Thursday, December 26, 2013

Government Command and Control Farming

Belgium dairy farmers dumping milk in protest.
As Europe clawed its way out from under the ravages of World War 2 the one thing they desperately needed was food. Farmers had to reclaim farm lands and put it back into production. In an effort to speed the process European governments began giving financial support to farmers. Their plan worked and they managed to rapidly end hunger.

Seventy years later, and long after formation of the 27 nation European Union, the practice continues. Through subsidies and tight regulation the EU has been able to produce cheap affordable food. Enter 2013 and we find Belgium farmers dumping milk on fields in protest of too low milk prices. Unless something is done many EU farms are threatened by bankruptcy.

By the 90's EU farms were over producing. Reports of wine lakes and mountains of butter – as described by the EU press – made some think it was time to have a more free market approach to agriculture. When the world wide recession hit, and driven unnecessarily deeper by the US government created housing bubble, world food prices dropped dramatically because people were buying less.

Progressive types believe they can control the economy by thinking they know what's best for everyone. Simply because someone is elected to office doesn't make them effective economists. It is only when faced with disaster such as the one in Europe will government back away from certain practices. A looming disaster is forcing EU officials to rethink their policies and follow a more free market approach.

A command and control economy has never worked. It was this command and control thinking that created the housing bubble, which resulted in the 2007 recession. Recessions are a normal part of a free market economy. You will always find up and down turns in an economy. Many times attempts to control an economy out of a recession only extends the down turn. The Great Depression is a prime example, as is the 2007 recession.

A command and control economy is based on one thing – a consistent government. Government is always in a state of flux. It is never a single mind. With each change comes a different way of doing things. These changes can be a result of cronyism or simply a lack of knowledge. When you live in a region where everyone has exactly the same government controlled education, thinking will tend to follow a narrow path.

Europe is often amazed by political differences in the USA. They don't understand why so many are constantly talking about politics. The reason is simple, education is a local decision. Each region typically teaches a variety of ethics and pushes the mind in many directions. For good or bad this allows people too look at a single problem from many different perspectives. The more possible solutions the better chance of finding one best suited for that situation.

Each day situations change, especially in economics. The simple trip to work can often require many different decisions each day. Traffic is always in a state of change. The government sets speed limits and lines the roads with signs in an effort to direct traffic flow. A roadway is probably the single thing in the country that has the most government control. Despite that control there are massive traffic jams. You can travel that same route the next day and traffic zooms along normally.

An economy is much the same as a road system. Farm production varies greatly from season to season. The farmer makes many decisions based on weather and what their neighbors grow. Farming is maybe the most unpredictable market supplier. It is usually impossible to predict accurately the annual yield. For something to be tightly controlled results must be fairly predictable. Traffic counters predict road use. Crop history is used to predict outputs. On roadways a traffic jam is typically simply annoying. When agriculture hits a jam it can affect the lives of millions.

We then have another variable and that's the consumer. One season beef can be in vogue and it seems everyone wants red meat. The next year something happens that causes people to become a little more health conscious and they switch to chicken and fish. One year green beans might be in huge demand, while the next it's spinach.

The producers must be free to change direction quickly to supply the variable market. Government is much like an aircraft carrier, it takes a long time for it to change direction – only with government it can take years or even decades for these changes to come. There is no problem when government builds a road on which the economy can travel, but if they clog it with signs and traffic lights it tends to slow. If there is an exit only every 100 miles it can take too long for the economy to correct course.

It's easy to have the European and progressive attitude that everyone has a right to food. Food and water are requirements for sustaining life. People will find food no matter if it's through natural economic action, by theft, or salvaging food discarded by others. It would be wonderful if all food was free – such as a place where rich and poor alike could walk in and take all they want. We know in such a scenario there would be hoarders and those who waste enormous amounts, which would create shortages. It would be impossible for government to predict behavior on that scale.

We could simply have government distribute food according to need. Government is supposedly doing that now with food stamps. How many times have we been in the grocery store to see those with far more food than you could afford and then pay with a government EBT card. In other cases government will allot a family far less than is needed. History shows us that a central government is a poor distributor of goods. If food was to be distributed, it would have to be on a more local level. We also know there is a black market for food stamps. Too often government control creates a black market that often comes with a criminal element. Alcohol and drug prohibitions are great examples.

The economics of food, because it's a necessity, is one with which we must give the most trust. Food prices vary according to the local economy and the distance it must travel from point of production to the consumer. This applies to all goods, but with food much of it is perishable and must – at least more desirable – be produced close to the market. Food is also the only commodity that an average American or European can produce themselves. Kitchens all over the world have herb plants within reach. A patio can contain a single tomato plant. In summer it's impossible to predict the number of home vegetable gardens.

Family farms in American are disappearing because of government control and taxes. Each year there is some new regulation that can increase the cost of farming, but controls on production don't allow for these added expenses. Because of federal crop insurance some risk is negated. But this doesn't offset all the other cost of government encroachment onto the farm. This article cannot end without mentioning what's maybe the most destructive force on the family farm, and that's the death tax.

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