Published on Sunday, November 17, 2013 by the New York Times
The Insanity of Our Food Policy
by Joseph Stiglitz
American food policy has long been rife with head-scratching illogic. We spend billions every year on farm subsidies, many of which help wealthy commercial operations to plant more crops than we need. The glut depresses world crop prices, harming farmers in developing countries. Meanwhile, millions of Americans live tenuously close to hunger, which is barely kept at bay by a food stamp program that gives most beneficiaries just a little more than $4 a day.
So it’s almost too absurd to believe that House Republicans are asking for a farm bill that would make all of these problems worse. For the putative purpose of balancing the country’s books, the measures that the House Republican caucus is pushing for in negotiations with the Senate, as Congress attempts to pass a long-stalled extension of the farm bill, would cut back the meager aid to our country’s most vulnerable and use the proceeds to continue fattening up a small number of wealthy American farmers.
The House has proposed cutting food stamp benefits by $40 billion over 10 years — that’s on top of $5 billion in cuts that already came into effect this month with the expiration of increases to the food stamp program that were included in the 2009 stimulus law. Meanwhile, House Republicans appear satisfied to allow farm subsidies, which totaled some $14.9 billion last year, to continue apace. Republican proposals would shift government assistance from direct payments — paid at a set rate to farmers every year to encourage them to keep growing particular crops, regardless of market fluctuations — to crop insurance premium subsidies. But this is unlikely to be any cheaper. Worse, unlike direct payments, the insurance premium subsidies carry no income limit for the farmers who would receive this form of largess.
Taking from the poor to subsidize the rich.The proposal is a perfect example of how growing inequality has been fed by what economists call rent-seeking. As small numbers of Americans have grown extremely wealthy, their political power has also ballooned to a disproportionate size. Small, powerful interests — in this case, wealthy commercial farmers — help create market-skewing public policies that benefit only themselves, appropriating a larger slice of the nation’s economic pie. Their larger slice means everyone else gets a smaller one — the pie doesn’t get any bigger — though the rent-seekers are usually adept at taking little enough from individual Americans that they are hardly aware of the loss. While the money that they’ve picked from each individual American’s pocket is small, the aggregate is huge for the rent-seeker. And this in turn deepens inequality.
The nonsensical arrangement being proposed in the House Republicans’ farm bill is an especially egregious version of this process. It takes real money, money that is necessary for bare survival, from the poorest Americans, and gives it to a small group of the undeserving rich, in return for their campaign contributions and political support. There is no economic justification: The bill actually distorts our economy by promoting the kind of production we don’t need and shrinking the consumption of those with the smallest incomes. There is no moral justification either: It actually increases misery and precariousness of daily life for millions of Americans.
FARM subsidies were much more sensible when they began eight decades ago, in 1933, at a time when more than 40 percent of Americans lived in rural areas. Farm incomes had fallen by about a half in the first three years of the Great Depression. In that context, the subsidies were an anti-poverty program.
Now, though, the farm subsidies serve a quite different purpose. From 1995 to 2012, 1 percent of farms received about $1.5 million each, which is more than a quarter of all subsidies, according to the Environmental Working Group. Some three-quarters of the subsidies went to just 10 percent of farms. These farms received an average of more than $30,000 a year — about 20 times the amount received by the average individual beneficiary last year from the federal Supplemental Nutrition Assistant Program, or SNAP, commonly called food stamps.
Today, food stamps are one of the main support beams in our anti-poverty efforts. More than 80 percent of the 45 million or so Americans who participated in SNAP in 2011, the last year for which there is comprehensive data from the United States Department of Agriculture, had gross household incomes below the poverty level. (Since then, the total number of participants has expanded to nearly 48 million.) Even with that support, many of them experience food insecurity, that is, they had trouble putting food on the table at some point during the year.
Historically, food stamp programs and agricultural subsidies have been tied together. The two may seem strange bedfellows, but there is a rationale: There is a need to address both sides of the economics of food — production and consumption. Having a bounteous supply within a country does not ensure that the citizens of that country are well fed. The radical imbalance between farm subsidies to the wealthy and nutritional assistance to the neediest — an imbalance that the farm bill proposals would directly promote — is a painful testament to this established economic fact.
The Nobel Prize winning economist Amartya Sen has reminded us that even famines are not necessarily caused by a lack of supply, but by a failure to get the food that exists to the people who need it. This was true in the Bengal famine of 1943 and in the Irish potato famine a century earlier: Ireland, controlled by its British masters, was exporting food even as its citizens died of starvation.
A similar dynamic is playing out in the United States. American farmers are heralded as among the most efficient in the world. Our country is the largest producer and exporter of corn and soybeans, to name just two of its biggest crops. And yet millions of Americans still suffer from hunger, and millions more would, were it not for the vital programs that government provides to prevent hunger and malnutrition — the programs that the Republicans are now seeking to cut back.
