Farming Subsidies
2011-01-23 · Guest: Chris Edwards (Director of Tax Policy at the Cato Institute) · 50:16
Federal farm subsidies and corporate welfare
Bob Zadek and Chris Edwards of the Cato Institute discuss the economic and political realities of federal farm subsidies. They argue that these programs, which cost taxpayers billions annually, primarily benefit wealthy corporate landowners while distorting market prices, harming the environment, and undermining global trade.
Topics: Farm Subsidies, Ethanol, Sugar Subsidies, Cato Institute, Corporate Welfare, Free Market Economics, Agricultural Policy, Department of Agriculture, WTO, International Trade
Speakers:
- Bob Zadek: Host
- Chris Edwards: Director of Tax Policy at the Cato Institute
- Caller (Mickey): Agricultural landlord from Arkansas
- Narrator: Audio clip voice
- Neil Young: Audio clip voice
Sausalito’s Surprising Subsidies [00:00]
Narrator: Just across the Golden Gate Bridge from San Francisco, you’ll find the waterfront community of Sausalito, world-renowned for its Mediterranean flair and breathtaking views.
Bob Zadek: World-renowned for its Mediterranean—Mediterranean flare and breathtaking views. Sausalito, Marin County, California, right over the Golden Gate Bridge. It sells itself, it markets itself as an upscale seaside community, and that’s where I live. Little known is the fact that Sausalito is in reality a hard-scrabble farming community trying to peck out a meager existence by poking at the soil. This is Bob Zadek, host of the Bob Zadek Show, Sundays at noon, 910 AM. Ideas, not attitude.
So what is this about Sausalito being a farming community? Well, I—although I live there and I didn’t know that—I learned that by studying statistics on farm subsidies. Residents of Sausalito received $717,000 from 1995 to 2006 in farm subsidies. That’s what Sausalito received. How could Sausalito, an upscale Marin County community, be receiving farm subsidies? Because the farm subsidy program is a federal program which is out of control, costs us $25 billion a year, and benefits nobody except for Cargill and Archer Daniels Midland company. It hurts everybody. Farm subsidies is the topic of today’s show.
The Scale of Corporate Welfare [01:10]
Bob Zadek: To help me sort this stuff out is Chris Edwards. Chris is the Director of Tax Policy at my favorite think tank, the Cato Institute. Chris, thanks so much for joining me.
Chris Edwards: Hey, thanks for having me. It’s a great topic.
Bob Zadek: Chris, farm subsidies. An out-of-control program that benefits nobody and costs us about $25 billion at least, putting aside the higher cost of food. Do I exaggerate?
Chris Edwards: No, it’s the biggest business subsidy or corporate welfare program in the entire federal budget. $25 billion a year direct cost on taxpayers. And it benefits essentially wealthy farm businesses. It’s taking from average taxpayers—it’s sort of like reverse Robin Hood—taking from average taxpayers, giving to the wealthy. It makes absolutely no sense.
A History of “Temporary” Measures [02:55]
Bob Zadek: And the stated purpose is almost laughable. It was the history of this corporate welfare started quite modestly with FDR in the Agricultural Adjustment Act, 1933, as a way to pay farmers to take land out of production to reduce overproduction so that farmers can make a living. It was, in the words of the Secretary of Agriculture in 1933, a—and be careful whenever you hear this word—a temporary program to get us over a hump. Well, 60 years later, it’s grown to $25 billion. And never mind the farmers, it helps Archer Daniels Midland, it helps Cargill and all the huge corporate growers. What is the stated purpose of these subsidies? And of course, subsidies describes a whole range of programs. I’m lumping them all together, Chris, so the audience doesn’t get these mind-boggling complex programs. It’s all wealth transfers to corporate farmers. But what’s the stated purpose? Why do we do—why do we say we do it?
