Nov 06 2008

Economic reality, government programs, food and energy

Category: Congress,economy,energy,politicsharmonicminer @ 10:02 am

John Stossel has some good thoughts on what is, and is not, in the power of governments. He begins by quoting African-American economist Walter Williams:

“Politicians have immense power to do harm to the economy. But they have very little power to do good,” Williams says.

The failure to understand this is at the root of many of our problems.

“Most of life is outside the government sector,” says David Boaz of the Cato Institute. “Most change in America doesn’t come from politicians. It comes from people inventing things and creating. The telephone, the telegraph, the computer, all those things didn’t come from government. Our world is going to get better and better, as long as we keep the politicians from screwing it up.”


Every year politicians promise to save the family farm, and this year, Congress passed another $300-billion farm bill. More subsidies after generations of subsidies.

It’s the free market that “insures” the food supply. You may not know that most farmers get no subsidies. Growers of apples, bananas, broccoli, cabbage, cantaloupe, carrots, cauliflower, grapes, lemons, limes, lettuce, onions, oranges, peaches, pears, pineapples, potatoes, spinach, squash, tangerines, tomatoes and dozens of other crops are on their own. There’s no cabbage crisis or pineapple panic.

The farm bill doesn’t even keep its other promise: saving family farms.

It’s why although Nebraska corn farmer Mike Korth received about half a million dollars in subsidies, he’s still against the farm bill. “We sold this on the fact that this is helping the family farmer and the small beginning farmer. It’s not. It’s hurting them.”

That’s because most subsidies go to those that are best at manipulating government: the agribusiness giants. Small farms can’t compete.

It’s why although Nebraska corn farmer Mike Korth received about half a million dollars in subsidies, he’s still against the farm bill. “We sold this on the fact that this is helping the family farmer and the small beginning farmer. It’s not. It’s hurting them.”

That’s because most subsidies go to those that are best at manipulating government: the agribusiness giants. Small farms can’t compete.

A Federal Reserve Bank of Kansas City study found that the more farm aid a county gets, the more likely it is to lose population.

So not only do farm subsidies cost every taxpayer $550 per year, they also raise food prices by paying farmers not to grow certain crops. Other crops are subsidized and exported, destroying the livelihoods of poor farmers in the Third World.

“This is just a crazy system,” said the Cato Institute’s David Boaz (www.cato.org). “It’s left over from the 1930s, left over from the Depression. And it’s a great example of how nothing is as permanent as a temporary government program.”

Of course, without subsidies, some farms would go out of business. That’s OK, says Walter Williams. It’s the creative destruction that makes America strong.

“The guy who delivered ice to my house, he doesn’t have a job because we have refrigerators. We’re better off. We would have been held back if we had tried to save his job.”

I said to Congresswoman Jackson Lee, “If this works so well, why don’t we just subsidize everything?”

Her answer? “You don’t want to push us.”

How frightening is that?

Well, it’s REALLY frightening.  And as we’ve heard before from another African-American congresswwoman, some in our government appear willing to extend government control into other industries, even nationalize them (if they can remember the word for it):

The oil exec said prices would go up unless demand went down.  Of course, since these hearings, demand went down, necessarily so; people were spending too much on fuel.  What has this meant?  Prices have dropped, for awhile.  But demand will rise, at least we’d all better hope it does, since otherwise it means we are staying in a permanently depressed economic condition. 

We need to drill, now, so that even cheaper energy than we have now (with the short-term demand reduction) can help to lead us out of recession by making in easier to go places and make things.  It is really that simple.  The question is whether Obama and a Democrat Congress will open up all the areas offshore that have oil, allow more drilling in Alaska, in western states, and so on.  I’m afraid I know the answer to that.

To requote economist Williams:

Politicians have immense power to do harm to the economy. But they have very little power to do good.

About all we can hope for at the moment is that our new crop of politicians will restrain their natural tendencies to do harm.  Anyone taking bets?

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