same look - and for the same reason - appeared on my own face when I
began reading the 1990 omnibus farm bill.  Every five years or so the U.S.
congress votes on a package of agricultural legislation that does to the
taxpayer what Pete and George and I did to the cow.

The last farm bill cost American taxpayers over $100 billion in direct
out-of-our-paycheck-into-the-feed-bag costs and another $50 billion in
higher prices we paid at the supermarket.  This was the Food Security Act
of 1985, which got its name from the fact that it left America's food
supply about this secure:  "Yes, officer, the stereo, the TV and the coin
collection are gone but, thank god, the refrigerator wasn't raided."

The new farm bill will only cost about $50 billion, although there's no
telling what any farm bill is really going to cost.  The 1981 farm bill was
budgeted at $12 billion and ended up costing $60 billion, and the 1985 bill
was supposed to represent a substantial cut of 1981 allocations.  You see,
if the weather's bad and we have lots of droughts and freezes, we'll have
to give disaster aid and crop-insurance payments to farmers, and the farm
bill will end up costing us more.  On the other hand, if the weather's good
and we have plentiful harvests, we'll have to buy up surplus commodities
and pay farmers to cut down on planting, and the farm bill will end up
costing us more yet.  And if - God forbid - the weather is good some of the
time and bad some of the time - if, in other words, the weather is *normal*
- then we can all just start backing towards the barn door and mooing for
frozen bull sperm.

---

But all this money goes to the poor farmers laboring from sunup to sundown
on millions and millions of farms across the nation, doesn't it?

No.

In the first place, there aren't millions and millions of farms in America.
There are about two million if you use the very inclusive Bureau of Census
definition of a farm as any place with $1,000 or more annual gross sales of
farm products.  My off-campus apartment closet would have qualified if the
grow lights hadn't blown the fuse box off the wall.  There are, in fact,
only about 314,000 full-time commercial farms in the U.S.  These are farms
that have gross annual sales of over $100,000.  These are also the only
farms where farm income exceeds income from nonfarm sources, such as
factory jobs, retirement benefits, or sticking up 7-Eleven stores.

Nor are farmers, in general, poor.  Farm-family income has exceeded average
family income in America for more than twenty-five years.  And federal farm
spending doesn't go to poor farmers, anyway.  The largest farms in America,
those with gross receipts of more than $500,000, receive 60 percent of all
price-support money.

So what are our Department of Agriculture tax dollars buying from us?  A
Department of Agriculture.  The USDA has 106,000 employees, one for every
three full-time farms in the country.

These 106,000 people would be more useful to the farm economy if we sent
them out to hoe weeds.  But they can't go; they're too busy doing things
like administering the Federal Wool and Mohair Program.  According to the
U.S. General Accounting Office report to Congress on the 1990 farm bill,
"The government established a wool and mohair price-support program in 1954
... to encourage domestic wool production in the interest of national
security."  Really, it says that.  I guess back in the fifties there was
this military school of thought that held that in the event of a Soviet
attack we could confuse and disorient the enemy by throwing blankets over
their heads.  Then, while they were punching each other in the dark and
trying to figure out who turned the lights off, we'd have time to run into
our missile silos and destroy Russia with ICBMs.  From 1955 to 1980, $1.1
billion ws spent on wool and mohair price supports, with 80 percent of that
money going to a mere six thousand shepherds and (I guess) moherds.  This
is $146,400 per Bo Peep.  And, let me tell you, she didn't lose those
sheep.  They're off at boarding school in Switzerland.

Then there's the U.S. Honey Program, instituted in 1952 to stabilize honey
prices (you remember how the American economy was almost brought to its
knees by wild swings in the price of honey) and to "maintain sufficient bee
populations for pollinating food and fiber crops."  The honey program
spends $100 million a year on about twenty-one hundered beekeepers - more
than $47,000 each.  For that kind of money, hell, I'll go sit in the
flowers and wiggle around and get pollen all over my butt.