And there is an extra layer of irony to America’s food policies: While they encourage overproduction, they pay little attention to the quality and diversity of foods our farms produce. The heavy subsidization of corn, for instance, means that many unhealthful foods are relatively cheap. So grocery shopping on a tight budget often means choosing foods that are not nutritious. This is part of the reason that Americans face the paradox of hunger out of proportion to their wealth, along with some of the world’s highest obesity rates, and a high incidence of Type 2 diabetes. Poor Americans are especially at risk for obesity.
A few years ago, I was in India, a country of 1.2 billion, in which tens of millions face hunger on a daily basis, when a front-page headline blared that one in seven Americans faced food insecurity because they couldn’t afford the basic necessities of life. Indian friends I met that day and in the following week were puzzled by this news: How could it be that in the richest country of the world there was still hunger?
Their puzzlement was understandable: Hunger in this rich land is unnecessary. What my Indian friends didn’t understand is that 15 percent of Americans — and 22 percent of America’s children — live in poverty. Someone working full time (2,080 hours a year) at the minimum wage of $7.25 would earn about $15,000 a year, far less than the poverty threshold for a family of four ($23,492 in 2012), and even less than the poverty level of a family of three.
This grim picture is a result of political decisions made in Washington that have helped create an economic system in which the undereducated must work exceptionally hard simply to remain in poverty.
This is not how America is supposed to work. In his famous 1941 “four freedoms” speech, Franklin D. Roosevelt enunciated the principle that all Americans should have certain basic economic rights, including “freedom from want.” These ideas were later embraced by the international community in the Universal Declaration of Human Rights, which also enshrined the right to adequate food. But while the United States was instrumental in advocating for these basic economic human rights on the international scene — and getting them adopted — America’s performance back home has been disappointing.
It is, of course, no surprise that with the high level of poverty millions of Americans have had to turn to the government to meet the basic necessities of life. And those numbers increased drastically with the onset of the Great Recession. The number of Americans on food stamps went up by more than 80 percent between 2007 and 2013.
To say that most of these Americans are technically poor only begins to get at the depth of their need. In 2012, for example, two in five SNAP recipients had gross incomes that were less than half of the poverty line. The amount they get from the program is very small — $4.39 a day per recipient. This is hardly enough to survive on, but it makes an enormous difference in the lives of those who get it: The Center on Budget and Policy Priorities estimates that SNAP lifted four million Americans out of poverty in 2010.
Given the inadequacies of the existing programs to combat hunger and poor nutrition, and given the magnitude of poverty in the aftermath of the Great Recession, one might have thought that the natural response of our political leaders would be to expand programs enhancing food security. But the members of the Republican caucus in the House of Representatives see things differently. They seem to want to blame the victims — the poor who have been provided an inadequate public education and so lack marketable skills, and those who earnestly seek work, but can’t find any, because of an economic system that has stalled, with almost one out of seven Americans who would like to find full-time employment still unable to obtain it. Far from alleviating the impacts of these problems, the Republicans’ proposal would reinforce privation and inequalities.
And the calamitous effects of the Republicans’ proposal will reach even beyond our borders.
Viewed from a larger perspective, the farming subsidies, combined with the cutbacks in food stamps, increase global poverty and hunger. This is because, with American consumption diminished from what it otherwise would be and production increased, food exports will inevitably increase. Greater exports drive down global prices, hurting poor farmers around the world. Agriculture is the main source of livelihood for the 70 percent of the world’s poor living in rural areas, who overwhelmingly reside in developing countries.
The adoption of the House Republicans’ plan will reverberate in our economy through several channels. One is simply that poor families with diminished resources will tamp down growth. More pernicious is that the Republicans’ farm bill would deepen inequality — and not just through the immediate giveaways to wealthy farmers and corresponding cuts to the poor. Children with poor nutrition — whether they are hungry or ill because of bad diets — do not learn as well as those who are better fed.
By cutting back on food stamps, we are ensuring the perpetuation of inequality, and at that, one of its worst manifestations: the inequality of opportunity. When it comes to opportunity, America is doing an alarmingly bad job, as I’ve written before in this series. We are endangering our future because there will be a large coterie of people at the bottom who will not live up to their potential, who will not be able to make the contribution that they could have made, to the prosperity of the country as a whole.
All of this exposes the Republicans’ argument in favor of these food policies — a concern for our future, particularly the impact of the national debt on our children — as a dishonest and deeply cynical pretense. Not only has the intellectual undergirding of debt fetishism been knocked out (with the debunking of work by the Harvard economists Carmen M. Reinhart and Kenneth S. Rogoff that tied slowed growth to debt-to-G.D.P. ratios above 90 percent). The Republicans’ farm bill also clearly harms both America’s children and the world’s in a variety of ways.
For these proposals to become law would be a moral and economic failure for the country.
© 2013 Joseph Stiglitz
Joseph E. Stiglitz is University Professor at Columbia University. His most recent book is The Price of Inequality: How Today's Divided Society Endangers Our Future. Among his many other books, he is the author ofGlobalization and Its Discontents, Free Fall: America, Free Markets, and the Sinking of the World Economy, and (with co-author Linda Bilmes) The Three Trillion Dollar War: The True Costs of the Iraq Conflict. He received the Nobel Prize in Economics in 2001 for research on the economics of information.