Chris Edwards: Well, the interesting thing is policymakers rarely actually have to stand up and defend these programs because these programs are passed by the Senate Agriculture Committee and the House Agriculture Committee. Those committees are dominated by members, often who own farms themselves, or certainly who come from rural communities. And they all agree with each other that we need subsidies on those committees. And the leadership doesn’t want to take them on. And so they really never have to justify. But certainly, they always claim that they’re standing up for the small-time farmer. But that’s frankly—it’s a real lie because three-quarters of all farm subsidies go to the 10% largest farms. So three-quarters of subsidies go to these very small group of very large corporate farms. So the politicians claim they’re standing up for the small farmer. The reality is that farming is dominated by large corporate businesses these days, and that’s where the subsidies go.
The Myth of Food Security [05:30]
Bob Zadek: And it’s an abuse which just continues and continues. 800-345-5639 is the number if you want to join my discussion with Chris. But the irony is the stated purpose is, first of all, it’s sometimes couched in the area of food security. We have to maintain our domestic farming industry lest we be—and does this sound familiar—dependent upon foreign food. As if, if we didn’t have farm subsidies, I’d be lining up to buy some scroungy chicken that we imported from Bulgaria because we wouldn’t have a domestic chicken industry. But that’s so utterly hypocritical because there are only five crops that get most of the subsidy. Fruits and vegetables don’t get subsidized. Poultry, beef, pork doesn’t get subsidized. And somehow, I’m able to buy a piece of chicken if I want. So what is this nonsense about preserving the domestic farm industry?
Market Distortions and Land Values [06:15]
Chris Edwards: Yeah, you’re right. It is nonsense. But what the effect of farm subsidies really is twofold. It distorts the crops that the farmers are using their land for. As you said, 90% of the cash subsidies go to wheat, corn, soybeans, rice, and cotton. Many other crops—the fruits and vegetables, for example—are not subsidized really at all. So the first thing it does is farmers, rather than planting the most efficient crops on their land, they are planting the crops that get the subsidies. So it distorts the farm economy that first way.
The second thing it does is it inflates the value of agriculture land in rural America. So all these subsidies pour not to farmers, they actually go to landowners. And so it’s really a misnomer calling these farm subsidies. They’re really landowner subsidies. That’s who gets—if you own the land, the subsidy from Washington goes to you, and you may well have a tenant farmer. The tenant farmer doesn’t get the money. The landowner gets it, and it ends up inflating the value of his land. And so that’s where the subsidies really go.
Lessons from New Zealand [08:20]
Bob Zadek: And the irony, Chris, you’re exactly right, of course. And the irony is that if you’re a family farmer, you want to buy some land on which to grow your crops, but the land prices get inflated by the subsidy. So as a family farmer, you can’t buy the darn land.
Chris Edwards: That’s exactly right. It’s the new young farmers that are really screwed by this policy because the land has become so expensive. So either they can’t buy it, or they’ve got to go massively in debt to the banks to buy it, or they’ve got to be tenant farmers. And so this—the policies are just—they’re really crazy. They don’t help the traditional small farm-owning family that the politician claims that it’s helping.
Bob Zadek: Now, Chris, we spend $25 billion a year. Tell us what would happen if tomorrow—tomorrow—$25 billion was cut from the budget and we didn’t spend a dime on subsidies. How would anybody be affected for better or for worse if we just stopped spending $25 billion with a B?
Chris Edwards: Well, the interesting thing is right now would actually be a great time to do that because the prices of food, prices of crops are generally very high now. Farmers have been doing extremely well the last five or 10 years. I mean, average farm incomes now are about a third higher than the average incomes of US households. So now would actually be a very good time to start phasing out farm subsidies.
And we have real-world experience of this. New Zealand in the early 1980s had huge budget troubles, and their farm subsidies were getting really out of control. And actually, a left-of-center Labor government at the time in New Zealand completely abolished New Zealand’s farm subsidies. And there were initially, you know, there was marching in the streets, the farmers were marching with placards on the capital and complaining. But you know what? The government stuck to its guns, and the farm subsidies now have been completely abolished in New Zealand. And now New Zealand farmers, they don’t want subsidies. What they did is they diversified their land use, they’ve gone to new higher-value crops, and now New Zealand farmers are militantly against subsidies and government help. And so I think that’s what would happen in this country. There would be some initial adjustments, but then farmers would adjust. They would plant different crops, they would do things more efficiently, and I think they’d become—they’d learn to survive in the global market without government help.
