The Political Economy of U.S. Agricultural Policy: Discussion

Why is agriculture regulated in the way that it is, and what sustains that regulation? Gardner and Paarlberg respond by reviewing frameworks for explaining political choice in agriculture. These frameworks are simplifications, so there are limits on what can be explained. Either real life offers apparent contradictions to the models or some parameters cannot be well quantified. For example, Paarlberg uses the Anderson and Hayami thesis to explain much about protection in U.S. agriculture but concludes that the existence of acreage reduction programs (ARPs) is not adequately explained. Gardner follows the maximization of a political preference function (PPF) whose arguments are the gains of interest groups. The weights on the gains of each group are viewed as not well explained by researchers. Most of this work is considered ad hoc and does not explain causality. At the outset of a discussion of political choice modeling, it seems reasonable to ask, "Who Cares?" An obvious response is that if you advocate policy, you care because such information may help further your cause. If you are not an advocate but an economic analyst interested in the effects of policy instruments, then the political decision process might seem to be largely irrelevant and any interest purely academic. There are, however, some reasons for caring. Such knowledge may aid problem definition for policy analysis by (a) eliminating infeasible policy options, (b) establishing different evaluation criteria, and (c) helping the researcher know whether an economically strange policy choice resulted from political weights or economic misinformation. A recent example is ethanol. Political support now seems to be growing despite numerous pessimistic analyses by economists. Is this testimony to the lobbying effectiveness of ethanol interests, or have the economic analyses omitted some impacts? Both papers present the ultimate political decision as a function of interest groups and their gains. What strikes me is the difficulty in observing a political decision, identifying the gainer, and consequently ascribing a high PPF weight to that interest group. Sometimes this is done pretty casually in economics, usually by dividing the world into consumer surplus, producer surplus, and taxpayer cost. Then, by revealed preference, it is argued that the political weights on producer surplus and taxpayer cost exceed that on consumer surplus. Some economists see a more complex picture. Rausser and Foster recently examined the framework that distinguishes between policies that transfer economic surplus (PESTS) and those that increase economic surplus (PERTS). The theory demonstrates that the effects of these policies are interdependent and therefore the policy choices may also be interdependent. To understand policy choices, you may need to look at a package of policies and the net gain accruing to the various groups. Advocacy stands out as a difference between the papers. Paarlberg uses his paper to focus on acreage reduction programs, which are characterized as uniquely American and apparently irrational. Gardner, in offering a clear survey of political choice research results and where they fit in the PPF optimization model, does not zero in on the choice of a current policy instrument. In fact, he steers clear of advocacy in his section, "Positive and Normative." Gardner sees beneficial and