Haley Barbour and the Regressive Economics of Farm Subsidies

Farm subsidies are the most popular form of corporate cronyism among many Republicans.  Unfortunately, but not surprisingly, this regressive form of ‘progressive’ market intervention garners enthusiastic support from Republican presidential contenders, especially preceding the Iowa Caucuses.  Haley Barbour is the latest potential presidential candidate to prostrate on the altar of the farm lobby and support the $20 billion fleecing of the taxpayer.  Even with the exit of John Thune from the presidential sweepstakes, the farm lobby still boasts many champions of taxpayer handouts among the 2012 hopefuls.


Yesterday, in an interview with the Daily Caller, Barbour offered the following counterintuitive economic justification of government intervention in the food market.  Here are some of his greatest hits:

“What we want to have in the United States is abundant food at a responsibly low price. To do that, we have to have an appropriately large supply of agricultural products. When sales volumes are good, prices are reasonable, there shouldn’t be any farm subsidies. But for natural reasons, nature, or what other countries are doing in terms of how they’re handling their markets, sometimes it is appropriate to have farm subsidies.”

“What you want is to have policies that lead to ample supply and prices that yield good prices for the person at the grocery store but profits for the farmers.”

Let’s expound upon Barbour’s economic theory.  Barbour opines that government subsidies, most of which go to wealthy farmers, are often indispensable because they increase food supply and lower prices at the grocery store during rough times.  Well, why is food inflation dramatically rising, even as farmers continue to receive record levels of subsidies?  Indeed every American (at least those who are not on food stamps) is suffering from the lack of “good prices” at the grocery store.

Also, even if there is some superficial short-term benefit from farm subsidies during a crisis, as is the case with most government interventions in the economy, doesn’t he realize that we aren’t experiencing a food crisis?   Yet, the inexorable farm lobby has ensured the immutability of the subsidy program even though the farm industry has recovered much quicker from the recession than virtually any other sector of the economy.  There is no natural disaster affecting the agriculture sector; there is an unnatural government induced disaster affecting consumers.


The reality is that farm subsidies have always had a long-term inflationary effect by inducing overproduction and incentivizing a lack innovation.  In fact, government subsidies and handouts are the primary cause for artificially high costs of such vital needs as health care and energy.  Most Republicans have the fortitude to oppose market-distorting  price-hiking policies in those sectors.  Yet they become the cheerleaders of those policies when they are applied to the agriculture industry.

These policies represent everything that is wrong with progressivism.  Farm subsidies and ethanol standards are examples of corporate cronyism, inefficacious market distortions, redistribution of wealth, public sector rent seeking, and regressiveness.  They have long historical roots as the antecedent to many New Deal programs.  In other words, they are an imprecation to conservatism.

Undoubtedly, farm subsidies present Republicans with a formidable political juggernaut in their pursuit of elected office.  Unlike most entitlement programs, these payouts are largely directed towards rural and conservative constituencies.  However, at a time when Keynesian government intervention has artificially and gratuitously inflated the price of food and energy, we cannot afford a candidate who supports these regressive repudiations of conservatism.

Let’s find a candidate who would rather lose Iowa but remain committed to prosperity and the free market, and not one who will attenuate his conservatism to indulge special interest groups.


Red Meat Conservative (Cross-posted)


Join the conversation as a VIP Member

Trending on RedState Videos