Political Incentives and Urban Legislators [11:20]
Bob Zadek: This is Bob Zadek talking with Chris Edwards. We’re talking about farm subsidies. When we come back in 90 seconds, you’ll learn about a subsidy in Texas for growing grass. Back in 90 seconds.
[Music/Bumper]
Bob Zadek: Welcome back to the Bob Zadek Show. 800-345-5639 is our number if you have something to add. I’m being joined for the first half hour by Chris Edwards. Chris is a tax analyst at the Cato Institute, an expert on federal budgetary matters. We are talking about farm subsidies, a program which costs US taxpayers at least $25 billion. And with all this talk about how we cut, how we reduce the deficit, here is a $25 billion expenditure that could be cut from the budget tomorrow morning while you’re having your coffee with no adverse effect on anybody within the sound of my voice. It would be good for everybody.
And this is, Chris, I think, a litmus test because whether you are a progressive, a liberal, a Democrat, a Republican, a libertarian, or a socialist, whatever you are, you cannot be in favor of farm subsidies. It is a program which offers—which is adverse to every recognized political philosophy, yet it continues just because the farm lobby is so strong. This is politics at its most ugly because we have a $25 billion program that benefits nobody. And I dare say if Iowa wasn’t the first primary state—and we’ll be talking about ethanol later, because that’s a very tempting topic—but if Iowa was not the first primary state, I don’t think the farm lobby would be as strong as it is now.
Chris, we have a caller from Arkansas, Mickey. We’ll talk to Mickey in one second. But I would just like to point out Chuck Schumer, who manages to get in front of a camera every 20 minutes—he’s a senator from New York—why isn’t he jumping up and down screaming? Since New York gets 1% of the farm subsidies, New York is a net payer of farm subsidies, and New York, predominantly an urban state, not a necessarily a farming state, his Chuck Schumer’s urban constituents are paying—are footing the bill for all of these farm subsidies, yet he is totally out to lunch. He ignores the issue. It stumps me why urban legislators just are so passive.
Environmental and Social Impacts [12:20]
Chris Edwards: You’re absolutely right on all those points. And here’s an example of how this works is that, you know, farm subsidies not only bad from an economic point of view, and you know, liberals don’t like it because it’s really—it’s subsidies for wealthy people. Conservative and libertarian economists don’t like it because it’s wasteful and bad for the economy. But also environmentalists don’t like farm subsidies either. Farm subsidies are bad for the environment. What they do is they induce farmers to farm marginal farmland that should really be left as forest land or other type or wetlands or other types of land. It induces them to overuse fertilizer because they have to do that if they’re farming marginal land. So environmentalists have never liked farm subsidies either.
So it’s amazing the power of these lobby groups that they’re able to year after year subsidize this stuff that people on all ends of the political spectrum don’t like. And part of how they do it with farm subsidies is they group together farm subsidies in a big broader bill that provides food subsidies that urban America likes. So like the school lunch and food stamp program are wrapped up into this farm subsidy bill so that liberal urban legislators vote for the overall bill along with the senators who support the rural farming interest. So it’s very sneaky what they do with farm subsidies.
Caller: An Arkansas Landlord’s Perspective [14:40]
Bob Zadek: Chris, we have a caller from Arkansas, Mickey. We’ll talk to Mickey. Mickey, they tell me you’re an Arkansas agricultural landlord.
Caller (Mickey): Yes, I am. And I listen to your show all the time and saw you talking about something close to me. And I agree with about everything Chris has said. But I have to disagree with you on one thing, Bob. It would hurt me if they cut it out. My income would go down.
Bob Zadek: And does that mean—does that mean that you couldn’t trade in your Ford pickup truck every 10 years as you do now? Is that the effect upon you?
Caller (Mickey): Well, I’ll admit most farmers—and the farmers y’all are talking about in Arkansas are well-to-do, and I’m not suffering either. But if you cut it out, my income probably goes down $250,000 a year. And you know, I kind of like having that extra—I’ll call it bonus money. It’s just kind of nice to know you got it coming in.
Bob Zadek: So you don’t—you don’t see that if we cut out agricultural subsidies that the shelves, the food shelves in supermarkets in Arkansas would be depleted of all bread and milk and potatoes?
