We don’t need more farm subsidies!

The Des Moines Register reported that Secretary of Agriculture, Tom Vilsack, said farmers need a new source of income, and that 90% of farmers don’t make a majority of their income from farming, and that that is a problem.  (See link below.)


It is not the government’s job to find new sources of income for farmers.  The fact that a large percentage of Iowa‘s farmers have other full-time jobs is not a problem that needs fixing. With the current state of farming mechanization, working a small farm is not a full-time job.  We already subsidize farmers by paying 60% of their crop insurance, regardless of size, for doing nothing special or extra.  Paying farmers for “carbon sequestration” sounds a lot like paying them for what they already should be doing.  What we should do is make good farming practices a requirement in order to receive crop insurance or other subsidies.


Link to Register article:  https://www.desmoinesregister.com/story/money/agriculture/2021/02/27/tom-vilsack-us-agriculture-secretary-iowa-farmers-fight-climate-change-find-new-income-joe-biden/6832688002/

Farmers are not special, and shouldn’t be given special preferential treatment.

The Des Moines Register recently recently ran an editorial advising us to not buy into the idea that Iowa farmers “feed the world”.  As the Register documented, “Only half of one percent of U.S. agricultural exports went to a group of 19 undernourished countries that includes Haiti, Yemen and Ethiopia.”  Some farmers and their supporters have a vested  interest in making sure that fellow citizens hold them in a special position because they produce the food we eat.  They perpetuate that meme in order to get special treatment by our government, for example by not having to either stop or pay for polluting our waters,  and by receiving a 60% subsidy on their crop/revenue insurance premiums, among many others.

Every week, most of us buy food from all over the world at our local grocery stores. It may be wonderful to be able to buy local fresh food, but it is not a necessity. International voluntary free trade is what has allowed us, and much of the rest of the world, to avoid starvation when local producers fail for any reason.  Farmers should be given no more credit than other producers of all kinds of products. As Adam Smith wrote in 1776 in his book, The Wealth of Nations, “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.”

Link to Register editorial:  http://www.desmoinesregister.com/story/opinion/editorials/2016/10/09/editorial-dont-expect-iowa-farmers-feed-world/91735242/

Crop insurance is essential, but no taxpayer subsidy is needed.

Craig Hill’s editorial explaining the importance of crop insurance to farmers made a lot of sense. (“This much is certain – For farmers, crop insurance is essential” 10/5/2016)   Most business and individuals buy insurance to reduce risk, and, as Mr. Hill explained, farmers have plenty of risk.  What he did not explain is why taxpayers need to subsidize about 60% of the premium.  Contrary to his opinion, it definitely is a handout.  Farmers, on average, have much more wealth than the average person.  It doesn’t matter that much of the wealth is tied up in land values.  Land can be sold for cash just like any other asset.  Crop insurance is a good idea, it just should not be subsidized by taxpayers.  In the next farm bill, a couple of years from now, we need to eliminate the taxpayer subsidy for crop insurance.

Link to Register article: http://www.desmoinesregister.com/story/opinion/columnists/iowa-view/2016/10/04/much-certain-farmers-crop-insurance-essential/91551614/

Why do taxpayers pay for bird flu?

According to a report in the Des Moines Register today, 10/26/2015, the last bird flu outbreak cost taxpayers $1 billion.  (See link below.)   The payments to chicken and egg producers included the cost of the birds that were destroyed, the cleanup, and “indemnity payments” to cover their losses.
I understand that we citizens, through our government, need to prohibit diseased meat from entering our food supply.  I don’t understand why producers are not insured against such a foreseeable risk.  If we have a law that prohibits diseased meat from being sold, and if we do not provide producers with a taxpayer paid bailout, then producers will do one (or more) of three things:  they will reduce their own risk by splitting large flocks into smaller, geographically separated flocks; they will buy insurance to cover the risk; or they will take the financial risk of loss upon themselves.
To the extent that taxpayers bail out producers, they will not take the necessary steps to manage and reduce their own risks.  We need to give notice to producers that they will not be bailed out in the future.
Link to Register article: http://www.desmoinesregister.com/story/money/agriculture/2015/10/25/bird-flu-when-return/74334080/

Inequality is unjust and immoral – if government force is used.

Today, 9/16/2014, The Des Moines Register once again reinforced the idea that there is something inherently wrong with increasing income inequality.  (See “Ag economy cited in study showing growth in rich-poor gap” – link below.)  In a free market, where government does not interfere except to stop fraud and force, people only become wealthy by producing things that others value and purchase voluntarily.  Under free market capitalism, voluntary trade only makes every participant richer.

