Mr. Shuman has served for the past fifteen years as President of the American Farm Bureau Federation. This article is from his address on December 8, ¹969, at the fiftieth annual meeting of the AFBF.
We are a nation of frustrated people. The liberals are bitter because their socialist schemes have not produced the results they expected. The intended beneficiaries are unhappy because the promised utopia did not materialize. Black people were promised immediate equality and prosperity. The aged were given increases in social security payments only to find that inflation gobbled up the gains. Union labor was given everything it asked for but the cost of living skyrocketed and some unions have priced their members’ services out of the market. Farmers who produce grain and cotton were given price supports and payments but found that these "benefits" were offset by depressed market prices and reduced sales. The poverty program failed to reduce poverty, and socialized medicine for the elderly is a miserable and costly failure. In a desperate effort to make these schemes work the liberal politicians have voted vast increases in power for the Federal government. The excuse was that only the Federal government could provide enough money and move with sufficient speed to break down the barriers that were slowing social and economic reform.
The most recent "national emergency" to be treated to the massive infusion of Federal funds cure is hunger and malnutrition. The White House conference on food, nutrition, and health which was held last week in Washington resulted in new proposals for huge appropriations, and low income is an important factor. The organizer of the conference estimated that there are 30 million hungry people in America but that hunger could be eliminated within three years by appropriating three to five billion dollars per year for food payments out of the Federal treasury.
While there may be 30 million undernourished people in the United States, there are other causes. Much of this so-called hunger is the result of ignorance of proper nutrition, prejudice about food, or unwise dieting practices, and it cannot be cured by food stamps or other spending programs. Like all of its predecessor national emergency programs, the hunger program will probably result in a huge new Federal bureaucracy busily soliciting clients to put on the free food list. Many people will be encouraged to reduce their efforts to help themselves and thus become eligible for food stamps. The "hunger" situation may actually worsen rather than improve.
Much of the frustration and unhappiness which has exploded into present-day demonstrations and protests are a direct result of the disappointment of those who expected more than could be delivered by government, and in reality found themselves worse off because of the inflation which destroyed their purchasing power. In difficult times like these it is natural to look for a scapegoat, but I believe that all of us—businessmen, farmers, workers, and professional people—have become obsessed with the notion that we can legislate prosperity for ourselves and—therefore, we must all take the major responsibility for the present trouble. Like Pogo, "We has found the enemy and he is us."
Schemes That Failed
If anyone in America has an excuse to be frustrated and bitter, it would be farmers and ranchers. For 40 years, the Congress has experimented with many different schemes to manage production, prices, and marketing of farm products. Almost without exception these schemes have failed, only to be replaced with some new concoction. Even now, the House Agriculture Committee is floundering around trying to find some way to patch up and extend the decrepit and costly Food and Agriculture Act of 1965.
The objective of this legislation was to reduce production and increase prices of feed grain, wheat, and cotton. It has failed in both objectives. The acreage of wheat and feed grains has been cut sharply in the last two years, yet total production has continued to move upwards. Acreage allotments of wheat were cut 13 per cent in 1968 and another 13 per cent in 1969, increment has cost wheat farmers many millions of dollars and should be suspended immediately. If the other nations party to the agreement will not agree to a suspension, the United States should announce that it will not be bound by the terms of this now discredited scrap of paper.
It may seem strange but a similar downward pressure on markets is exerted by the Commodity Credit Corporation in a short crop year. Government supply managers also tend to panic in a short crop season especially if the housewives begin to picket the retail stores to complain about high retail food prices. The farmers and ranchers of America were given a painful demonstration of this panic about three years ago when Secretary of Agriculture Orville Freeman dumped hundreds of millions of bushels of grain on the market to hold feed prices down in an effort to stimulate livestock feeding. During recent months the Commodity Credit Corporation has been moving substantial quantities of wheat into the feed grain market.
When Congress passed the Food and Agriculture Act of 1965, it included provision for making direct payments to farmers. This action in itself was an admission that the net effect of government-managed production, pricing, and marketing was to reduce the prices to farmers. These direct payments have only been a partial offset to the market price losses sustained under this legislation. Approximately 23 per cent of net farm income is now represented by these payments and cotton farmers look to these payments for about 40 per cent of their gross receipts from cotton lint.
Further Payments No Help in Getting "Unhooked"
Causing farmers to be dependent on Congressional appropriations for so much of their income is a sorry state of affairs and one which cannot be continued if there is to be a good future for farmers. Consumers and taxpayers look upon these payments in the same light as they look upon welfare payments to the poverty stricken. This means that limitations on the amount paid to any one producer will be imposed and eventually Agricultural Stabilization and Conservation "case workers" will supervise the spending of these "welfare" checks. Many farmers are hooked on payments because the price in the market has been depressed to such a low level that their only hope of covering production expenses is to add the payments to the market price. However, the solution is not to continue payments. The only sensible approach is to find a way to get unhooked.
Getting unhooked from farm programs will be a costly operation because the distortions and imagined advantages of the programs have been capitalized into land values and machinery.