Caller (Mickey): Well, if I was to be honest, I’d have to say there’d probably still be plenty of food for everybody. And I don’t—I doubt the income of the farmers would really change because they just wouldn’t be paying as much for equipment, etc.
Bob Zadek: And you’re a landlord, you’re a farming landlord, I guess. So you don’t actually get up in bib overalls and go out there and peck at the ground, do you?
Caller (Mickey): No, I don’t. I used to farm. I quit in my early 40s. I loved farming for 20 years, and I enjoyed getting those checks from the government. Now it’s just electronic deposit. I used to really enjoy getting them in the mail, and I’ve been deprived of that.
Bob Zadek: And you’re a landlord, so you don’t farm, but you have a tenant who farms.
Caller (Mickey): That’s correct.
Bob Zadek: And so you get the check, not your tenant.
Caller (Mickey): Well, in a roundabout way, it all goes through the farmer first, but the landlord actually gets it because you raise the rent accordingly. When—you know, it’s just the way it needs to work.
Bob Zadek: Well, it doesn’t need to work that way, but that’s the way it does work.
The Ethanol and Sugar Scandals [18:20]
Chris Edwards: Can I see here what, you know, what I think is interesting about farming? Farming is, you know, it is a business. And there are many—it’s a very—it’s often a very risky business. And people, I think, who live in urban America like I do, often you have sympathy for farmers because they deal with things like adverse weather events and bad crop years and that sort of stuff. But it’s always struck me that farming is really no riskier than any other sort of risky business like high technology. And you know, if you’re a software developer, you borrow money from the bank, you take great risks, your product may succeed, it may not succeed. Or any other business, you introduce a new product line every year, it might succeed, it might fail, there’s great risks involved.
And so, you know, people always talk about farming as if it’s specially risky and that’s why it needs government subsidies. I don’t really see it like that. I see just about—I mean, the economic future of America is always unknown, and every industry’s got to take lots of risks. And so I don’t see why this industry needs to be more coddled than something like high tech.
Bob Zadek: Mickey, can you make a case for farm subsidies since you are actually a farmer and a farm landlord?
Caller (Mickey): Boy, you’re—you’re causing me a moral dilemma here.
Bob Zadek: Take your best shot, Mickey.
Caller (Mickey): You want me to defend farm subsidies? As a farmer, as the one who gets the direct deposit into your bloated checking account? No, no, I can’t defend them.
Bob Zadek: I guess that says it all. I should tell Tim, my engineer, to switch to music for 40 minutes because nothing says it better than that.
Caller (Mickey): There is a related topic. I don’t know if this would be the right time to talk about it. They’ve got the subsidies for ethanol. And instantly, the first time they talked about that, turning corn into ethanol, I thought it takes a tremendous amount of energy to raise corn and a tremendous amount of fertilizers. And the main fertilizer is urea, nitrogen, and they make that from natural gas. That would be an interesting topic sometime in the future because it cannot make any sense whatsoever.
Bob Zadek: Well, Mickey, actually, if you stay tuned, I am going to cover ethanol. Chris is going to have to leave us at the half hour. I am going to spend a little time on ethanol because it’s such a wonderful topic and it brings in Al Gore’s position on ethanol. Al Gore, who looks like he’s been eating too much corn lately, but that’s a different subject. So Mickey, we are going to cover ethanol if you stay tuned. Thanks, Mickey. Thanks so much for calling.
Caller (Mickey): Alright, thank you.
Bob Zadek: Appreciate hearing from you. Well, Chris, that sounded like confessions of a subsidized farmer to me.
Chris Edwards: Yeah, that was quite interesting. And you know, he confirmed basically what I’m saying. He’s a fairly well-off farmer, he’s the landlord, he gets the money, he doesn’t really need it. And not only that, he and his tenant would continue farming on even if they didn’t get the subsidy. You know, the ethanol is very much related, as you know, because it’s again, it’s subsidies for rural America that are essentially—because of the power of rural America in the Senate, they’re essentially foisted on all of us in higher prices at the pump, inflated food prices. It’s really been—ethanol has been a disastrous policy. But you know, we get the same sort of negative economic effects with all these subsidy programs. Some genius in Washington gets this great idea, a lobbyist supports him, and gee, oh gee, it turns out it doesn’t really work and you can’t really break the forces of the free market economy. And when you do, you damage society. So ethanol is just—it really is an interesting parallel to the farm subsidies.
