The federal government is at it again–meddling in the private marketplace, creating messes, and then trying to sell shoddy, temporary solutions in exchange for people forgetting about the freedom that the government has taken from them.
Recent media stories have stated that if Congress doesn’t act, the price of milk could skyrocket, perhaps more than double from a current average of $3.20 per gallon to more than $7.00 per gallon. What?! You may be asking yourself, why in the world would the price of milk require Congress to pass a law?
Politically motivated simpletons playing at “TV news reporter” wasted no time trying to fan the flames by working up headlines like “GOP Obstinacy May Force Milk Price Spike.” Any honest-minded reporter worthy of the title would have the intellectual honesty to ask how we arrived in our present situation instead of trying a sucker punch to score cheap political points.
As it turns out, more than 60 years ago, Congress passed a law called the Agricultural Act of 1949. The law gave the federal government the authority and responsibility to “stabilize” the market prices of milk and a variety of other farm products. Government used its extensive knowledge of market forces in agricultural production, such as labor inputs and land yields, to establish a government-mandated formula that would establish a price floor for farm commodities. If the price of milk fell below the “stabilization rate” the federal government could, via the Commodity Credit Corporation (an agency still in existence today), buy up inventories of milk to artificially raise the price of milk to the price the government deemed to be the correct (or “stabilized”) price. The government would then give away the milk it purchased to “friendly countries” or approved non-governmental organizations to further distribute.
Some may say helping farmers makes sense and is worthy of a government program, funded by taxpayers. A price guarantee is a great thing if you’re a farmer–not such a great deal if you’re a taxpayer. The statist response goes something like, “well you like to eat don’t you? So you should be willing to have your taxes support farmers.” But this argument completely ignores the dynamic facets of a free market system. If enough farmers go bust to affect the food supply, prices will rise and attract new suppliers into the marketplace.
The point is that a free market system that is unfettered by government interference is the most efficient way to allocate resources. The federal government is not smart enough to effectively formulate a one-size-fits-all solution to an agricultural market with multiple commodities.
As time has gone on and agricultural methods have shifted away from labor in favor of machines, the federal pricing formula has…remained the same. More than half a century after original passage, the same funding formula remains in effect as a permanent law. The federal law has made less and less sense over time. Of course Congress’s response to an out-of-date law wasn’t to repeal it, it was to pass temporary waivers and exclusions to the permanent law.
An adequate analogy is to think of a nasty house with a nasty plumbing problem that backs up sewage into the house. If Congress owned this house, instead of fixing the plumbing, it would spray air freshener whenever the air became too foul to breathe, and pretend like this was a permanent solution.
Recently, Republicans had the opportunity to repeal the bad law when they held both houses of Congress in the mid 2000s. They failed and kicked the can down the road. Democrats had a similar opportunity in 2009 when they held both houses of Congress (as well as the White House), but again failed to act.
It seems to us that rather than fixing problems, Congress is happy to be a malpracticing contractor who creates more problems than it fixes–but continues to charge for its shoddy services in terms of taking more taxes and more freedoms from the people they are supposed to be serving. The government solving rather than creating a problem? That will probably happen when cows learn to fly.
Photo Credit: Sin Amigos at www.flickr.com