Farming is among civilization’s oldest professions. It has never been easier nor more technologically advanced nor more productive than it is today. One would thus expect it to be an economically feasible activity.
But government has ruined farming by ruining the free market. And so the clamoring for government farm subsidies and intervention goes on endlessly.
Within a federal government where dysfunction is already the norm, federal farm policy is in a class of its own. After the end of World War I, speculators demanded that the government save them after they had overextended themselves in planting to support the war effort. This was the beginning of the end for economically sustainable agriculture.
Ever since, various government panels and boards and subsidy programs and purchase mandates (such as the recently enacted mandate to use ethanol) have caused the farm problem to grow worse, much like a snowball grows as it rolls downhill. Government intervention has made farming less feasible in the name of making it more so.
Some of the worst farm programs were established in the New Deal era. Thankfully, the Supreme Court dealt a body-blow to one of them on Monday, at the same time winning a great victory for the cause of property rights in the case Horne v. Department of Agriculture.
The Raisin Administrative Committee is the federal government’s version of OPEC, but for raisins. Created by a 1937 law, it had (until Monday) the power to seize and destroy raisins without necessarily compensating farmers. The aim was to keep raisin prices high through artificial scarcity. Under the program, the government could do what it wanted with the raisins. Farmers had only a moderate chance of recouping the money from the raisins they lost, depending on whether the bureaucrats found a way to sell them profitably.
The Supreme Court, in a resounding eight-to-one decision, ruled against the raisin panel and the Obama administration’s defense of it. They did not do so because it is an abomination to a free society to have government dictate market outcomes in this way, but rather because the physical seizure of the raisins and the forced transferal of title to the government constitutes an obvious taking of private property.
“Any physical taking of [raisins] for public use must be accompanied by just compensation,” Chief Justice John Roberts wrote. A narrower majority also rejected the Obama administration’s backup argument — that if the farmers must be compensated, the compensation can be reduced to account for the supposed benefits of the panel’s regulation and price-manipulation. “[T]he Government cites no support for … its notion that general regulatory activity such as enforcement of quality standards can constitute just compensation for a specific physical taking,” Roberts wrote.
This ruling could make it significantly harder for government to run raisin cartels and similar agricultural programs in the future. We hope it makes it impossible.
The world woke up long ago from the era when people believed governments could successfully improve the broader economy by manipulating market prices. The lessons of the past should be enough to prevent it from going back into that economically illiterate slumber.