Bob Zadek: Is it an exaggeration or is it not an exaggeration to look at farm subsidies as being an entitlement which goes to the wealthiest corporations in the country? We want to talk about entitlements for Social Security and related topics which are very much in the news. This has grown to be an entitlement to Cargill. Is that an exaggeration?
Chris Edwards: No, that’s absolutely right. In fact, much of what the federal government does includes subsidies to wealthy people. There’s been studies that looked at the overall distribution of federal spending. In other words, on the tax side, we know that the wealthy pay most of the income taxes. But people assume that most of the spending goes to poor people to help poor people. Not true at all. There’s been studies looking at overall spending, who gets the spending, and really, it’s distributed across the board. There’s many programs that skew the benefits to the wealthy and to businesses, and the farm subsidies are very good example of this.
So people assume that when you downsize the government, you’re going to be hurting poor people. No, not at all. In a lot of ways, farm programs really screw poor people. And I’ll give you one good example: the sugar program and the milk program. These are two government agriculture programs. We have import barriers on sugar and milk. We have domestic monopoly quotas on sugar and milk that benefit sugar and milk producers and harm milk and dairy consumers and the consumers—average consumers who eat sugar in breakfast cereals, in candy, in all kinds of other stuff. So those programs similarly, they go to give monopoly profits to the milk and sugar producers, they harm average consumers.
Bob Zadek: I’m going to thank Chris. Chris has to leave us at the half hour, and I’m going to thank Chris very much for sharing his expertise. We’re talking about farm subsidies. This is Bob Zadek. 800-345-5639. Farm subsidies is a $25 billion program which could be eliminated on 24 hours’ notice with no adverse effect to anybody except for the CEO of Cargill, who will see his earnings go down by an immeasurable rounding error. He will be the only one hurt by farm subsidies. So this is, to my mind, the litmus test for political sincerity. Any politician who defends farm subsidies is utterly deceitful and not true to his beliefs, whatever his beliefs are. Chris, thanks so much for joining me for the half hour. I know your time is valuable, and I appreciate your expertise.
Chris Edwards: Thanks for covering this great topic. We’ll see whether the Republicans actually cut this.
Bob Zadek: Well, we’ll see, Chris. Thanks so much for joining us. This is Bob Zadek. I’ll be back in 90 seconds. 800-345-5639. You’ll learn how we subsidize obesity. Back in 90 seconds.
[Music/Bumper]
Bob Zadek: Welcome back to the Bob Zadek Show. 800-345-5639 is our number if you have something to add. The topic is the obscenity of farm subsidies, corporate welfare writ large. Farm subsidies, a $25 billion program that hurts everybody. It is a program that could be slashed from the federal budget on 24 hours’ notice without harming a soul except for the president of Archer Daniels Midland, the president of Cargill, and some super-rich domestic Cuban sugar growers in the Everglades. That’s today’s topic.
Farm subsidies are a governmental obscenity. And it is a litmus test for today’s politicians because it is fair to say that no matter what your political philosophical leanings are, you cannot—underline cannot—support farm subsidies lest you just have sold your vote to your buddies in Congress. This is the litmus test.
The Litmus Test and Peanut Subsidies [26:30]
Bob Zadek: Now, I, like most people, got very encouraged with the ascendancy of the Tea Party and their promise to eliminate governmental waste, cut the budget. Well, the farm subsidy is, of course, a very clear target. It should be cut instantly. But the peanut farmers—remember Jimmy Carter—the peanut farmers in Georgia get huge subsidies. Of course, we all are desperate for cheap peanut butter, so this fills a desperate national need. Peanut farmers get massive subsidies. You would think that the Tea Partiers are going to be slashing the subsidies to all farm products and probably including peanuts.
