Why Do Farmers Deserve Federal Help?

My title is a question which is often asked, particularly by fiscal conservatives and free market types. Why help farmers when we don't help restaurants or dry cleaners or other small businesses which fail.

The simple answer is: they don't deserve Federal help..

But simple is often wrong.

The heart tugging answer is: family farms are the cornerstone of the country.

But that's easy emotion, based on an agrarian myth which doesn't work these days.While most field crops are still grown on family farms, even though the family may be a corporation or partnership, those families are spread rather thinly over the landscape, so rural churches and organizations are at best on life support.  See Prof. Putnam's Bowling Alone.

The historical answer is: because they used to have lots of political power and they still have enough to get legislation passed.

But that answer isn't one of principle, it's one of power: farmers deserve help because they're powerful enough to get it.

So is there an answer which is principled, or at least plausibly principled?

Yes, I think so.  You start with the idea that we're one nation, one society, and part of that means we care for each other.  You add in the contrary principle that we believe in freedom and the market, so people should stand on their own two feet.  The free market principle says we shouldn't keep restaurants from failing (which they do at very high rates) because their success or failure is market-driven.  There are exceptions, of course: when the oil well blew out in the Gulf, BP and we compensated the businesses hurt by the oil spill.  When a hurricane comes through, FEMA will help to rebuild.  Those exceptions serve to clarify the rule: when success or failure is due to the efforts of the individual operating within the constraints of the free market, then no federal help is warranted. So if the failure is from exogenous causes, events outside the system, then one can argue for federal aid. Hence the long history of disaster aid, which gradually has consolidated into crop insuance.

Going further, I can argue for help based on the structure of the market system in which farmers find themselves, or at least found themselves in the past.  As commodity producers with no power to set prices, they were at the mercy of the market.  (Airlines are also commodity producers with no power to set prices individually, but they're so few of them they can signal each other when they're ready to raise prices.  Even so, I understand over its history the airline industry has never made a net profit.) Consequently it was justified for the government to use its power to permit cartels to be formed, as in the "marketing orders" for various fruits and vegetables and the classical production adjustment programs of the last century.

For the last argument, I can question whether, with modern means of information and marketing, hedging the risks, government intervention is still required.  It is true, I think, a disaster like this year's drought will cause oscillations in the supply/demand for field crops next year.

The Northern Sea Route and Global Warming

This article from Iceland reports the arrival of the Chinese icebreaker Xuelong which took the "Northern Sea Route" from China--i.e. going through the Arctic Ocean across the top of Russia.

Searching on "Northern Sea Route" gets this report: "Cargo shipping along the Northern Sea Route is expected to double this year. Nordic Bulk Carriers plan to transport 6-8 shipments of ore from Murmansk to China."

Farmers: Why Vote for Obama?

Perhaps two reasons: to punish Republicans in the House for not moving the farm bill and because Obama seems more favorable to immigration of farm workers than the Republicans.

Not that I'm predicting any Obama victories because of this, though Harry Truman won in part because of farmer opposition to the Republican farm policy proposals.

NASCOE--A Friend at AEI?

After this beginning, I'm surprised that this guest at the American Enterprise Institute comes out somewhat friendly to NASCOE:

"The U.S. Department of Agriculture's Farm Service Agency (FSA) is often described as overstaffed and inefficiently structured for its mission, which is to deliver and monitor a variety of federal subsidy and conservation programs"

 Hint: he likes crop insurance just as little.

The Changing Country Scene: Aldie Country Store

Aldie is a little country town on Route 50 west of here.  Emily Wax has a nice article in the Post today on the changes the country store has seen over the years: notably the people running it now are a Hindu couple who employ a Hindu vegetarian to cook their barbecue.

Reason from the Conservatives

Occasionally the conservatives write true things.  This is one--the wrong side absolutely must not win this election. and another

What Difference Does a Person Make

This FCW post reports the Obama administration has 22 "rockstar innovators" coming in to help transform the government.  I wish them luck, I really do. 

But...

There's always a but. My guess is only 5-10 percent of them will have the desired impact.  They may know software and they may know people, but they probably don't know government. 

Point number one: in 90 days they're dead meat if Obama doesn't win reelection. There may be one or two who know someone in Romney's camp with sufficient pull to stay on, assuming they want to but that's all.  And everyone in the bureaucracy knows they're dead meat if Obama's polls continue to fall, so how much cooperation will they get?

