President Donald Trump's protectionist trade policies have backfired on farmers who are seeing their access to foreign markets dry up as a result. His solution? Last year, he instructed the U.S. Department of Agriculture to hand out billions in taxpayer dollars to affected agricultural interests in a transparent attempt to maintain their support. This week, the president announced his intention to divvy out to farmers another $15 billion in taxpayer-financed hush money.
How did we get to the point where the president of the United States can willy-nilly raise taxes on American consumers and share the proceeds with a select commercial interest? That story began a long time ago.
Coincidentally, this year marks the 80th anniversary of John Steinbeck's riveting, fictionalized Depression-era tale of a struggling family of Oklahoma tenant farmers and their desperate journey to California in search of greener pastures in "The Grapes of Wrath." Particularly emotive was Steinbeck's depiction of oranges being doused with kerosene and pigs being slaughtered in an attempt to reduce commodity supplies and inflate prices.
Unfortunately, Steinbeck assumed that private cartels were destroying the food when, in fact, it was at the behest of government regulators. In time, these measures became unpopular and policymakers began to augment supply restrictions with measures to artificially boost demand such as government purchases of commodities, subsidized crop insurance and direct payments to farmers. Eighty years later, these remain (albeit in different forms) despite scant support from economists and policy experts.
Prominent politicians on both sides of the aisle continue to allow special interests to dictate farm policy, much to the detriment of taxpayers and consumers. That's because when the government confers a benefit on a special interest, the recipient will become accustomed to it – even reliant on it – and work tirelessly to maintain it. One need look no further than the innumerable groups comprising the "farm lobby" and the powerful sway they hold with policymakers.
Today, the chief question in the minds of most policymakers is not whether these programs have long outlived any usefulness; rather, the concern is with how government-dispensed privileges can be tailored to ensure the continuing support of agricultural interests at the ballot box.
Trump, in another example, campaigned on a promise to "drain the swamp" in Washington. Two years later, he was instead warning a crowd filled with Iowa corn interests that "The Dems will end ethanol ... They will take it away ... you better go out there and vote for Republicans." He was referring to the federal Renewable Fuels Standard (RFS), which requires fuel refiners to use a certain amount of ethanol in their gasoline, artificially inflating the demand for corn to the benefit of corn growers and to the detriment of consumers, other industries and the environment.
On the Democratic side, presidential aspirant Sen. Elizabeth Warren (D-Mass.) recently released a campaign-style policy brief titled "Leveling the Playing Field for America's Family Farmers." According to Sen. Warren, "bad decisions in Washington have consistently favored the interests of multinational corporations and big business lobbyists over the interests of family farmers."
So far so good. The federal government's $20 billion system of farm subsidies does benefit the largest producers: Approximately 60% of subsidies from the three largest federal farm programs go to the largest 10% of farms. Funny, though, that Warren never gets around to calling for an end to these programs. Instead, she lays out a list of additional protectionist measures designed to capitalize on the wave of populism that Trump has successfully exploited.
Agriculture is but one of many commercial interests working feverishly to obtain or maintain their government-granted privileges. But the past 80 years of political pandering to agricultural interests may be the best example of how the federal government has become a dispenser of privilege to the politically select few. Subsidized agriculture's political benefactors defend the handouts as necessary to "ensure our nation has an adequate food supply." But the truth is that policymakers are generally more responsive to special interests than to the taxpayers and consumers who foot the bill.