OCR Text |
Show ; ! Politics in Agriculture i By WALTER E. SPAHR J Professor of Economics, New York University Secretary Wallace has announced that he hopes to perfect a plan to subsidize the export of about 100,- I 000,000 bushels of surplus wheat dur- . M Eh ing the current wheat year.The money for the subsidy would come from one-third one-third of customs cus-toms receipts that are earmarked ear-marked for this purpose by the AAA legislation legisla-tion of 1935. The nature of this program is worth pondering. ponder-ing. The pur- i pose is to use receipts from, fectively in world markets in peace times and when matters of national j defense are not involved. Once we i open the way to subsidizing people 1 who are inefficient, or who have bad judgment, or who suifer misfortunes , from the unpredictable or uncontrollable, uncon-trollable, then there is no logical end j to the uses to which subsidies may be ; put. i If people wish to protect themselves them-selves against the uncertainties of 1 life, it is supposed that they will take out insurance, or hedge, or diversify risks. But it is also assumed that they themselves will pay for these methods of reducing their risks; it is not assumed as-sumed that others should pay these bills. Prices, resulting from free and fair competition, are the best guides known to producers and consumers; they also serve humanity best in accommodating ac-commodating production to its needs. i Subsidies interfere with the free interplay in-terplay of the forces of supply and demand. They mislead and distort; they create maladjustments that will require more severe readjustments later. We subsidized wheat growers, through price fixing, during the World War. The readjustments, which farmers have been compelled to face since, have been very severe. The values of farms fell sharply, heavy mortgages on high-priced farms caused widespread bankruptcies 1 among farmers, and the consequent suffering has continued to this day. Subsidies may prove to be political assets for a short time, but they cure nothing fundamentally, and they tend to pile up trouble for the future. Rushing from One subsidy to another an-other in agriculture shows the &ad i state of affairs into which our government's gov-ernment's agricultural program has fallen. The program is a matter of politics, not economics. Just how long we can continue to play politics with such problems is, of course, debatable. debat-able. But it seems clear that In time 1 the economics of the issue will have to be need, and then the present ' mess of opportunistic, political subsidizing sub-sidizing will have to be cleaned up. If economic principles have the value that economists think they have, then we are destined to faco a clean-up along a bruad front In the not too distant future for the simple reason that we have bt-en piling one expedient on another until the economic and political structures cannot can-not much longer carry the loud. Whfn this house of cards, bacd upon temporary, political expediency, borrowing, spending, lending, and subsidizing, crjllapses, what then? Now i3 the time to give tvtuc thought to this question. customs duties on imports so that our wheat exporters can sell to foreigners at low prices and to our own domestic buyers at higher prices. In other words, money is to be collected from importers so that consumers can be charged higher prices. The gainers are the foreign buyers and domestic producers. Or, if it be granted that there is no reason why we should encourage en-courage domestic production for foreigners at a price more favorable that that charged our buyers, then the Wallace program resolves Itself into subsidizing our wheat growers at the expense of our domestic buyers and importers. This method of subsidizing one group at the expense of others raises a question of economic policy with which we are apparency unwilling to deal sensibly or fundamentally. Instead, we as a nation, are subsidizing subsidiz-ing various groups and are using this policy to gloss over economic problems prob-lems that we do not face properly, and to serve political ends. The principle of subsidizing certain cer-tain groups of producers at the expense ex-pense of others should be squarely faced by the American people. When, if at all, is a subsidy justified? Is there any good reason why we should sub- ! sidi?.e people who overproduce in j certain lines, or who produce at costs which are too high, or who experience j the uncontrollable and unpredictable, fluctuations of weather or of prices j in world markets? And if we subsidize sub-sidize such producers, will we not en- courage more of tlftse producers to, increase their output still further and i at a still greater cost so that more J subsidy will be needed? j One may justify subsidizing cer- . tain necessary Out undeveloped or j high-cost industries as a part of a program of national defense, but it seems impossible, to find defensible reasons for subsidizing groups that overproduce or cannot compete e!-, |