Point number two: to be effective the innovator needs to hook up with someone in the bureaucracy who has some clout and is open minded about sharing credit with the innovator.  After all the innovator isn't the secretary's person, he's the president's; he's from the Innovator initiative and he's here to help. ("He" because there appear to be only 2 women in the list.) 

Point number three: during the next 90 days the bureaucracy is going to move slowly simply because of the impending election.  It takes a unique blend of chutzpah and dedication to push full steam ahead on something when it's much more interesting to spend the day checking realclearpolitics and hashing over Obama's chances in Florida or Ohio.

My bottomline--one or two of the innovators may land in the right place where their skills and personality fits with someone already there, and together they may make significant changes.  That's better than not having any changes in the next 6 months, but it's not a silver bullet.

Guns and Laskas

I should hat tip someone but I forget who.  Jeanne Marie Laskas used to write for the Post, and I always enjoyed her work. In this GQ article she explores an Arizona gun shop and its world.  It's honest.

Identity Proofing

From Regulations 

Identity proofing can be accomplished for 
customers in two ways: (1) By visiting a local registration authority 
at a USDA Service Center, or (2) through a new on-line identity 
proofing service. The new on-line identity proofing service will 
provide registrants with a more efficient mechanism to have their 
identity proofed. The on-line identity proofing requires responses to 
at least four randomly selected identity questions that are verified by 
a third party identity proofing service in an automated interface. Once 
an account is activated, customers may use the associated user ID and 
password that they created to access USDA resources that are protected 
by eAuth.

 Estimate of Burden: Public reporting burden for this collection of 
information is estimated to take eight (8) minutes to complete the self 
registration process for a Level 1 Access account. A Level 2 Access 
account registration is estimated to be completed in one hour 40 
minutes when travelling to a USDA Service Center to visit a local 
registration authority (expected to be approximately 30% of the 
registrants), or 50 minutes when using the on-line identity proofing 
service (expected to be approximately 70% of the registrants).
    Respondents: Individual USDA Customers.
    Estimated Number of Respondents: 114,841 Level 1 and 14,860 Level 2 
for an estimated total of 129,701 respondents.
    Estimated Number of Responses per Respondent: 1.
    Estimated Total Annual Burden on Respondents: 31,077 hours. 

This is from USDA's Information Collection Notice.    Some comments:  I assume USDA/OCIO will do the same sort of thing as Treasury has done with their Treasury Direct customers: ask things like what the customer's address, phone number, date of birth, years in house, etc. etc. are--that's the "third party identity proofing service" referred to.  The theory is that such data is publicly available and has been collected by the credit rating people, and other entities, so if I give answers which match that set of data, I must be me.  It makes sense to me.

I wonder how OCIO came up with the time estimates in the document.  When I did this sort of thing with Treasury it was more like 5 minutes than 50--maybe the third party service they use is less efficient than the Treasury's?  I'm assuming, perhaps wrongly, the identity proofing is only for Level 2, seems like bureaucratic overkill to require it for Level 1.

 I'm most fascinated though by the estimated number of respondents. Only 15K Level 2's, which are the people who want to do real business with FSA* online??  Elsewhere I've noted, I think, the big plans USDA/FSA has for moving to online business; I think this figure is inconsistent with those plans being successful.  Trying to construe them as favorably as possible, if I had been writing this document I would have used only the new FSA customers I anticipated over the period of the collection.  I'd assume there's some period OMB says to use for this, though usually you're talking about an annual collection, not an open-ended one.  

Finally I wonder if USDA/OCIO has run this process through a user review, as pushed by Prof. Sunstein.  If the good professor had been bureaucratically sharp, he would have changed the OMB guidance for these documents to specify the extent they were tested with users.

* I don't know that other USDA agencies use the e-Auth process.

The Importance of Bureaucratic Infrastructure

I'll link to a Matt Yglesias post which links to a NYTimes article on the Obama administrations slow and small efforts on the housing front.

A sentence here: "But none of that explains why they were so slow to spend the money that they had that was earmarked for housing."

As is discussed in the article, the policy choices were bad: helping borrowers who were under water meant in the eyes of many, including me, helping people who had gambled and lost.   But another factor is, I think, the lack of the appropriate bureaucratic infrastructure.  The Feds don't deal directly with homeowners and borrowers, they deal with mortgage lenders and bankers.  So if Geithner, Obama, and Summers decided they wanted to do something, the existing bureaucracy wasn't set up to analyze alternatives and propose machinery which could carry out the policy.

This is just another instance of my "we have a weak government" meme.