But in researching for this show, a quote by Don Kohler, who’s the Executive Director of the Georgia Peanut Commission—now, I am not a member of the Georgia Peanut Commission, sounds like a nice group of folks—but in discussing the prospects for Tea Partiers from Georgia cutting the wasteful peanut subsidy, here’s a quote from Dan Kohler, Executive Director of the Georgia Peanut Commission. He said, quote, “Some of the Georgia folks talk like Tea Party candidates, but if you’re from a district that has peanuts, you won’t stay in Congress long if you start voting against farm bills or create problems for peanuts.” Perish forbid that a Georgia Tea Partier would dare to create a, quote, “problem for peanuts.”
So is he right? Are the Tea Partiers going to cave and going to look to their own self-preservation in Congress and surrender in no time their principles? Well, farm subsidies are the perfect litmus test because farm subsidies can be cut totally with no harm to anybody except maybe for the checks you get from the food lobbyists.
Sugar Subsidies and the Everglades [28:30]
Bob Zadek: Before the break, we discussed the massive sugar subsidies. As you may know, the American Congress loves the very small, controlled-by-a-few-families domestic sugar industry. And they are protected like our poor stepchildren. We spend a fortune to protect domestic sugar, which mostly is done in Florida, consuming and destroying the Everglades. The domestic sugar industry will tell us, “Hey, it’s a great program. We keep a lot of sugar jobs domestically, which otherwise would be lost overseas or lost to Central and South America, and it doesn’t cost taxpayers a dime.” Well, in point of fact, it costs us an arm and a leg. These guys are just liars.
In fact, statistics are that to preserve one domestic sugar job, we pay $826,000. That’s to save one crummy sugar job. And that ignores, of course, the following: by the US Congress artificially inflating the cost of domestic sugar, we chase all the candy manufacturers to Canada and Mexico, causing a loss in the last couple of years of 10,000 candy manufacturing jobs. So we spend $826,000 to save one domestic sugar job, and we chase Hershey’s and all the other and Brach’s and all the other candy manufacturers—we chase them to Canada and to Mexico. That’s what our Congress is doing because they get all of these massive political contributions from the domestic sugar industry.
So the farm—our domestic farm subsidy program is one which is so ugly because it’s all driven by politics with no sensible public policy purpose. Everybody is hurt by farm subsidy. Yet wherever you live and however you vote, you have voted for a congressman or a senator who supports this obscenity. They should be kicked out of Congress.
Protecting Farmers vs. Other Industries [31:00]
Bob Zadek: And part of the domestic farm subsidy program is to protect farmers from the fluctuations in the price of their product. It’s to protect the poor family farmers. Well, first of all, large corporate farmers can easily hedge against price fluctuations. And as to the small farmers, why are they any different than the folks who run ski slopes in Tahoe? If they suffer through a very warm winter without much snow, does Congress subsidize them because they have suffered from a bad winter? No. The ski slope operators and many other industries that are affected by weather and other unpredictable and uncontrollable factors, they just put away money during the good years to protect them against the bad years. And farmers would do the same thing. They do not deserve and, more importantly, do not need any protection.
The Ethanol Scandal and Al Gore [32:40]
Bob Zadek: And that, of course, leads us to the largest obscenity of all, which is ethanol. And if we’re going to discuss the ethanol scandal, Tim, can you find us some ethanol music for us?
[Audio Clip: “The corn is as high as an elephant’s eye…”]
Bob Zadek: Perfect, Tim. Perfect ethanol music. That’s from the show Ethanol in the Gas Tank. No, no, that was—sorry—that was Oklahoma! with a little ethanol refrain. You all know about ethanol, don’t you? That was an Iowa-driven failed concept to insulate us from dependency upon foreign oil. Some bright corn growers got the idea: let’s extract ethanol from corn, put ethanol in the gas tanks, and we can tell the Saudi Arabians to go put it where the sun don’t shine because we don’t need their oil anymore, we have our ethanol. That was the plan.
You remember who one of the largest promoters of ethanol was? It was chubby Al Gore, who has eaten too much corn in his life, obviously. Well, he has supported—he was a large spokesperson for ethanol during its early years. He pushed to get ethanol forced into the gas tanks. Well, Al Gore—Al Gore recently has come out of the ethanol closet and publicly admitted that when he promoted ethanol, he did so to win the Iowa primary or the Iowa caucus. And he knew then and he acknowledges now that, in fact, the whole concept of ethanol helping making us less dependent upon foreign oil was just not true.