James Bovard, policy analyst at the libertarian Cato Institute and author
of the book The_Farm_Fiasco, notes that between 1985 and 1989 government
spending on rice farms was equal to $1 million for every full-time rice
farmer in America and that the annual subsidy for each American dairy cow
is between $600 and $700 - greater than the per capita income of half the
world's population.

Walter Williams, an economist professor at George Mason University, points
out that since 1985 federally mandated attempts to boost citrus prices have
resulted in the destruction (or use as cattle feed) of three billion
oranges and two billion lemons (which explains why we so rarely hear about
a cow with scurvy).

And Congressman Dick Armey, in an article for 'Policy Review' entitled
"Moscow on the Mississippi: America's Soviet-Style Farm Policy," says the
1985 farm bill paoid farmers *not* to farm sixty-one million acres - an
area equal to Ohio, Indiana and half of Illinois - and that the amount
we've spent on farm subsidies in the past ten years is enough to have
bought all the farms in thirty-three states.

"Moscow on the Mississippi" is an apt phrase.  U.S. farm policy is
coercive, collectivist and centrally planned and has been since 1929, when
that wild radical Herbert Hoover created the Federal Farm Board in an
attempt to corner the commodities market and control farm prices.

The New Deal successor to the Federal Farm Board was the Commodity Credit
Corporation, or CCC, one of the Roosevelt era's Goldilocks programs, so
called because it barged in on the taxpayer fifty years ago, and IT'S STILL
THERE.  The CCC is empowered by its 1933 charter to "...undertake
activities for the purpose of increasing production, stabilizing prices,
and insuring adequate supplies; and to facilitate the efficient
distribution of agricultural commodities."  A more Brezhnevian set of
instructions to a government agency is hard to imagine.

U.S. farm policy is, along with North Korea and the Stanford liberal arts
faculty, one of the world's last outposts of anti-free-market dogmatism.
Congressman Kika de La Garza, who is the exasperatingly powerful chairman
of the House Agriculture Committee, wrote in the Capitol Hill newsletter,
'Roll Call,' that, "most Americans believe the unique nature of agriculture
- the lenghty production cycle, dependency on the weather, susceptibility
to price swings, etc. - justifies a certain level of government
involvement."  But you can say the same thing about the unique nature of
selling Mazda Miatas.  Why isn't the government giving $50 billion to car
dealerships?

A GAO report on federal dairy policies contains this sentence: "The federal
government first developed diary policies when low milk prices appeared to
threated the adequacy of the nation's milk supply."  Which is insane.
Everybody from wife-bartering savages to Michael Milken knows that low
prices mean surplus, not shortage.  Yet this statement appeared in a GAO
report criticizing the federal dairy programs for *not* being "market
oriented."  Meanwhile, the dairy farmers themselves, through their lobbying
organization, Dairymen, Inc., issue position papers that sound like
extracts from Albanian newspaper editorials: "Dairymen enthusiastically
supports a strong and flexible federal milk marketing order program.  Such
a program is essential for the maintenance of orderly marketing of milk in
fluid and manufactured dairy product markets."

Thus, while America was fighting Commies all over the world, Communism grew
apace in our own back forty.  American farm policy is exactly what, during
the McCarthy era, people were jailed, fired and blacklisted for advocating
in this country - unless, of course, they were American farmers.

This being America, we haven't pursued Marxist goals with tanks, secret
police and gulag camps; we've used money.  And the result has been we've
created gross overproduction.  Instead of making people dirt poor, we've
made them filthy rich.

---

As with anything that's had too much attention from the government, farm
policy is a mess and a tangle, an immense dog's breakfast of programs, laws
and regulations.  The farm policy briefing package prepared by the Library
of Congress for U.S. senators and representatives begins with a "Glossary
of Agricultural Terms" forty pages long.

But farm policy, although it's complex, can be explained.  What it can't be
is believed.  No cheating spouse, no teen with a wrecked family car, no
mayor of Washington, DC, videotaped in flagrant delicto has ever come up
with anything as farfetched as U.S. farm policy.

