Thursday, January 19, 2017

American Enterprise Institute (AEI) report on poverty, hunger, and U.S. agricultural policy

In a new report for the American Enterprise Institute (AEI), Dan Sumner, Joe Glauber, and I consider all the different ways that farm programs could affect prices or incomes, which in turn could affect poverty and nutrition for low-income Americans. We conclude:
Despite occasional claims to the contrary, farm subsidy programs have little impact on food consumption, food security, or nutrition in the United States.
It might surprise you to hear that this is a widely held view among researchers and policy analysts in agricultural economics. Interestingly, it depends little on a person's political ideology.

Strongly market-oriented economists tend to describe farm subsidy programs as an ineffective use of tax dollars. Ryan Nabil and Vincent Smith write this week in Inside Sources:
There is no poverty and nutrition alleviation rationale for U.S. farm subsidies because they do not have any meaningful effects on poverty. These programs simply transfer government monies mostly to well-off folks who can afford competent lobbyists but are in no need of government handouts.
At the same time, the Environmental Working Group writes this week:
Last fall, an EWG investigation debunked the agriculture industry’s claims that American farms “feed the world.” In fact, fewer than 1 percent of U.S. exports go toward feeding the hungriest nations.
Now, a study by three leading experts shows that federal farm subsidy programs such as crop insurance don’t help feed hungry Americans either.
An analysis by Joseph Glauber, Daniel Sumner and Parke Wilde for the American Enterprise Institute confirms that farm subsidies don’t improve food security for poor Americans – even for those who live in farm country.
Before reaching our conclusions, Joe, Dan, and I tried to contemplate a wide array of ways that somebody could say farm programs help the nutrition status of the poor in the United States. For example, perhaps the programs lower prices of beneficial foods (but they don't), or perhaps they help the income of poor farmers (but they go mostly to more prosperous farmers), or perhaps they help farm workers by increasing labor demand in certain industries (but the least labor-intensive industries get more subsidies).

In a spirit of open communication across diverse traditions, especially this particular week, I look forward to participating in the AEI event this Monday, Jan 23, connected with the release of this report.

9 comments:

Anonymous said...

"... farm subsidy programs have little impact on food consumption, food security, or nutrition in the United States"

Most of us have always been inclined to agree with that statement...BUT...that certainly condescends the sacred anti-agriculture talking point that farm subsidy programs, by targeting the 'wrong' commodities, single-handedly caused the obesity epidemic and, in turn increased incidence in diabetes, in turn causing our health care system to spiral out of control and, in turn precipitating an egregious, intolerable and inexcusable affront to the effete sensibilities of the Liberal Elite. It is for that reason alone, it has been argued, that traditional size-neutral farm subsidies had to be ended in favor of exclusive economic assistance to be lavished upon small failing alternative farmers & their peculiar niche markets, and especially to enrich lifestyle farmers (out here in rural America we recognize those as hobby farmers).

In fact, back in the day when farm programs were being instituted our nation had been experiencing uncomfortable volatility in food supplies and food pricing due to wars, economic depression, frequent crop failures, and the Dust Bowl fiasco. Compiling grain reserves and encouraging land into modern food production at that point in time was not exactly a foolish idea from the standpoint of stability, economic growth and national security.

Today, given our infatuation with imported goods, the idea of maintaining or even tolerating strong domestic food production seems superfluous -- we're too well fed, so who needs a vibrant productive agriculture? It's such a nuisance! Well, times change and situations with them. Who can say how good a viable national farm sector might once again look to a beset and beleaguered American public some fateful day, long after we've finished crushing modern production agriculture in favor of a fluffy domestic boutique 'let them eat cake' food economy?

Parke Wilde said...

Thanks, anonymous, for your comments here.

The report agrees with you in not blaming crop subsidies for the obesity epidemic.

You exaggerate the scale of "exclusive" economic assistance "lavished" on small alternative farmers and niche markets. If you count dollars rather than words, you won't find much of that.

And, finally, if you are half-tempted -- and, as I hear you, only half-tempted -- to be sympathetic to farm programs for the purpose of protecting domestic food security, it would be consistent for you to be especially opposed to domestic agricultural subsidies and rules that support using food crops for biofuels.

Anonymous said...

Yes, the bothersome business of ethanol subsidies could safely be put to rest if we embrace an aggressive energy policy that un-encumbers oil & gas exploration and extraction, de-regulates and incentivizes pipelines and refinery capacity here in the U.S. and Canada. Continental energy self-sufficiency and national security go hand in hand.

Problem is, many of the same 'let them eat cake' opponents of successful modern agriculture are also mortal enemies of domestic oil & gas resource development. Ironically these were some of the same activists who advocated passionately for the failed ethanol boondoggle in the first place, and they tend to be a shallow, prideful sort who cannot be reasoned with. They won't let ethanol go and be proven wrong without making a huge fuss.

