Chapter 10: Government and Pig Farmers

Overview

A recent newspaper article talked about a Midwestern state’s pig farmer’s problem. The problem was that the cost to raise, feed, and bring pigs to market left little or nothing for the farmer. This offered that state’s U.S. Congressional representatives an opportunity to serve their constituency by finding a way to get a subsidy that would sustain the farmers through the crisis.

This particular action may or may not have been the right thing to do, as all the background information was not presented. The point is that there are many such subsidies in place and the Congressional people who promote them get credit and votes. It is likely that there are varied opinions on their legitimacy and their urgency, but you can bet that we will all pay for these subsidies one way or the other in higher taxes, reduced government services, or increased prices. We will also pay for it in the loss of the benefits of competition for overall value - price and quality. There is not much need for Yankee ingenuity to find better ways to improve the product or its cost through genetic engineering or other imaginative approaches when they are subsidized.

It is well-known that family farms and more recently, the larger corporate farms as well, historically have received a great deal of sympathy and ongoing subsidy aid from state and federal governments. The natural question that arises is, what establishes the priority for farmers in modern America in comparison, for example, to the family- owned or otherwise small special machine tool companies or any other business, especially the small entrepreneurial businesses? Are they of greater strategic importance to Americans? Is it possible that farm ownership could involve foreign investors or owners and could involve U.S. government subsidies as well?

The subsidy actions parallel welfare and organized labor examples where ongoing aid or protection can be a strong incentive to not fix a problem. They also blur John Quincy Adams’s view of individual liberty, and they encourage dependency. In most such cases, the market is sending a very strong message and needs to be heard. The message is typically that someone else is doing a better job of providing value and deserves to get the business.

A story told to children about the eagle with a broken wing says that it needs to be put back into the wild as soon after recuperating as possible, or it will soon lose its ability to hunt and to sustain itself and will have to be supported for the rest of its life. Subsidies can have that same kind of effect.

It also seems that in the modern global free market environment, subsidies can interfere and be a source of friction between trading partners. No matter how you look at it, the free market is being manipulated by the use of subsidies except to fix a short term tilted playing field problem.