[I am relaunching my blog and I am recycling my old content. Very green. Since posting this my co-author Jong Hee Park has moved to Seoul National University]
Saturday Morning Farmers Market Thoughts
US Agriculture Policy
A trip to the Tower Grove Farmers Market has me thinking about agriculture policy. It also reminds me how delicious breakfast tacos can be.
A few years ago I wrote up a little piece with Jong Hee Park (U Chicago) for the Political Economist newsletter on U.S. agriculture policy.
The short story is that everyone talks about the massive amount of farm subsidy money flowing in the US. Lots of it doesn’t even go to farmers (people paid to not farm). This sums up to about $260 billion over the past 15 years. Some of the best data on the subject comes from the Environmental Working Group.
Why do the US government offer such high levels of farm subsidies? The standard answers include:
1. Farmers are geographically disbursed and thus overrepresented through the Senate
2. Agriculture committees hold gatekeeping power
3. Durable coalitions have been formed linking farmers and urban representatives through food stamp and school lunch programs since the 1970s
4. Farm groups spend massive amounts of money on campaign contributions and lobbying
5. The US has a history of farming
We address the logical and empirical problems with most of these arguments in our piece.
I the bigger issue that we try to point out is that the United States is actually much less generous in their farm programs than other countries. Estimates vary, but the US usually comes in the bottom third of countries, with more support for farmers than Canada, Australia, and New Zealand, but much lower than the European Union, South Korea, and Japan.
The very nerdy question that literally keeps me up at night is:
Why is it that agriculture is protected more than other industries across countries? Research that might have some insights into this question is a paper on envy and altruism in international trade.
But the more I think about it, does agriculture get more protection than other industries? Agriculture producers (along with textile firms) are shielded through subsidies and trade policy. But lots of industries receive other forms of support, ranging from generous tax treatment (technology companies), government procurement contracts (Boeing), foreign ownership restrictions and regulation (finance). I think agriculture receives a disproportional amount of support, but I haven’t seen any data confirming this.
Ok, these questions used to keep me up at night before having a baby. Now I have time to blog about them while Walter takes a nap. Perhaps I should be thinking about my French Open Draw.