The Deck is Depressingly Stacked Against Subsidy Reformers

It's long been known that folks who support significant reforms to state and federal subsidy programs face a really uphill battle.  They're easily demagogued as "anti-farm/environment/jobs/whatever," and taxpayer subsidies are a classic case of "concentrated benefits and diffuse costs," with subsidy recipients far more organized and motivated than reformers (and Joe Taxpayer) to push their agendas through the government.  However, there is another reason why real subsidy reform is so darn difficult: government benefactors brazenly rig the game in favor of their cronies.

And during last week's House debate on the bloated, subsidy-packed Farm Bill, we got a rare glimpse into one way that the riggers do it.

Before I get to that, however, a little background is necessary.  You may recall that in late-December of last year Congress passed a slew of temporary extensions to certain farm subsidy programs in order to avoid what the media dubbed the "Dairy Cliff."  Congress' motivation for this last-minute action was suddenly-intense media attention and fear of voter backlash to the skyrocketing milk and other commodity prices that would've resulted from the subsidies’ expiration and the resumption of a dormant 1949 farm law that fixed food prices well above current levels.  (A good summary of the mess is here, if you're interested.)

With this in mind, let's now fast-forward to last week's House debate over the new Farm Bill.  In order to avoid another "Dairy Cliff" when/if the bill expired, an enterprising congressman – Rep. Paul Broun (R-GA) – proposed an amendment to the House version of the Farm Bill that would repeal the dairy provisions of the 1949 law, thus protecting US consumers from the threat of sky-high dairy prices.  Although passage of such an amendment would seem like a no-brainer, this is Congress, and Broun's amendment was easily defeated by a bipartisan vote of 309-112.  Apparently the House has no desire to prevent another Dairy Cliff in the future, and in a rare moment of candor, Rep. Collin Peterson (D-MN) - former Chair of the House Agriculture Committee and arguably the US Farm Lobby's BFF - explained why he has worked to keep the 1949 law - a ticking time bomb embedded in US agriculture policy -  on the books.  In rising to oppose Broun's amendment, Peterson stated:

When I was chairman and did the last farm bill, we maintained the permanent law, and we did it for a reason, which is that it is very hard to get these farm bills done, and sometimes you need some motivation to get people to move. That's the main reason we left it there.

In short, Rep. Peterson admitted on the House floor that congressional refusal to repeal the 1949 law - and its hidden threat of high prices, market uncertainty and serious consumer pain - is solely intended to extort new (or extended) farm subsidies out of future Congresses.  And, as last December showed, it's quite the effective strategy.  So, it seems that, for Rep. Peterson and his subsidy-loving friends in Congress, not only do you "never let a serious crisis go to waste," but if such a crisis doesn't appear naturally, you just hardwire one into US law.  Simply amazing.

As Cato's Sallie James explained on Friday, "so long as this [1949] law is part of the national legislative fabric, we’ll have a dairy cliff (or some other commodity-themed cliff) every five years."  And, instead of actually deliberating the cost and merit of our bloated, archaic farm subsidy programs, sheepish Members of Congress will simply approve those subsidies in order to avoid the media scrutiny and voter backlash that these intentional "cliffs" inevitably produce.

More broadly, this is the uphill battle that subsidy reformers face.  Not only is the playing field severely titled in favor of subsidy recipients due to the simple nature of subsidies and politics, but many of the supposed referees in Congress have intentionally rigged the game even further in the recipients' favor.  It's this kind of institutional disadvantage that makes real change extremely difficult (if not impossible), regardless of the overwhelming evidence in support of reform.

Hopefully, a little scrutiny of revealing statements like Peterson's will help tilt the playing field back a little bit, but I'm not holding my breath.

Is Ian Fletcher a Bad Person or Merely a Bad Economist?

Self-avowed protectionist Ian Fletcher has decided to pick a (rather nerdy, admittedly) fight with GMU economics professor and Cafe Hayek blogger Don Boudreaux about free trade.  After getting dressed down in several of Boudreaux's "open letters," Fletcher has fired back in a new blog entry at the Huffington Post.  This time, however, Fletcher skips the economic or moral arguments and instead opts for the truly high-brow approach of, err, jingoistic name-calling:

Libertarianism, the New Anti-Americanism

Sometimes the bad guys do us all a big favor, by openly stating what they stand for after spending years denying it. I recently received exactly this sort of favor from an economist, one Don Boudreaux, at the renowned libertarian Cato Institute, a hotbed of free-trade thinking. He wrote:

Why should you or I celebrate less an improvement in the welfare of a South Korean than we celebrate a comparable improvement in the welfare of a South Carolinian? (original here) 

That's it. So finally we have it: after years of telling us that libertarian economics -- deregulate this, deregulate that, believe that the free market is always right -- is best for America, they admit that, in the end, they just don't care.