To begin with, there is the concept of parity - the deep thought behind
all of the USDA's price- and income-support measures.  Parity is the idea
that the price farm goods bring ought to be the same, now and forever, in
inflation-adjusted dollars, as the price farm goods brought in the years
1910 through 1914.  Parity was conceived in the twenties, when increased
mechanization and better seeds and fertilizers were causing agricultural
prices to fall.  Farmers liked the fact that they could grow more stuff.
But they didn't like the fact that other farmers could grow more stuff,
too, and that all the stuff being grown was therefore less rare and
valuable.  The farmers wanted the calendar turned back to those golden
pre-World War days, when - as they remembered it - a peck of wheat sold for
a bushel of money, and every load of manure was pitched by a hayseed
Vanderbilt.

The U.S. government is a sort of permanent frat pledge to every special
interest in the nation - willing to undertake any task no matter how absurd
or useless.  So our government obliged the farmers, or tried to, and parity
was born.

If we applied the logic of parity to automobiles instead of feed and grain,
a typical economy car would cost forty grand.  $43,987.50 is what a 1910
Nash Rambler cost in 1990 dollars.  And for that you got a car with
thirty-four horsepower, no heat, no A/C, no tape deck or radio and no
windows around the front seat.  If farm parity were a guiding principle of
human existence, we'd not only have lousy, high-priced economy cars, we'd
have a total lack of civilization.  Cheap, plentiful food, everybody has to
spend all his time getting fed and nobody has a minute to invent law,
architecture or big clubs to hit cave bears on the head with.  Agriculture
prices have been falling, relative to the prices of other goods and
services, not since the 1920s, but since the Paleolithic age.  And it's a
good thing.  Otherwise we wouldn't grow food, we'd *be* food.

The government has any number of ways of inflicting parity on taxpayers and
food shoppers.  For example, there's the "nonrecoures loan."  This is a
loan farmers can get from the government using their crop as collateral.
But the government sets the value of that collateral not by the crop's
price but by what the crop's price *ought to be* in a dream world full of
parity and happy farmers.  Say wheat is selling for $3.50 a bushel, but the
USDA thinks farm life would be a more fulfilling experience if the price
were $4.  So the USDA sets the "nonrecourse loan rate" at four bucks, and
farmers can get a loan of $4 for every bushel of wheat they've got lying
around.  Then if America happens to suffer a terrible outbreak of toast
weevils and the price of wheat goes up to $10 a bushel, farmers can pay
back their $4 loans, sell the wheat for $10 and bank the profits.

But if everybody in the United States suddenly goes on an all-meat diet and
the price of wheat drops to fifteen cents, the farmers can blow off the
loans, make the government eat the wheat and not even get an ink smudge in
their credit histories.  It's an absolutely no-risk business transaction,
like doing real estate deals with your dog.  "Beach front?  You don't want
beach front, Fido.  I've got some prime dumpside acreage, chicken bones and
dead rats all over the place.  I'll trade you straight up."

Or if a nonrecourse loan is too complicated for the farmer, the government
has another program, called "loan-deficiency payments."  In this program
the government pays the farmer *not* to take a nonrecourse loan.

The "conservation reserve program" is almost as simple.  The government
gives annual payments to the farmer in return for the farmer removing
highly erodible land from production - as if erosion weren't doing that
already.  A farmer on the conservation reserve program will doubtless want
to be on the "acreage conservation program," too.  That way the government
will pay him up to $3,500 a year to practice soil conservation in general.
This is like going to a Dairy Queen and giving the owner money to keep his
ice cream freezers plugged in.

"Marketing orders" are used to keep farm prices high at the retail level.
The growers of various commodities are encouraged to get together and fix
the price for which their commodities will sell.  In other industries
there's a name for people who do this: felons.  Some marketing orders are
enforced by "marketing quotas."  Growers decide how much growing each
grower can do.  If shoeshine boys tried this, you'd only get one loafer
polised during shine-business slumps.

During the mid-1980s the diary industry had its own plan to limit
production, the "whole herd buyout."  Dairy farmers decided there was too
much cheap milk at the supermarket.  Hell, even homeless welfare babies
were drinking moo juice.  So the government bought and slaughtered 1.6
million diary cows.  How come the government never does anything like this
with lawyers?

