Republic, Lost_ How Money Corrupts Congress--And a Plan to Stop It - Lawrence Lessig [20]
A socialist country.
It’s easy to see why this enormously wealthy capitalist celebrates this chunk of American socialism: he is a primary beneficiary. Headquartered in Illinois, ADM is a conglomerate of companies with revenues exceeding $69 billion in 2009. According to one estimate, at least 43 percent of ADM’s annual profits are “from products heavily subsidized or protected by the American government.” More dramatically, “every $1 of profits earned by ADM’s corn sweetener operation costs consumers $10, and every $1 of profits earned by its ethanol operation costs taxpayers $30.”17
Andreas is certainly right that few from the coasts (including the west coast of Lake Michigan) recognize just how pervasive this socialism is. We protect milk in America. Milk, for God’s sake! “Most milk in the United States is marketed under… regulations known as ‘milk marketing orders.’ Currently, there are [ten] federal orders that regulate how milk is priced.”18
That means there is a map controlled by government regulators that divides the country and sets the price. And by “most,” that commentator means almost 60 percent of milk production under federal regulation, with most of the rest subject to state regulation.
This regulation is intended to subsidize dairy farmers. The Organisation for Economic Co-operation and Development (OECD) estimates that that subsidy increases the price of milk by about 26 percent. Cheese costs 37 percent more in the United States than elsewhere, again because of this regulation. Butter: 100 percent more in the United States than elsewhere. These differences are not trivial.
This system of subsidy dates back to the New Deal, when at least the government had the excuse of the phenomenally bad economics that seemed to rule the day. “Got a depression? Here’s an idea: mandate higher prices!”
Since the 1930s the economics has improved. The politics has not. Richard Nixon hinted that he planned to abolish the price supports for milk. After receiving—because of the hints?—$2 million in campaign contributions from the dairy lobby, he changed his mind.19 Since his flirt with free markets, no one has seriously thought to end this economic idiocy—because it is political genius. Highly organized special interests leverage their power to transfer wealth from consumers to farmers.
And not just dairy farmers. The government has intervened to protect shrimp producers against foreign competition.20 It has blocked more-efficient Brazilian cotton producers from selling in the American market (by subsidizing American cotton farmers and paying off Brazilian farmers so they won’t retaliate).21 It has waged war to protect banana producers.22 It has even imposed import restrictions and offered low-cost loans to protect peanut farmers (and no, Jimmy Carter is not to blame for that).23
This protection is not just for farmers. Republican president George W. Bush led the charge to protect steel in 2001.24 So, too, do we protect domestic lumber firms from Canadian competition. According to the Cato Institute, this adds between fifty and eighty dollars per thousand board feet, pricing three hundred thousand families out of the housing market.25 As University of Chicago professors Raghuram Rajan and Luigi Zingales estimate, “trade restrictions imposed in the 1980s… cost consumers $6.8 billion a year, while the value of government subsidies received by the industry over the same period amounted to $30 billion.”26