Support the Free Market - Boycott Beef

(11/19/2009) - One of the main tenants (if not the main tenant) of mainstream “conservative” economics (i.e. those supported by large, pro-business organizations like the Club for Growth of the American Enterprise Institute (AEI), or the Republican Party, but not necessarily all that consider themselves conservatives) is that the world works better when Government stays out of people’s business.

One of my main problems with these organizations is that they tend to be very selective when complaining about government-supported projects.  They are, for instance, usually in favor of increasing military spending.  The programs large conservative groups tend to focus on do have one thing in common – they are issues supported by many economic liberals.  Trains, social welfare, unions, support for bike lanes, the US Postal Service, climate change – these issues and organizations are perennially by conservatives as punching bags. 

The problem is that when “liberal” and free-market economic principles align, the big conservatives groups tend to grow silent because their existence seems dependent on opposition to liberal values.  It’s a shame.  It think the country could be improved greatly if they allied with liberals on common agendas, but that would make Obama and liberals look too good, so I don’t expect to see it happen.

One place where free market principles and the environmental interests of many economic liberals converge is farm policy.  And unlike the above-issues, some of the pro-free market think tanks have supported work critical of our current farm policy.  Reason Magazine (which, unlike Heritage, I do not include in the group of organizations named earlier) offers six reasons for repealing the subsidies.

However, both these articles avoid discussing some of the primary reasons liberals tend to emphasize for eliminating the subsidies program – global warming.  On the one hand, farm subsides are designed to favor large agro-business, which utilizes large amounts of water and gasoline-driven machinery to turn out a cheaper product.  The subsidies are designed to keep maintain a minimum price for farm goods.  If the real price falls below a certain level, government will help make up the difference.  This encourages producers to make more food, which in turn lowers the real price of the food but increases their profits artificially because the subsidy is protecting the farmers from the effects of their over-production.

This over-production of grain doesn’t go to humans, but instead is used to feed cattle, pigs, and chickens.  As a result, meat is cheaper than ever.  But this comes at a cost – and not just in the taxes that go to support the agricultural regulations and higher prices Americans pay for grain, dairy products, sugar, and other products that benefit from the price protections.  As James E. McWilliams writes, “Livestock accounts for at least 21 percent of greenhouse-gas emissions globally -- more than all forms of transportation combined.” Other estimates I’ve seen all hover around 18-22%. 

Though he doesn’t mention it (I suspect because it would under-cut his universal-vegetarian message), cattle produce the vast majority of this.  Pound for pound, they produce about 11 times more greenhouse gases more than chicken, and about 4 times as much as pork, which means if we converted all our beef production to an even mix of pork and chicken, livestock’s contribution to global warming would drop quite a lot. While chicken and pork production is promoted by the same agricultural subsides, it doesn’t benefit to the same extent as cattle. 

McWilliams also reveals another area where the free market is absent in our meat production: “[Livestock production] consumes 70 percent of the water in the American West -- water so heavily subsidized that if irrigation supports were removed, ground beef would cost $35 a pound.”  I’m not sure what the details are relating to this figure, but even if the additional cost is wrong (intuitively it seems high to me, but it might be true).  But McWilliams is definitely on to something.  In Utah, 80% of all water goes to agriculture – the majority of which is alfalfa for cattle.  Ranchers, who are subsidized by tax-write offs and grants (again, details in my sources are lacking) are also allowed to graze their cattle on public land for free.

Political support for these subsidies comes from both political parties.  During the campaign, Barack Obama spoke out in support of agricultural subsides, and as President he has yet to show an interest in changing his position.  Senators and Representatives from all sides of the political spectrum support these give-aways and market distortions because they benefit their constituencies. 

Probably the only way these policies are going to be reversed is if a majority of non-beneficiaries recognize that these policies are bad for the environment and bad for the market.  But its definitely a change in policy that both conservatives and liberals can support, if for completely different reasons.