Three Steps to De-Control
There are three essentials that must be adhered to in any program to change directions. First, the unsuccessful attempts to control production by government allotments and quotas must be terminated. Acreage controls have been worse than useless—they have actually stimulated surplus production. Second, price supports have acted as a ceiling to prevent price increases and must be phased out or keyed to market prices if farmers are to share in the prosperity of our competitive enterprise economy. Third, welfare-type direct payments in lieu of competitive prices must be phased out.
Making the transition from the present program to a market price agriculture should not be too difficult once the Congress has agreed on the objective of phasing out government supply management in agriculture.
The temptation for farmers to seek an "easy" way to develop market power remains, even though Federal control of production and pricing have proven unsuccessful. Those who would "let the government do it" favor nationwide marketing orders, Federal marketing boards, or other government supervised and managed marketing and bargaining. Government has a proper and important role in the marketing system; however this role is not to supervise marketing or to participate in the price-making process. Government should act as a referee to establish rules and to protect consumers against conspiracies to set price, or other monopolistic practices.
Experience in other countries with government marketing boards and other devices to control the marketing of farm products have proven to be ineffective and unsatisfactory from the farmers’ standpoint. Here again, political appointees who administer the programs must please the majority of voters—the 95 per cent who are consumers. It is inevitable that any government price management will result in holding prices down to please this big consumer majority. The egg marketing board in the United Kingdom was recently abandoned because it had stimulated surplus production, depressed prices, reduced the quality, and increased the retail cost of eggs. If the labor-socialist government of the United Kingdom, which is dedicated to a managed economy, cannot control the egg market, who can say that our government can manage the marketing of any agricultural commodity successfully?
Congress Must Control Spending
Nineteen seventy will perhaps be one of the most crucial election years in history. The nation is in need of a change in direction. That change can come if the new Congress is willing to accept its responsibility to control Federal spending. Government, fiscal, and monetary policies must be stabilized and the budget brought into balance. Irresponsibility in high public office invites the same attitude by the people. Much of the bitterness and frustration which is evidenced in the demonstrations and riots is in part a byproduct of government fiscal irresponsibility. Extravagant promises of instant prosperity and total security could not be fulfilled, and so the disillusioned protested.
Much of the present discontent probably should be charged up to the rapidly escalating inflation which is boosting prices and destroying the value of savings. Inflation is caused by huge government spending programs to satisfy the demands of the citizens for ever-increasing government benefits—the "something for nothing" idea. The costly war in Vietnam has generated inflation but so too have the multi-billion-dollar domestic spending programs, such as urban renewal, poverty, and farm subsidies.
Centuries ago, Pericles said: "Happiness is freedom and freedom is courage." In our search for the good life we have been concentrating on material comforts while neglecting more fundamental values. True happiness cannot be purchased, it cannot be found in material comforts alone.
Undoubtedly, much of the current turmoil is the result of the frustration experienced by many people when they find that money and things have not brought happiness. It is also probable that increasing restrictions on individual freedom are being felt but not always identified. Ever higher property taxes, sales taxes, income taxes, and surtaxes are required to pay for planned society schemes, and this reduces the individual’s freedom to spend his income.
Furthermore, the welfare state breeds countless rules and regulations as thousands of new laws are passed each year. Big government and individual freedom are not compatible.
Money, luxury goods, leisure time, security from the cradle to the grave—all these are valued by many people but they alone do not bring happiness. What we need in America is a big dose of courage: courage to take a position on controversial issues; courage to reject compromise between good and evil; courage to take a stand on moral issues; courage to refuse to be "bought" by government payments or private bribes; courage to accept risk as the price for opportunity.
Produce for the Market, Not for Government Storage
Up to now, this has been a rather doleful recital of the sad state of affairs in the United States generally, and particularly in agriculture. If we stopped here in our analysis, the conclusion could be drawn that the future is bleak, but I am optimistic. I believe that the next few years will bring a change in direction, a change in the attitude of people toward government and new hope for farmers as they seek to produce for consumer markets rather than government storage.
The time for a change is long past due. It is time to rid the United States of welfare state policies and philosophies. Time to return government to its proper role of providing a healthy economic climate for private enterprise rather than attempting to guarantee security from the cradle to the grave. Time to recognize the failure of the wild spending "new economics" theories and to re-establish government fiscal responsibility by balancing the budget. Time to abandon government policies that force farm families to depend upon welfare type subsidy payments for their income. Time to re-establish a free market agriculture with income derived from profits. Time to restore proper respect for law and order.
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Look to the Individual
The renewal of civilization has nothing to do with movements which bear the character of experiences of the crowd; these are never anything but reactions to external happenings. But civilization can only revive when there shall come into being in a number of individuals a new tone of mind independent of the one prevalent among the crowd and in opposition to it, a tone of mind which will gradually win influence over the collective one, and in the end determine its character. It is only an ethical movement which can rescue us from the slough of barbarism, and the ethical comes into existence only in individuals….
ALBERT SCHWEITZER, The Decay and the Restoration of Civilization