This philosophy has the perverse virtue of perfect logical consistency: if you don't care about what's good for Americans, why not have free trade? I must grant -- and the reader should, too -- that the entire policy of free trade makes perfect sense if one adopts this premise.

The idea of caring equally about the well-being of people all over the world sounds, of course, like a very sweet and humanitarian philosophy. And in a perfect world, maybe it would be. But there are two very big realities that get in the way:

1) We live in a world of ruthless economic rivalry, so if Americans aren't willing to stand up for the economic interests of Americans, we just get rolled by multinational corporations and foreign powers that lack such delicate qualms.

2) Libertarianism, for all its pretensions of universalist humanitarianism, is in fact a notoriously selfish philosophy. Someone once defined a libertarian as "an anarchist with a credit card;" they were onto something.

The South Korea Free Trade Agreement, America's largest free-trade agreement since NAFTA, is back on the front burner. So when the libertarians speak up on this issue, as they will, just remember where their hearts are.

Sigh.  Don's a big boy and certainly doesn't need little ol' me to defend him, but, being a libertarian myself, I have a small dog in this fight and, well, just can't help myself.  For the moment, let's ignore the obvious failings of Fletcher's actual "arguments," such as the fact that--

• Fletcher totally misunderstands (or intentionally misstates?) Boudreaux's post, which, as even Cletus the slack-jawed yokel could grasp from a quick skim, clearly shows that Boudreaux believes that free trade greatly benefits Americans through increased wealth, better returns to capital and thus more investment, higher productivity and real wages, and (perhaps) lower income inequality, and that free trade also benefits workers in poor countries (hence, the selectively-quoted comment about South Koreans and South Carolinians). 

• Even if Fletcher's characterization of Boudreaux's statement were correct (and it's clearly not), that would obviously make Boudreaux and other libertarians ambivalent about America, not "anti-American"; and

• Even a dumb lawyer like me can see that modern global supply chains have made "a world of ruthless economic rivalry" a thing of the distant past, and that trade (i.e., voluntary, mutually beneficial exchanges) has never, ever been a zero sum game.  (This, by the way, is the entirety of Fletcher's "economic argument" in his eight HuffPo paragraphs.)

So, take away these clearly erroneous parts of Fletcher's statement, and you're left with the following brilliant insights:

Libertarianism is the new Anti-Americanism.  Don Boudreaux and other libertarians are "bad guys" who "just don't care" and follow a "notoriously selfish philosophy" of deregulation and free markets.  They're pretty much "anarchists with a credit card," and their hearts are clearly in the wrong place.  So remember that when they "speak up" about the US-Korea FTA.

Wow.  So, other than a brief and conclusory statement about "ruthless" international competition, Fletcher's blog entry is nothing more than a long string of jingoistic insults.  I mean, I knew the Huffington Post didn't exactly have the highest editorial standards in the world, but if this steaming pile of substanceless nonsense is the sort of thing that qualifies as "publication-worthy content" over there, then I imagine virtual poo-flinging can't be far behind.

But, hey, I guess when you're a protectionist and your economic arguments get repeatedly crushed by Boudreaux and others (including AEI's Mark Perry) and you utterly whiff on the libertarian critiques of your protectionism's obvious moral failings, then you go attack libertarians' intentions and their character.  Very classy!  Of course, when faced with the opportunity to impugn Fletcher's intentions/character, Boudreaux actually did the exact opposite and defended Flecther in the comments section of one of his earlier blog posts:

There's no reason to believe that Mr. Fletcher is insincere; no reason to think that he's writing and saying what he writes and says simply because someone is paying him to issue the opinions and 'analyses' that he issues. I'm pretty confident that he sincerely believes that the intellectual and moral cases for free trade are weak, or at least much weaker than people such as Russ, myself, Doug Irwin, Dan Griswold, and the like believe these cases to be.   

(I actually said something similar in the comments section of one of Perry's entries.)  Fletcher, on the other hand, apparently has no such reservations and has little problem essentially saying that Americans should doubt libertarians' intentions and beliefs because we are, in essence, bad people who hate America.

Seriously.

British writer and poet Samuel Johnson once famously said that "patriotism is the last refuge of scoundrels."  Historian James Boswell wrote that Johnson wasn't denouncing "a real and generous love of country, but that pretended patriotism which so many, in all ages and countries, have made a cloak of self-interest."  After reading Fletcher's latest baseless diatribe against Boudreaux and other libertarians, one must wonder whether Fletcher, in one short blog post alleging the "anti-Americanism" of his opponents, has quickly revealed himself as a true scoundrel rather than just a poor, misguided economist.


(More classy libertarian critiques of Fletcher's economics, rather than his intentions or "heart," can be found here and here.  And these were done after Fletcher's ad hominem attack!)