Farm-production bargains are also eliminatd by means of the "commodity
import program."  Our government gives foreign governments grants and loans
to buy stuff grown in the U.S., stuff that would otherwise be a glut on the
domestic market.  I guess we should be thankful that similar programs have
not been undertaken by the governments of Columbia, Bolivia, and Peru.

While some government programs are making farm products mroe expensive to
buy, other programs are making farm products cheaper to produce.  For
example, farmers get cut-rate credit to the extent that the federal
government now controls half of all farm debt.  Farmers also get subsidized
crop insurance.  And, for those farmers who didn't feel like buying
subsidized crop insurance but had crop failure anyway, there are free
disaster benefits.

This conflict between policies that send prices up and policies that drive
prices down results in the need for a third category of policies that do
nothing at all.  These are the famous programs that give farmers money for
not farming.  In the "payment-in-kind program" the farmer is given the
excess farm products that other farmers grew in return for not growing any
of his own.  In the "paid acreage diversion program" the more farming the
farmer doesn't do, the more the government pays him.  And in the best
program of all, "0/92," the farmer does absolutely nothing and gets 92
percent of all the payments and benefits he could have possibly gotten from
the largest crop he could have possibly grown.  A USDA scheme like this
gives every government agency something to shoot for.  With 0/92 as an
inspiration, Health and Human Services will probably dream up a way for us
taxpayers to catch clap from whores without getting laid.

---

Just when you think the farm issue can't get sillier, here comes Willie
Nelson pounding on the gut-fiddle and adenoidaling away at Farm Aid.  Yes,
Willie and such thoroughtly improbably acts as L.L. Cool J, Guns n' Roses,
Iggy Pop and Lou Reed (hey, there's a bunch of sheep in fishnet stockings
out here, they've got drugs, and they say they're with the band) have
raised a few more bucks for the farmers who just euchred Congress out of
$50 billion.

There are farm families in need of charity, of course.  But singling out
farmers and getting all soggy-nosed and soak-eyed over their plight has
less to do with facts than with romantic nostalgia for a pastoral ideal
that never existed.  Throughout history farm life has been brutish, dirty
and mostly stupid.  Not that any of us would know.  This country is so
urbanized we think low-fat milk comes from cows on Nutri/System weight-loss
plans.

According to the 'Statistical Abstract of the United States,' about 1.3
million people in America define themselves as farmers.  But there are 4.1
million secretaries.  These secretaries are poorly paid, hold jobs that
provide little satisfaction or chance for advancement, are frequently
working mothers and often the sole support of their families.  Where's the
"Lend a Short Hand" concert for them?  Where are the famous ode-yodelers
singing "Mom Was a Hard-Typing Gal"?  Why'd farmers get cinematic encomiums
like 'The River,' 'Country' and 'Places in the Heart' while secretaries got
nothing but 'Nine to Five'?

Farming has always carried emotional freight.  Thomas Jefferson, caught in
a moment of rare idiocy arguing against the industrialization of the United
States, said, "Those who labor in the earth are the chosen people of God
... whose breasts He has made a peculiar deposit for substantial and
genuine virtue."  This, by the way, from a gentleman farmer who owned two
hundred slaves and kept at least one of them as his mistress.

The farm lobby makes good use of such lofty forms of nonsense and, also, of
less lofty forms of nonsense, such as congressmen.  For instance, sugar
growers donate about half a million dollars a year to congressional
election campaigns, and the dairy industry donates $2 million.  Even though
only 46 out of 435 congressional districts are controlled by farm votes,
farmers have gained heavy leverage on Capitol Hill by combining rhetoric,
ready money and a talent for political logrolling that dates back to the
Constitutional Convention, when southern farmers managed to get slaves
counted as three fifths of a voter without letting any slaves do three
fifths of the voting.  As a result of this disproportionate influence, 25
percent of the net income U.S. farmers receive is in the form of direct
cash payments from the government.  The only other businessmen who put this
kind of lip clamp on the public teat are defense contractors.  And at least
when we give billions to defense contractors, we get something back for it,
Star Wars or something.  Maybe we don't need Star Wars, maybe it doesn't
work, but at least the defense contractors were thinking of us.  The made,
you know, a gesture.  But we give billions to farmers and don't even get a
basket of zuchini on the front porch.

