The Welfare State Runs Wild

April 25, 1949

Secretary Charles F. Brannan’s new farm subsidy scheme at least admits what the Administration has hitherto denied—that the present farm price support program raises the cost of food to consumers. Inadvertently it also betrays the completely one-sided operation of the present program. The present “parity” was based on the contention that the 1909–14 relationship of farm to nonfarm prices (one of the most favorable to farm prices in our entire history) was the “normal” and “fair” one. But last year, Mr. Brannan concedes, “farmers received 160 percent of the theoretical parity income.” This is only another way of saying that industrial income or prices last year were 37½ percent below “parity.” But no farm lobbyist demanded relief for industry or even urged farmers to turn back subsidies to the government. Farm “relief” marched on.

Secretary Brannan now wants to change the system not because it pays farmers too much but because he thinks it doesn’t begin to pay them enough. He is worried about the “historical gap” between farm and nonfarm income. Even last year “the average net income of farm people from all sources was only $909 per capita .. . compared with the non-farm average of $1,569.” This difference is “indefensible.” Farmers must have the same “standards of living afforded persons in other gainful occupation.”

Now if farmers must be supplied with cash from the Treasury to bring their standards of living up to those in other gainful occupations, then in consistency why shouldn’t those in every occupation be paid enough to have the same standard of living as those in every other? Why not cash subsidies to close the gap between average wages in work-shirt factories of $26 a week and average wages in oil refineries of $77 a week? Or to close the gap between the farmer with the lowest income and the farmer with the highest? Or to close the gap between the $15,000 salaries of Cabinet officials and the $1,400 average per capita income? Why not, in consistency, demand equality of everybody’s income with everybody else’s, regardless of his contribution to production?

Brannan outbids all previous subsidizers. He would let supply and demand determine the market prices of farm products, and then he would pay the farmers, in cash, the difference between these market prices and a “fair,” or Brannan, price. For example: “If it is necessary to get milk down to the area of 15 cents a quart at retail, in order to have maximum consumption, and use production payments to assure farmers of fair returns, I think both farmers and consumers will want to do it.” But why not reduce the price to 10 cents a quart? Or give it away free?

Apparently no proposal is now too preposterous or too insulting to the electorate’s intelligence for the Administration to put forward. Brannan proposes high prices for producers and low prices for consumers. And his presentation never once mentions the Forgotten Man, the taxpayer, who is expected to pay the difference.

Brannan blandly talks as if the Treasury cash turned over to the farmer would be a net addition to the purchasing power for industrial goods. A schoolboy could tell him that it would be a mere transfer. The taxpayer would be deprived of exactly as much purchasing power as the farmer gained. But Brannan apparently relies on everyone’s keeping the delusion that the taxpayer will turn out to be some other fellow. Naturally he did not give any estimate of the cost of his program. It is in fact impossible to estimate the cost without knowing in advance exactly what future conditions are going to be.

Brannan’s scheme is a glaring illustration of what happens once we reject free markets, destroy the connection between income received and value produced, and accept the premises of the pressure-group welfare state.