Freedom to Farm
Observations Based On Twentieth Century History
By Clive Perry Ririe
(From NETWORK, the family newsletter,
volume 3, October 1997)
Conventional wisdom is that farm
programs are from another age, that they didn't ever work very well
and they're worse now. They seem to say that in our present global
agricultural economy, old nostrums, even if they were effective in
their day, wouldn't be now.
The view that gave birth to the
Freedom to Farm legislation that was recently signed by President
Clinton, is that if the U.S. and all other countries that produce
and export farm commodities would discontinue all market-altering
practices (subsidies), the force of comparative advantage would work
to establish the niche for each exporter and send the signals that
propel each producer to find his place in the grand scheme and that
every producer, free of government interference, would comply to
the will of the market and use the elements of production that he
controls to produce the commodity for which he has the comparative
advantage.
The positive premise that market
forces will solve all the problems and equitably distribute rewards
is questionable and the oft repeated condemnation of all farm programs
is completely unjustified.
The New Deal farm programs of the
thirties worked well. Their goal was to promote stability on the
farm. Because of the great depression, American industry and American
financial institutions were nearly destroyed. The influx of workers
from rural America to the industrial centers had exacerbated a terrible
economic calamity in which the rate of unemployment was far worse
than at any time since the beginning of the revolution. Allowing
farm foreclosures to continue at such unprecedented rates would have
toppled all the banks and increased the unemployment numbers so drastically
that the solution to that problem might have been delayed by many
costly and wasteful years. It might have destroyed our American capitalistic
system!
It was fortunate that in the early
days of the Franklin D. Roosevelt's presidency, the Farm Security
Administration was born. It acquired millions of dollars of bad commercial
loans and allowed farmers to stay on the land. Unemployment wasn't
immediately solved nor was farming suddenly made profitable but a
terrible situation was stabilized and thousands of banks were saved.
The substantial loss that was anticipated
for the FSA never happened because other programs were instituted
which improved economic conditions on the farm. Among them was the
price support program which promoted orderly marketing of the most
commercially important commodities; corn, wheat, cotton, rice, and
others, including tobacco. Mistakes were made; for example we now
know that one of the serious ones was the inclusion of a tobacco
program, but this approach succeeded and the taxpayers' investment
in it was rewarded by the return of invested capital, but more importantly,
by the return of overall economic stability.
Subsequent farm programs have been
based loosely on the economic verities that proved useful in the
thirties but they, unfortunately retained most of the errors from
the early legislation and compounded those errors by accepting other
follies. For the last thirty, we have managed to include enough of
the ludicrous to make the whole pie look and taste like a cow pie.
There's little doubt that from
among the solutions we might have chosen, the one we have settled
on in the Freedom to Farm act is probably the worst.
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