---

Our that-ain't-hay farm policy is useless.  Even Willie Nelson acknowledges
that four hundred thousand small farms have gone out of business since he
began giving his Farm Aid concerts, and I don't think we can blame all four
hundred thousand on Willie's awful music.  A 1988 Government Acounting
Office report concluded that one quarter of the bankruptcies among Farmers
Home Administration borrowers were the result not of any credit crunch, but
an excess of cheap, subsidized loans.

Agricultural economist Clifton B. Luttrel estimates than an old-fashioned
money-vomitting Great Society-style welfare system to keep needy farmers in
business would cost only $4 billion a year, less than half what current
programs cost.

I went to see Pete, the dairy farmer who'd helped my friend George get his
cow pregnant.  Pete's family has been dairy farming in New England all this
century, and dairy farmers, as a group, have been on the receiving end of
gread federal largess - on the order of $6 to $7 billion a year.  Pete,
however, had just sold his cows and was subdividing his land to build
vacation homes.  I had a very short interview with Pete.

    Me:  As the result of price supports, product purchases, marketing
    orders and other federal dairy programs, how much better off are local
    dairy farmers?

    Pete:  There are only two local dairy farmers left.

    Me:  Are they better off?

    Pete: Nope.

U.S. farm policy, besides not doing what it's supposed to, does do what it
isn't supposed to, and lots of it - the law of unintended consequences
being one piece of legislation Congress always passes.

Many farm-program payments are doled out according to an "acreage base."
This is the amount of land on a farm that's planted in a particular crop.
In order to protect their acreage base and continue getting government
payoffs, farmers are forced to practice "monocropping" - planting the same
thing every year instead of rotating crops to replenish soil nutrients.
Monocropping requires more chemical fertilizers, which pollute ground
water, and more pesticides and weed killers, which cause severe side
effects, such as meryl Streep appearing in front of congressional
committees to complain about what's in her food.

The acreage-base system also discourages experimentation with new crops,
such as canola (vegetable oil) and kenafe (paper pulp), both of which show
enormous potential as dinnertime child disciplinary threats.  ("No TV until
you finish your canola.")

Other farm-program benefits, such as "deficiency payments," are paid on the
basis of yield rather than acresge.  The more you grow, the more you get
paid.  Yield-based deficiency payments for feed corn, combined with
disaster payments based on yield projections, encourage farmers in drought
areas to plant the highest yielding varieties of corn rather than the
varieties that are most drought resistant.  Meanwhile, wind erosion blows
the top three inches of North Dakota into downtown Duluth.

Farm programs even make American foreign policy more screwed up than it is
already - not an easy thing to do.  The USDA sugar program spends a quarter
of a million dollars per year per American sugar grower.  This to keep the
sugar industry healthy in a climate phenomenally unsuited to producing
sugar.  These subsidies and the sugar-import quota that goes with them cost
sugar-cane-growing U.S. allies such as the Philippines more than $800
million a year in lost revenues.  That's $319 million more than we pay the
Philippines to rent our military bases there.

And while the USDA is spending $10 billion a year to increase farm income,
the same government agency is spending $20 billion to make food affordable
to poor people through the Food Stamp program.  A moron, an imbecile, an
American high-school student can see there's something wrong with this
equation.  Just give the $10 billion to the poor people, and let them buy
their own damn food from the farmers.

---

I spent two and a half years examining the American political process.  All
that time I was looking for a straightforward issue.  But everything I
investigated - election campaigns, the budget, lawmaking, the court system,
bureaucracy, social policy - turned out to be more complicated than I had
thought.  There were always angles I hadn't considered, aspects I hadn't
weighed, complexities I'd never dreamed of.  Until I got to agriculture.
Here at last is a simple problem with a simple solution.  Drag the omnibus
farm bill behind the barn, and kill it with an ax.

--end--