For the past several years there has been a worldwide boom in farm crops, making it difficult for many American farmers to survive. And for the fourth year in a row Congress has done the single dumbest thing imaginable to deal with the plight of farmers — it passed a massive bill to provide emergency payments to farmers.
The problem is that the low price of farm commodities means that least efficient producers should switch to some other commodity, but instead Congress is going to reward the least efficient producers meaning they’ll go on with producing crops even though they can’t possibly recoup their costs, much less make a decent profit.
According to Fox News, opposition from the Bush administration kept the bill from being even higher. Rep. Larry Combest (R-Texas) wanted to up the price tag to $6.5 billion but apparently abandoned that effort when advisers to George W. Bush said they would recommend the president veto the bill if it were higher than $5.5 billion.
But the principle here is exactly the same as the various proposals and schemes for controlling energy production — market interference merely encourages inefficiency and, while it might feel good and be politically palatable now, will only cause further problems in the future.
Source:
House approves billions in farm aid. Associated Press, June 26, 2001.