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Limited government,

As I See It

My libertarian tendencies often clash with the “reality” of how the world works.

I believe in limited government, but have we ever really had that? What do we want from government — federal, state and local? What roles should government programs, agencies and personnel play in our daily lives? How do we want our tax dollars spent?

Take, for instance, the recently passed federal Farm Bill. Mississippi will see millions of dollars in appropriations, subsidies, grants and loans for farmers, growers, agribusiness and rural development.

However, what are we to make of this so-called “investment?” In fact, aren’t we just monkeying around with the free market that for the most part works very well?

So much for weaning

In the mid-1950s, my father took a portion of our cotton land out of production, and the government paid us for not growing cotton. That program was called putting land in the “soil bank.” Instead of planting cotton, we planted a legume crop, vetch, as I recall, and simply mowed the vetch down in the fall.

That struck my young (I was born in 1948) mind as very strange indeed. There is an air of futility in planting for no other purpose than not planting something else and then mowing down what was planted and getting paid for having done it. Heck of a deal!

Nonetheless, farm subsidy programs are with us still. In fact, they are with us in a big way and likely with us to stay. Forever. The Freedom to Farm Act, passed in 1996, was intended to signal the beginning of the end for farm subsidies. Though some progress was made toward taking American farmers off the public dole, emergency farm appropriation bills throughout the late 1990s defeated the weaning process. The recently enacted 2002 Farm Bill dispenses with all hope that farm subsidies will ever end in America.

Where the money goes…

Why do we need farm subsidies?

Improvements in agriculture here and abroad have flooded the market with produce. Consequently, prices are low. So low, in fact, that farmers can’t sell their crops in the open market for enough money to pay the costs of production. Either the price must go up or production must go down. Or, the government must subsidize farmers.

Obviously, we have chosen the later solution.

Much has been said about the importance of the small family farm in America. Appeals for support are emotion wrought and have enlisted big name personalities to promote the cause. Many feel that small family farms are the fabric that holds our civilization together and it’s entirely proper to use public funds to insure their survival.

Unfortunately, the situation is somewhat different than Willie Nelson and John Mellencamp portray it with their Farm Aid productions. Unless you consider Archer Daniels Midland a small family farm, your tax money isn’t going to benefit small family farmers. Multi-billion dollar farming conglomerates get the lion’s share of the money.

Every year, there are fewer and fewer small family farms and more and more huge corporate farms. Economies of scale and high equipment costs are making the small farm uneconomical to operate and they are passing from the American landscape. No amount of tax subsidy is going to change that trend.

Politics, politics, politics

The political reasons for farm subsidies cannot be overstated. In the ongoing battle for control of Congress, the farm states can determine which party is in power. Politicians are using your money to buy votes. And the price tag is not insignificant. The new farm act will disperse $190 billion over the next decade, a 70% increase.

Unlike the 1996 act, the new farm bill doesn’t include any enticements to control production. Since farmers are already raising too many crops at today’s low prices, it’s hard to see how raising the prices will cause them to cut back production in future years.

Some say that farm subsidies are, in reality, a consumer subsidy in that food would cost more absent the farm assistance payments. There is probably truth in that assertion. However, why is it in our national interest to subsidize consumers with tax dollars?

Others argue that national defense is at risk without farm subsidies. Now, this is really a stretch! The theory is that American independence would be weakened if farmers quit farming and we had to depend on other countries for food. Those who make this argument apparently have no faith in the basic laws of supply and demand.

A few other institutions worth saving

If preserving the small town way of life in America is a priority worthy of spending tax dollars, there are several other areas that need to be considered. What about all the small retail stores that have been put out of business by Wal-Mart or had their town bypassed by an interstate? What about independent pharmacies who have been done in by the chain stores? Hey! What about little independent newspapers who have been pressured off the playing field by big media interests? The list could go on and on and on.

I have no doubt that some of our readers will disagree with my thinking. After all, the new farm bill benefits lots of Mississippi farmers, and, for many, probably means the difference between staying in business and not. While I recognize the importance of agriculture to our state, it is unwise to pour $190 billion of tax money into delaying the inevitable changes that must take place in American farming.

So, let’s honestly summarize the situation. The politicians are using billions of your tax dollars to buy votes and subsidize huge corporate farms so that they can continue to produce more crops than the market will absorb at reasonable prices. Politicians and mega-corporate farms benefit and the taxpayers foot the bill.

Heck of a deal?

Joe D. Jones, CPA, is publisher of the Mississippi Business Journal. Contact him at cpajones@msbusiness.com.

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