Well, when Al Gore admits it was a flawed, false concept, doesn’t that tell us that we should close up the ethanol subsidies we are providing to Iowa and other corn growers? But no, compliments of President Obama, he is increasing the requirement that ethanol be used as a domestic fuel. So when we discover that a massive diversion of federal resources to something like ethanol is just plain phony, do we stop? No. Another corporate welfare opportunity. Let’s divert valuable dollars from our deficit to a flawed concept of ethanol in the gas tank. It continues and it grows. Well, when the chief sponsor admits it was phony, shouldn’t the government have a little “come to Jesus” and reverse the policy and go back to using corn for food? But no, not our government. Continue to promote ethanol even though it is now admittedly a failed concept.
Impact on Food Prices [35:00]
Bob Zadek: And ethanol is even worse than you think. We have now devoted 40% of our corn production to ethanol. That means 40% away from food, which has caused the price of food for all of us to go up. And not just the price of popcorn and the price of corn on the cob. The price of beef goes up because what do beef eat? Beef eat corn. And when the price of corn goes up, the price of beef goes up. So we are all paying every time we go to the supermarket. We are paying for a policy that was created to get Al Gore elected president, and even he admits it was a mistake. Is that the way we want our government to be run? With all the politicians who are all taking an oath to an efficient, less expensive government, how could anybody justify spending money on ethanol subsidy? It makes no sense. What hypocrisy. And we have to speak out and we have to tell them, “We’re onto you guys. Cut out these farm subsidies.”
[Music/Bumper]
Subsidizing Obesity and Global Poverty [39:35]
Bob Zadek: Welcome back to the Bob Zadek Show. 800-345-5639. The topic is the obscenity of farm subsidies, corporate welfare writ large. Farm subsidies, a $25 billion program that hurts everybody. It is a program that could be slashed from the federal budget on 24 hours’ notice without harming a soul except for the president of Archer Daniels Midland, the president of Cargill, and some super-rich domestic Cuban sugar growers in the Everglades. That’s today’s topic.
Farm subsidies are a governmental obscenity. And it is a litmus test for today’s politicians because it is fair to say that no matter what your political philosophical leanings are, you cannot—underline cannot—support farm subsidies lest you just have sold your vote to your buddies in Congress. This is the litmus test.
Now, I like most people got very encouraged with the ascendancy of the Tea Party and their promise to eliminate governmental waste, cut the budget. Well, the farm subsidy is, of course, a very clear target. It should be cut instantly.
And just to show you how nasty—nasty—this stuff is. We have our First Lady, Michelle Obama, who is beating up on PTA bake sales because we’re feeding kids brownies and cupcakes and homemade stuff like that. And she said it’s bad for you, you should be eating sliced-up celery at your celery sales to raise money for the school. Well, Michelle Obama, why aren’t you out there beating up on Willie Nelson and all those people who promote farm subsidies? Why do I pick on Michelle Obama? Because she has taken a position against childhood obesity.
Well, here’s the fact. The fact is our farm subsidy program subsidizes really only a few crops, Michelle. It subsidizes sugar, corn, soy, wheat. All that stuff is bad for you, Michelle. Do we subsidize fruits, vegetables, beef? Uh-uh. They don’t get subsidized. So in effect, Michelle, the farm subsidy program that the President and his cohorts in Congress support only subsidize food that makes kids fat. And it doesn’t subsidize the veggies that you love so much. How could anybody defend a federal program where on the one hand we are trying to get kids to eat better, on the other hand we’re subsidizing all the food that makes them fat? Isn’t that a little bit misguided? Doesn’t that make you wonder whether one hand knows what the other hand is doing? The utter absurdity and hypocrisy of these programs. So Michelle, stop worrying about the bake sales, don’t take away my brownies, Michelle. Leave the brownies alone, but get after the subsidies to corn and soy and wheat and sugar. That’s where you should focus your energies.
