HuffPo and Civil Eats Watch: Wrong, Wrong and Wrong About Agribusiness Trust-Busting
I have strong opinions about politics and economics. Excepting food politics, I try to keep them out of this blog because they're off-topic and not entertaining. However, sometimes someone says something about politics and/or economics in a food-related blog post that is just so wrong that I can't contain myself.
Such an event occurred when I saw the post "Message to Obama: Bust-up the Agribusiness Trusts" by Paula Crossfield in Civil Eats. The post was also picked up by Huffington Post and AlterNet.
Crossfield writes:
1) Our "thirty-year experiment in free-market ideology" can hardly be "judged a failure," current economic problems notwithstanding, because it was a period of unprecedented, sustained growth. Net, we are more prosperous today, again, current economic problems notwithstanding, than we would have been had we spent the last 30 years under the yoke of high taxes and excessive regulation.
2) Our current economic situation has as least as much to do with botched regulation as it does with "unfettered capitalism." For example, the Community Reinvestment Act (CRA) forced banks to lend to unqualified borrowers. Counter-parties to various financial institutions that were deemed "to big to fail" had an implicit put against the federal government protecting their investments. The roots of today's economic downturn lie as much in our government's response to the meltdowns of Continental Illinois and Long-Term Capital Management as it does with "unfettered capitalism." In fact, had "unfettered capitalism" reigned during those crises, those institutions would have been allowed to fail, taking depositors, bondholders and other counter-parties with them if that was the market-based outcome. That did not happen. As a result, counter-parties took what would have otherwise been foolish risks in things such as mortgage-backed securities based on risky loans, confident that the government would bail them out if things went sour. That, more than anything, is why we are where we are today. (And, in case you didn't notice, the counter-parties were right, the government did bail them out again, perpetuating the cycle.)
3) Which brings us to the subject at hand, agribusiness trust-busting. Anyone who thinks that U.S. agricultural markets are examples of "unfettered capitalism" or, more accurately, unfettered free markets (a better term for the concept to which Crossfield refers) is smoking rocks of crack the size of Gibraltar. U.S. government policy has grossly distorted agricultural markets since the 1920s and the government's interference with market operation has increased over time. In fact, government policy has, in many cases, led directly to many of the current outcomes that food activists decry (e.g., see the Earl Butz "get big or get out" remark in the above-linked article). And activists such as Crossfield think that the solution is yet more government control over agricultural markets???!!! If insanity is doing the same thing over and over again, expecting a different result, the activists are certifiable!
There is a solution but it's one that will take time and effort and requires the local/organic/sustainable crowd a) to set aside their prejudices that markets are bad and government action is good and b) to not sell out when the government offers them 30 pieces of silver for their silence or support. The solution is to demand that the U.S. government end corporate welfare in the form of payments to agribusiness interests. This includes ending the ethanol subsidy that is popular in some, but not all, green quarters.
As I wrote previously:
If large agribusiness still poses a problem after we end government distortion of agricultural markets, then we can talk about trust-busting. But, until we end the corrupting influence of the massive transfer of wealth from taxpayers to farmers and agribusiness interests that is mandated by our federal government, injecting additional government interference into agricultural markets is simply piling more epicycles onto a fundamentally broken model.
Such an event occurred when I saw the post "Message to Obama: Bust-up the Agribusiness Trusts" by Paula Crossfield in Civil Eats. The post was also picked up by Huffington Post and AlterNet.
Crossfield writes:
Beyond the thirty-year experiment in free-market ideology having been judged a failure in financial markets, one thing is clear: as Kerry Trueman reminded us in a recent post, unfettered capitalism has also been bad for our health, and indeed the safety of our food.So much wrong and it's only the first paragraph of her article.
1) Our "thirty-year experiment in free-market ideology" can hardly be "judged a failure," current economic problems notwithstanding, because it was a period of unprecedented, sustained growth. Net, we are more prosperous today, again, current economic problems notwithstanding, than we would have been had we spent the last 30 years under the yoke of high taxes and excessive regulation.
2) Our current economic situation has as least as much to do with botched regulation as it does with "unfettered capitalism." For example, the Community Reinvestment Act (CRA) forced banks to lend to unqualified borrowers. Counter-parties to various financial institutions that were deemed "to big to fail" had an implicit put against the federal government protecting their investments. The roots of today's economic downturn lie as much in our government's response to the meltdowns of Continental Illinois and Long-Term Capital Management as it does with "unfettered capitalism." In fact, had "unfettered capitalism" reigned during those crises, those institutions would have been allowed to fail, taking depositors, bondholders and other counter-parties with them if that was the market-based outcome. That did not happen. As a result, counter-parties took what would have otherwise been foolish risks in things such as mortgage-backed securities based on risky loans, confident that the government would bail them out if things went sour. That, more than anything, is why we are where we are today. (And, in case you didn't notice, the counter-parties were right, the government did bail them out again, perpetuating the cycle.)
3) Which brings us to the subject at hand, agribusiness trust-busting. Anyone who thinks that U.S. agricultural markets are examples of "unfettered capitalism" or, more accurately, unfettered free markets (a better term for the concept to which Crossfield refers) is smoking rocks of crack the size of Gibraltar. U.S. government policy has grossly distorted agricultural markets since the 1920s and the government's interference with market operation has increased over time. In fact, government policy has, in many cases, led directly to many of the current outcomes that food activists decry (e.g., see the Earl Butz "get big or get out" remark in the above-linked article). And activists such as Crossfield think that the solution is yet more government control over agricultural markets???!!! If insanity is doing the same thing over and over again, expecting a different result, the activists are certifiable!
There is a solution but it's one that will take time and effort and requires the local/organic/sustainable crowd a) to set aside their prejudices that markets are bad and government action is good and b) to not sell out when the government offers them 30 pieces of silver for their silence or support. The solution is to demand that the U.S. government end corporate welfare in the form of payments to agribusiness interests. This includes ending the ethanol subsidy that is popular in some, but not all, green quarters.
As I wrote previously:
The local/organic/sustainable movement is a logical force to oppose this corporate welfare but, in the latest farm bill, they allowed themselves to be co-opted by 30 pieces of silver in the form of funding for local food programs, organic agriculture research, renewal energy initiatives, etc. Note, by the way, that this legislation [the 2008 Farm Bill] was enacted with bipartisan support in Congress, overriding two George W. Bush vetoes.Ending government agricultural payments would put a huge dent in the profits of big agribusiness. It would level the playing field, allowing small players to be more competitive. It would encourage entrepreneurial enterprises. It would allow free market forces an opportunity to dilute the power that large agribusiness has gained because of government interference in agricultural markets.
If large agribusiness still poses a problem after we end government distortion of agricultural markets, then we can talk about trust-busting. But, until we end the corrupting influence of the massive transfer of wealth from taxpayers to farmers and agribusiness interests that is mandated by our federal government, injecting additional government interference into agricultural markets is simply piling more epicycles onto a fundamentally broken model.
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