Unfortunately, we don’t have a free market in much of our agricultural sector.  So, an important question is how did the wealthy gain their wealth. If they gained their wealth by receiving subsidies from our government, then they gained their wealth by making others poorer. Today, farmers receive various kinds of government subsidies, both directly and indirectly.  For example, crop insurance premiums are subsidized 60% by taxpayers, regardless of the income or wealth of the farmer. And, crop insurance not only covers losses from natural disasters, it also covers loss of profits due to lower crop prices. There should be no subsidy at all for crop insurance, but it is particularly distasteful when the subsidy goes to the rich.  So, we must blame our own government’s policies for at least some of the unjust and immoral aspects of income and wealth inequality.

The new welfare dependent class – businesses

If seems as if all businesses now require some type of welfare program.  The definition of economic development is grants or loans or special tax breaks given by our government to businesses.  Banks get their welfare indirectly – from loan guarantees from many government programs.  Of course our farmers must be protected from losses by government – through crop insurance subsidies that not only cover natural disasters, but actually protect against price declines.  All types of energy companies receive special tax credits or tax breaks.  The biggest manufacturers in Iowa receive large tax credits for research.  Now, Mediacom and John Deere want a grant of $800,000 from the federal government to help bring high speed internet to farmers who buy high-tech, internet connected tractors that cost hundreds of thousands of dollars.  We should say no!  We need to reverse the trend of expecting taxpayers to fund all types of economic development.  Just as with with individuals and families, welfare for businesses create dependency.  Our economy will continue to grow sluggishly as long as we look to government to manage our economic development.

5 more years of farm welfare?

It appears that those in charge of reconciling the differences between the House and Senate versions of the Farm Bill will not be doing anything to reduce the obscene amount of welfare going to farmers.  Money “saved” by eliminating direct payments is being shifted towards more subsidies for crop insurance.  Senator Grassley’s effort to place a cap on the total welfare payments received by any one farmer appears to have been watered down at best.  Farmers have higher incomes and greater wealth than most citizens. They should pay the full cost of their crop insurance.  Now, lets hope that either the full House or Senate will vote this bill down.  We don’t need five more years of welfare for rich farmers.

Farm Bill blackmail!

Almost every day we are warned that we must pass a Farm Bill because, “… if we allow the current bill expire we will revert back to the 1949 law that will raise the price of milk to $7 per gallon!”  Why is it that this situation never changes?  I’ve heard this same threat for decades.   Any new Farm Bill should include a provision to repeal this archaic 1949 law and stop all government intervention in farm markets if the Farm Bill expires.

Income inequality is not the problem.

Income inequality is not a problem in and of itself.  As long a people earn their income through honest, peaceful and voluntary exchange, then there is no moral reason for our government to redistribute that wealth.  What is a problem is when government places its thumb on the scale and unfairly helps the rich to get richer, or hurts the poor and makes them poorer.  To the extent that a person gains wealth by unequal preferential treatment by government, it is morally correct for government to use its force to take away that wealth.

One good example of the many unfair government policies that wrongly favor the rich is the special low income tax rate on “carried interest” income earned by hedge fund managers.  They call it carried interest, but it is nothing more than a bonus based on performance.   In any other situation, this type of income is taxed at regular income tax rates. Somehow, hedge fund managers have sold politicians on the idea that carried interest is a special kind of income that should be taxed at lower rates.  Another example is the Oil Depletion Allowance for oil companies.  Another is farm subsidies for rich farmers.  We do not need to raise tax rates on ordinary income, we do need to do away with the unfair preferences, tax breaks, and subsidies that go mostly to the wealthy.

A good example of government policy that hurts poor people is that of keeping interest rates low in order to prop up housing prices.  If housing prices had been allowed to fall to their free market levels, housing would be much more affordable for poor people.  Instead, our government tries to fix the problem that it helped to create (unaffordable housing) by giving rent subsidies to the poor – creating more dependency on government, but not fixing the underlying causes of the problem.

To misquote Walter Scott, “Oh what a tangled web we weave when first we practice to use our government to achieve social goals.”  The solution to many of our economic problems today is to reduce the size and scope of our government.  Many unfair crony capitalist subsidies and tax breaks exist because our government has expanded far beyond its Constitutionally limited powers.  The primary just powers of government are to protect our lives, liberty and property; and to resolve disputes.  The scope and powers of our current federal government are clearly way beyond the limited government that our founding fathers created.  Lets start by closing unfair tax breaks and lowering spending to match.

Stop crop insurance subsidy!

Taxpayers subsidize about  60% of the premiums that farmers pay for crop insurance – regardless of how wealthy the farmer is, regardless of the income of the farmer, and regardless of whether or not the owner actually even works on a farm.  Crop insurance covers not only losses due to disasters, but it also covers losses due to low prices.  There is no ethical, moral, or food security reason why wealthy farm owners should be receiving any subsidy.  Most farms, like most other businesses, need disaster insurance.  But, there is no good reason why taxpayers should subsidize the premiums.  Farmers say they need a 5-year farm bill so that they can properly plan.  That is understandable.  Let’s let them plan on not receiving any subsidy on their crop insurance.