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The Case for Paying Dead Farmers Not to Farm Instead of Living Ones:

Jonathan Adler's post about how the federal government pays dead farmers not to farm has generated predictable outrage from commenters. I sympathize. But the critics are ignoring some important reasons why paying dead farmers not to farm is a lot better than paying living ones.

It's hard to deny that dead farmers can do just as good a job of not farming as living ones; perhaps even better! At the very least, paying the dead not to farm isn't worse than paying the living to do the same "job." However, there are three major reasons why it's actually likely to be better.

I. Lower Enforcement Costs.

When you pay living farmers not to farm, there are going to be enforcement costs. Those ungrateful peasants might be tempted to do some illicit farming on the side in order to make an extra buck or two. You may even have to file a lawsuit to get them to stop their nefarious black market farming. If you're really unlucky, the case might even go all the way to the Supreme Court, and then you're talking really big litigation expenses. By contrast, enforcement costs are rarely a problem when it comes to the dead.

II. Lower Deadweight Losses to Society.

When you pay living farmers not to farm, you deter them from engaging in productive activity that might benefit society as a whole. You reduce the production of food and raise the cost of living, especially for the poor. You don't have to worry about any of that when you pay the dead.

III. Less Rent-Seeking.

Once you start subsidizing the living, they will have strong incentives to lobby for ever larger subsidies and to reward politicians who hand them out, while punishing those who refuse. This activity increases deadweight losses by deterring ever-more productive activity, and also by diverting resources to the unproductive activity of lobbying and away from the socially useful purposes. Economists call this "rent dissipation." The good news: the vicious cycle of rent-seeking, lobbying, and rent dissipation is not a problem if subsidies for not farming are confined to the dead.

The Bottom Line.

I'd prefer that we abolish subsidies for not farming entirely. But if we have to have them, I hope as much of the money as possible goes to the dead.

Related Posts (on one page):

  1. The Case for Paying Dead Farmers Not to Farm Instead of Living Ones:
  2. Paying Dead Farmers Not to Farm:
Bruce Hayden (mail) (www):
Ok, it makes some logical sense. But the better solution would probably be to abolish those farm subsidies in the first place. As I noted earlier, all they do is allow a favored small minority of us to stick to their rural roots, at the cost of the subsidies and the inefficiencies inherent in resisting the rationalization of the industry. So, the rest of us pay for these marginal farmers, first with our taxes, and secondly, with higher food prices.
7.24.2007 7:40am
Arkansas Andrew (mail):
As a farmer, I must correct a misnomer concerning these payments. The federal government quit paying us NOT to farm land in 1994. There is no acreage set-aside restrictions associated with Direct Payments.
Take heart, those of you who wish this subsidy to go away, for farmers are now only less than 1% of the population and according to Socialism 101 our votes are now worth less to politians because there are less of us.
Case in point: the 3 Entity rule (whereby I can be a person 3 times depending on my partnerships) is being removed in this year's bill.
7.24.2007 8:39am
markm (mail):
I'm pretty sure Ilya's joking - but the sting is that paying live farmers not to farm makes no more sense than paying dead ones. If the program made any sense in the first place, then there would be a reason to keep paying the estate of a dead farmer to keep the land out of production. His heirs could start farming or it could be leased to an active farmer.

Full disclosure: Back in the 60's, my grandfather was getting about half of his income from federal payments for not farming in northern Minnesota. The other half came from a part-year job as an apartment building superintendent in Minneapolis, while the building owner flew south for the winter; this came with an apartment, which certainly beat overwintering in a farmhouse without plumbing, and probably paid better than really farming would have. I doubt that this work schedule would have allowed him to be on the farm early enough in the spring and late enough in the fall to raise the crops his neighbors grew.
7.24.2007 8:48am
bornyesterday (mail) (www):
I'm going to second the commenter on the first post who mentioned Nikolai Gogol's Dead Souls which shows the effect of using dead workers in establishing economic conditions throughout a country.
7.24.2007 8:49am
Hei Lun Chan (mail) (www):
My heart really goes out to you, Arkansas Andrew, now that the government is only screwing me in favor of you a little instead of a lot.
7.24.2007 8:50am
Grange95 (mail):
Amusing, but perhaps it misses the point a bit. It's often easier to poke fun when the background facts aren't provided. My coment from the prior post:


Sure the farm program has major flaws ... but before we attack this particular "outrage", maybe we should ask if this is a situation where the farmers in question signed up their farms for various programs prior to their deaths. Often, farm program benefits run with the land in question, not to an individual (i.e., the benefits are paid for taking a particular piece of land out of production, or to pay crop insurance for yields on a particular piece of land). If the benefits in question do run with the land, I have a hard time seeing why the fact the farmer died makes much difference to eligibility for benefits.
7.24.2007 9:11am
NaG (mail):
There is one small problem, though: the money isn't going to the dead. It's going to the heirs of the dead, who are all alive and making choices as to how to use the farm.

