James Leroy Wilson's blog

Wednesday, February 16, 2005

Welfare Queens

John Stossel writes:

Most businesses that can't make a profit go out of business. Woolworth closed. So did TWA. So do 20,000 restaurants every year. It's that freedom to fail that has helped make America as prosperous as it is, because it frees people to do more productive things.

But not on subsidized farms. When the Starrhs can't make a profit, you give them a handout, although Fred Starrh refuses to call it a handout. "I look at it," he says, "as a way to maintain a viable agriculture in this country."

That's the myth. Subsidies don't maintain viable agriculture. Viable agriculture maintains itself, because people are willing to buy its products at more than the costs of growing them. In fact, most crops are not subsidized. Not lettuce, peas, potatoes, plums, peaches, broccoli or green beans. There's no shortage of any of these. Yet the Starrhs and others say farming can't survive without subsidies.

"If I can't grow my 6,000 acres of cotton because the subsidy's gone," said Larry Starrh, "where am I going to go with that acreage? Do I just idle it?"

Subsidies are like a heroin fix. They feel good, but they lead to more subsidies. The first subsidy makes cotton more expensive. That causes a problem for manufacturers, so we give them a subsidy, too. That subsidy hurts poor farmers worldwide, so we send them more money in foreign aid. But that's not enough for our cotton farmers. We give them another subsidy for the water they use and another subsidy to advertise their cotton overseas. We give away billions in handouts, without which, say the Starrhs, American cotton - which Americans value - would be replaced by foreign cotton.

The foreign cotton - Fred Starrh mentioned China, India and Pakistan as likely sources - sounds like a good deal to me. The free market puts resources to work where they're most productive. If Americans bought cheap cotton overseas, we'd have more money to spend on other things.
If Fred and Larry Starrh got out of the cotton business, they might become self-supporting in some other line of work, and their land could be used, by them or by someone else, for some more profitable purpose. If Third World farmers became the world's leading growers of cotton, we and they would benefit.

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