A faux crisis that's too good to waste

More than a century ago, a rapidly urbanizing United States (the U.S. Census of 1880 found farmers a minority in the labor force for the first time) decided, through the political process, that farming was too important to be left to the farmers to manage. In a tradition going back to the ancient pharaohs, government was seen as the best way to control the food supply and its price for consumers.

Various methods have been used saince our post-Civil War turning point-that is, that our deflationary monetary policy, surplus exports, a fixed parity formula, floating parity, deficiency payments, emergency aid would somehow do the trick.

As farmers responded with soaring productivity gains, over supply and inadequate producer prices have been the central problem.

In the early decades of the 20th century, farmer-quits weren't a problem-indeed, as late as 1962, the USDA was still preaching about a surplus of farmers and a labor shortage for industry. However, since the 1930s, the strategy has been of one of providing the least amount of aid needed to keep farmers producing, not quitting-this to ensure enough commodity supply to keep consumer food prices from rising as fast as urbanite incomes.

Adjusted for inflation, farm income continues to drop while urban income doesn't, so food-spending-as-a-percent-of-income for urbanites continues to shrink. From near 25 percent in the 1950s, it's below 10 percent today.

The 1951 $1/gallon of milk should cost $8.26 today. It doesn't. Milk left the farm gate at parity back then. Today, it doesn't.

Dairymen now lose money on milk production. Without some subsidy, some might quit-supply might drop and retail prices might rise and consumers would go political.

The 20th century turning point came in the early 1950s, with a governmental decision to dump the full parity formula and go to partial parity.

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