The WTO and International Trade [41:40]
Bob Zadek: Now, it gets even worse than that. Because what we do is we very much want the Third World to be able to become somewhat economically self-sufficient. Yet what we do is we subsidize our domestic farmers. As a consequence, we can grow crops with subsidies cheaper than the Third World can. So take cotton being grown in Nigeria. Nigeria could have a domestic cotton industry, but they cannot produce cotton as cheaply as the subsidized American farmers are. So Nigeria ends up not being able to export cotton and employ their domestic cotton growers because they can’t compete against America. So we force dependency upon Nigeria and prevent them from becoming economically viable.
We do the same thing with sugar. We unfairly compete against Third World or Second World countries who don’t subsidize quite as much their crops. In fact, there was an interesting story recently. The World Trade Organization brought an action—Brazil brought an action against the US for illegally subsidizing US sugar growers. And the US was found to be guilty. The US settled with Brazil. And you know what the settlement was? The US government now pays about $15 billion to subsidize Brazilian sugar growers. So as a result of the World Trade Organization complaint against the US, not only do we subsidize US sugar growers, we subsidize Brazilian sugar growers. That is our policy that your elected official, wherever you live, that is the policy that your elected official has supported. It makes no sense. You should demand that Congress immediately reverse all and undo all federal farm subsidies.
Debunking the Family Farmer Mythology [46:20]
Bob Zadek: So when you hear some Tea Partier cry out for closing up the Department of Agriculture, while that may seem to be extreme, it’s not. It’s good policy. The money the Department of Agriculture spends is just totally wasteful. It cannot be defended. There is no constituency. There is no reason on earth why farmers are somehow special and they cannot exist with a market-driven economy the way the rest of our economy does. To protect the farmers and food growers from the free market makes no sense whatever.
And it is—the proof of it—this is not just hyperbole. There’s proof of it. There’s only a handful of crops—they’re big crops—that get subsidized. But vegetables, for the most part, are not subsidized. They are subject to the free market. Yet the domestic vegetable industry is thriving. Carrots and corn and broccoli and raisins and tomatoes and apples and all that stuff—it all prospers. They make buckets of money growing those crops without subsidy. So obviously, the free market is not a danger. We are not in danger of becoming dependent upon foreign carrots. What are we worried about? Why is there the fear of the free market? Yet there is this folklore about the family farmer. Tim, can we hear that spokesman on farm policy, Neil Young, what he feels about the family farmer?
[Audio Clip: Neil Young: “This is really happening. This song is for all those families, all those farmers, all those children, all those wives. Farmers have committed suicide because of this. Families have broken up. Generation after generation after generation of family farms have suddenly stopped. Tradition that America was built in, living off the land…”]
Bob Zadek: That’s Neil Young, spokesman for US government agricultural policy, pining away for the poor family farmer who needs a subsidy. Neil, get a life. That’s not the way it is. Farm policy in this country hurts the family farmer. But there is this mythology about rural America and farmers—the Neil Young mythology—that keeps farm subsidy alive. Well, I say that’s enough. Stop farm subsidy. It’s a waste of our dollars. It is indefensible. And if ever there was a litmus test as to the sincerity of anybody in Congress to reduce the budget deficit, if you want one litmus test that’s better than any other test, it’s “vote down farm subsidy.” If your elected official flunks that test, they do not deserve to be re-elected.
Not that this is the most important issue in our country, but it is the clearest test of whether or not you in Congress are a hypocrite and just give lip service to budget deficits and wasteful government policies or whether you are sincere. There is no reason why we cannot apply free market principles to agriculture as we do for the rest of society. It is corporate welfare, bad for everybody within the sound of my voice. I hate agricultural subsidies. There is no constituency for it.
This is Bob Zadek, host of the Bob Zadek Show. We’ve been talking about farm subsidies, a $25 billion wasteful program which we’ve just blown the lid off. I expect you will turn off your radios and email a letter to your elected official complaining about $25 billion down the farm toilet. It has to be stopped. This is Bob Zadek, host of the Bob Zadek Show, every Sunday at noon, 910 AM. Happy to join you on every Sunday. I’ll be speaking to you soon. Thanks so much for listening.
[Outro Music]