Instead of paying farmers every year to not farm, wouldn't it be cheaper to just buy the land and just turn it into a park (that nobody bothers to visit)?
7.24.2007 9:42am
NickM (mail) (www):
Couldn't we just pay the dead farmers by check, and not do direct deposit?
B-)

Nick
7.24.2007 9:55am
James Grimmelmann (mail) (www):
NickM: If the government pays the dead farmers and the payments can't make their way into heirs' hands, then it doesn't matter what payment form it uses.

Ilya, if the payments to dead farmers can make their hands into the heirs, and we adopt your suggestion to pay dead farmers instead of live ones, there's an unfortunate increased incentive for farmers' heirs to kill them.
7.24.2007 10:17am
TKA:

I'd prefer that we abolish subsidies for not farming entirely. But if we have to have them, I hope as much of the money as possible goes to the dead.


It's an interesting and politically savvy intermediate step to eliminating a subsidy, I suppose. Once you steer as much of it as possible toward dead people, it's easier to make the case for its abolition, and your opponents are less likely to speak up.

Since debate season is heating up, this could also be a good compromise tactic. Hillary to the GOP: I support the war. Hillary to the Dems: I would only send dead people to Iraq. Hillary to the Dems: I support a woman's right to choose. Hillary to the GOP: I would make abortions available only to dead people.
7.24.2007 10:25am
BruceM (mail) (www):
If the money is not going to the heirs, where is it going?

And I still don't get it. They're dead!
7.24.2007 10:33am
Gary McGath (www):
In some places, the dead constitute a very significant voting bloc!
7.24.2007 10:35am
Rick Herrick (mail) (www):
Arkansas Andrew says:

Take heart, those of you who wish this subsidy to go away, for farmers are now only less than 1% of the population and according to Socialism 101 our votes are now worth less to politians because there are less of us.


Except that what's driving the subsidy is not the votes of the farming population and it hasn't been for decades. Every last individual farmer could abstain from voting ever again and the subsidies would still flow. As a Heritage Foundation study from 2004 put it:


[F]arm subsidies are not distributed to the small, struggling family farmers whom lawmakers typically mention when defending these policies. Rather, most farm subsidies are distributed to large farms, agribusinesses, politicians, and celebrity "hobby farmers."


As long as the campaign contributions flow from John Hancock, Chevron, and ADM, amongst other top recipients of the farm subsidies, the ag subsidies will continue. But don't kid yourself that this is primarily driven by concern for rural votes. They're not completely neglible, e.g. would any candidate have a chance in the Iowa caucuses if he or she were to vigorously lobby for removing ag subsidies and ethanol "incentives"? But the real reason this never changes is because of the money teat.

Note that the Heritage study doesn't correlate subsidy amounts with campaign contributions and lobbying expenses. This is partly because it's a fairly limited research monograph, but also partly (I'd guess) because Heritage doesn't have campaign finance reform as one of its favored causes. I'd be interested in seeing a study like that, but it'd be kind of difficult to separate out contributions and lobbying intended to influence ag subsidies and those intended to influence other policies, laws, and regulations, given the widespread interests of these conglomerates (insurance, finance, petroleum, pharmaceuticals, etc).

And Bruce Hayden: It's satirical. Ha ha. And also:


...all they do is allow a favored small minority of us to stick to their rural roots, at the cost of the subsidies and the inefficiencies inherent in resisting the rationalization of the industry.


As I note, these subsidies are not at all about allowing anyone to stick to their rural roots (most studies show that the number of individual farmers continues to shrink each year in spite of the subsidies). It's about lining the pockets of corporations, pure and simple.
7.24.2007 10:36am
Muskrat (mail):
I for one am glad to see some government support for the post-mortal community. For too long the dead have been discriminated against. They are denied jobs, cannot vote (except in Chicago) and are banned from decent housing. They get no medical care, and cannot legally attend college. Plus, whenever they try to organize, everybody starts shouting about "Zombies" and waving flaming torches around. All of this despite the fact that this country was founded by people who are now dead, our greatest war heroes are dead, and some of our greatest cultural icons, from Ted Williams to John Lennon and John Wayne, are all dead. It's time to end this era of metabolic apartheid, ban the Z-word, and adopt the Chicago model of full post-mortal rights.
7.24.2007 10:59am
martinned (mail) (www):
L.S.,

This reminds me of an amazing passage in Rushdie's "The ground beneath her feet", where he spends more than a full page explaining why breeding non-existent goats is so much easer than breeding real goats.
7.24.2007 11:17am
Rich Rostrom (mail):
Points I and II are valid, but III fails. When payments are made, someone collects. Those parties have motive to rent-seek. Unless someone can conceive a scheme whereby the value of the payment is buried, cremated, or otherwise disposed of, it doesn't go to the dead.