Now let me second guess your response to this prickly conundrum -- you are going to suggest we increase subsidies to the alternative energy faddists, wind & solar, just as you seem to be advocating for farm subsidies to re-invent the wooden wheel of agriculture for quaint hobby farms, farmers markets and other boutique foodie wet dreams. None of these trendy pet projects in food or energy are scalable, of course, in times of healthy economy and cordial international relationships, much less during those occasions when we must sail through economic or diplomatic stormy weather.

So then, what begins as your blissfully direct resolution to simply do away with an obsolete national farm program fast becomes increasingly complicated. How will you make your simple-minded 'no to farm programs' debate relevant to policy-makers who must cope with real world conditions over the long haul, Parke? I'm getting a strong sense that perhaps you and your associates have only thought this through from inside your respective Ivory Tower echo chambers. I'd have to say you're not quite ready for prime time just yet. You do know there's a new Sheriff in town and you're gonna hafta make a "good deal for America" out of your sales pitch, right?

Parke Wilde said...

Let me get this straight. Are you criticizing the "shallow, prideful sort who cannot be reasoned with" and in the same post telling me to go easier on the new President?

Anonymous said...

Well, you're half right anyway, Parke. Yes I am critical of the shallow, prideful, unreasonable premature know-it-alls who forced themselves on us to implement dreamy wishful doomed theatrics around celluosic ethanol in the first place...and all that has subsequently transpired from that politically expedient decision. Beware impassioned do-gooders, for they know not their arse from their elbow.

I am not, however, suggesting anyone "go easier" on the new President. You betray your tunnel vision and academic echo chamber naivete when you derive that meaning, when what you and your associates need to understand is the onus is on you to convince the new President and his associates. All indications are that future policy making will require would-be lobbyists to pitch a rather more robust and convincing business model than previously. The requirement for good science is untested at this point. Good, bad or indifferent, activist lobbying is confronted with a new paradigm. One that no longer trusts or values liberal elitist affectations for their own sake. This is an epic change, and is at the root of hysterical Liberal Elite angst and despair over the election.

The newly stated "America first" priority seems pretty clear. How does your proposal meet that simple pragmatic standard? That will be the first (and perhaps only) litmus test you must meet. So far, you seem to be raising the same old politically correct elitist canards and resorting to the same old bigoted elitist excuses and accusations. Not a winning strategy, if you will admit my counsel to you on the matter. Just sayin'

Parke Wilde said...

There is one vision of "America first" in which agricultural policy protects American farmers at the expense of the global food economy. Tariffs. Price-suppressing subsidies that make it more difficult for farmers overseas to compete. The slogan "America first" echoes 1930s and 40s era American isolationism (a movement that, as you know, flirted with antisemitism).

There is another vision of "America first" in which our great country is "first" in the sense of leadership rather than in the sense of helping ourselves at the expense of others.

You can sign me up for the second vision. Like most economists, I think President Trump's protectionist and angry version of "America first" is a losing proposition. Even if it costs me, I would refuse to give the new "sheriff" a sales pitch on that ground.

Anonymous said...
This comment has been removed by a blog administrator.
Parke Wilde said...

Hi, Anonymous. As you know, I welcome your comments here. I especially value your criticism when you find my reporting and commentary to be elitist. It helps me try even harder not to be snooty. I had to delete your last post because of the passage where you called out particular alternative food movement folks as Jewish in a way that was irrelevant to their views on the food system. Just to offer more detail, you are welcome to note Hazon as a Jewish organization interested in the food system, because that is part of the organization's self-identification, but, in this forum, not to use Jewish identity as a marker for elitist food movement attitudes with which you disagree. Do not take this as an accusation that you are antisemitic (I assume you are not). Please do not argue this decision. Take it to heart as the community standard in an unusual non-echo-chamber conversation that means something to you, I think, as it does to me.

Anonymous said...

Fair enough. I guess I was misled when you raised the issue of antisemitism, is all. Merely asked you to expand on your point which, apparently, was no point at all, only a needling strawman. That's OK, we get it Parke.

Hey, hunted down and downloaded your AEI paper today and gave it a read (why didn't you link to the damned thing for us?). I'm guessing you haven't passed a copy of this onto Marion Nestle's desk -- your study completely debunks the heart of her NYU curriculum content railing against the farm bill, specifically her expert opinion that farm policy has caused the obesity epidemic, diabetes and so forth. She's not going to accept your contrary finding gracefully, though she will gleefully approve of your conclusion that the most productive farmers earn commensurately large portions of commodity support subsidies, tagging the system as hopelessly broken, patently corrupt and unfair. You're right, of course. Capital investment in state of the art ag technology, efficiency and success should never be supported or even tolerated, it's just not natural. And so it's probably not green or sustainable or anything, right? It's just a yucky idea.

Isn't there some way, with the help of activists like Nestle and the rest, you could push through a farm program that rewards the most inefficient farmers who produce the least, as it naturally should be? That ought to do the trick! I vaguely recall talk (well complaints, really) of such a farm program years ago when farmers were paid NOT to produce. My sense is that it was a popular program with farmers, one that set them up with disposable income and plenty of free time to drive in to town to spend it. How about turning the clock back to those good old days -- that could make America great again! Maybe your policy interests are more in common with Pres. Trump than you think.