Oh, and could we please drop the "dead vote in Chicago" line? I judge elections in Chicago (for about 30 years) and I've never seen any sign of "cemetery voting". (I'm a Republican, so I would object.) The Daleycrats haven't needed to steal any votes for decades anyway.

Philadelphia and St. Louis do have current problems with ghost or zombie registrations, and possibly voting.
7.24.2007 12:09pm
NickM (mail) (www):
Muskrat - they do not like being called zombies. [How would you like to be named after a drink?] They prefer the term Decomposing-Americans.

Oh, and nowadays, they vote in Miami. Those Chicago winters are a killer.
B-)

Nick
7.24.2007 2:56pm
Cornellian (mail):
Farming isn't just a job, it's a way of life.

QED
7.24.2007 3:22pm
Arkansas Andrew (mail):
Ok, Farm Payments, a primer on how to collect money on dead people. First, There is a method of receiving government subsidy payments even though you are not technically farming. It's called "Share Rent". "Share Rent" means that the landlord contributes to the farming by sharing the risk on the receipts netted from the crops harvested, instead of "Cash Rent" (ie. 1/4 rent vs. $75/acre). The landlord may be a partnership, a trustfund, or simply a individual. The payment from the Farm Service Agency is usually a direct payment into a bank account.
Or with the 3 Entity rule, you may enter into 3 separate partnerships with others who may be landlords or family members (except a wife), and have this payment encumbered by a lending institution. Again, the payment is electronically sent to the lending institution and goes against the loan.
In short, with normally 3 overworked staff members per county, and in some county's up to 3000 entities to account for each year, the dead get paid.
Is this a great country or what?
7.24.2007 4:43pm
David M. Nieporent (www):
Rick, every company in the U.S. wants subsidies from the federal government, but not every one gets it, and certainly not at the level of agribusiness. The reason the agribusiness ones are so successful is because of the votes. It doesn't matter what percentage of the $ goes to agribusiness; the point is that some money goes to significant numbers of people. And those people do vote. You yourself note the Iowa caucus effect.
7.24.2007 4:58pm
Rick Herrick (mail) (www):
David,

I concede the point to some extent, but what I meant is that it's not a simple "largesse for votes" arrangement. This is fairly clear for a number of reasons, especially the vanishingly small percentage of actual individuals that count as actual farmers nowadays and the overwhelming percentage of the subsidies that go directly into corporate coffers as opposed to the bank accounts of individuals and families.

So it really comes down to a combinations of factors. The agribusiness concerns want the subsidies and lobby strongly for them. So that's one factor. Iowa plays an inordinately large factor in the equation because of the unique position of the Iowa caucuses. So people there manage to get candidates to kowtow to the political sensibilities of Iowa voters more than others. And in Iowa coming out against agricultural subsidies is of course political suicide.

Which is interesting since, according to figures from the USDA, only 20% of Iowa's population is employed in "n farm and farm-related jobs," including barely more than a quarter of even rural residents. So even in one of the states that drives this phenomenon, barely 1/5 of the residents works in the agricultural industry.

In fact, what drives this more than anything is the image that Americans have of themselves and want to believe that they represent. This is stoked by the corporations, who would of course drive a massive amount of advertising and outrage if a politician were to dare to suggest reducing the subsidies.

So yes, the votes are a factor, but they are both irrational and really secondary and contributory to the money driving the overall machine.
7.24.2007 7:33pm
Arkansas Andrew (mail):
After posting my Primer on Farm Programs I was reminded of how a dead person would receive a payment legally. By share renting, if someone should die his payment would naturally go to the estate. The inheritors of that estate having to abide by the "share rent" contract which would contain a portion or percentage of the harvest and government payments would be legally due those payments or it would nullify the contract.
Therefore, a dead man should receive money legally!
On the subject of the morality of receiving government subsidies, my feeling is that it is all horrific and inevitable and just a part of socialistic entropy.
7.24.2007 7:58pm
JamesH (mail) (www):
Ilya,
I've never seen a better brief analysis of the subsidy and rent-seeking phenomenon. Wonderful satire--so good I'm going to assign this in my Political Economy class this fall.

Arkansas Andrew,
You say
according to Socialism 101 our votes are now worth less to politians because there are less of us.


Actually that's Democracy 101--fewer votes = less political success. Socialism 101 is taking money from some taxpayers and giving it to others because they have more political clout, sorta like farm subsidies. How bizarre that you call democracy socialism, and socialist subsidies democratic.

(Of course I work in academia, and we get subsidies, too, through the student loan program, so who am I to complain!)
7.26.2007 11:48am