The word “fairness” sometimes has the same mesmerizing effect upon people’s critical faculties that the phrase “divine right” had a few centuries ago. Modern morality is based on “push-button fairness”: the government announces a new regulation, enforcers twist arms, and — voilà! — fairness triumphs. The vast expansion of government power in recent decades has stemmed in part from the presumed moral superiority of the government over the private sector; the presumed moral superiority of government commands over private voluntary agreements; and the presumed moral superiority of politicians and bureaucrats over private citizens.
Moral assumptions and pretenses have played a much larger role in the expansion of government power than most Americans realize. And the cloud of moral rectitude that surrounds political and bureaucratic action undermines citizens’ will to resist further intrusions into their lives.
It is in the abstruse details of government policies that the moral character of the state can best be divined. Federal farm policy provides one of the clearest examples of the power of foolish ideas wrapped in a cloak of fairness. Federal farm policy has been driven for most of the 20th century by the notion of “parity.” Agricultural Adjustment Administration chief Chester Davis declared in 1934, “Parity is justice now.” Parity is a doctrine of “fair exchange value”: if farmers receive less than so-called parity values, society has somehow wronged them.
Parity measurements were concocted by government agricultural economists in the 1920s to provide credibility to farm groups’ demands for federal aid. The official parity calculation was based on the current ratio of farm prices to nonfarm prices, compared with the ratio of farm to nonfarm prices between 1910 and 1914. USDA chose some of the most prosperous years for farmers in American history and then proceeded to implicitly condemn the nation for most of the 20th century because farm prices were supposedly not as high as they had been during farmers’ “golden age.” No one would try to drive across the country with a 1912 road map, but that is how the government made agricultural policy for much of the 20th century.
And as if its economically inane premises were not enough, parity calculations were further slanted by the Agriculture Department. The parity formula was designed to significantly understate farmers’ income: it completely disregarded all off-farm income of farmers (many of whom were part-time farmers); it exaggerated business costs by counting half the cost of passenger automobiles as a farm expense; it completely ignored the revolution in farm production and the fall in crop-production costs that resulted from the introduction of tractors; it ignored the increase in the quality and durability of other equipment that farmers bought, compared with that bought in 1910; and it ignored the fact that roughly half of all farmers lived in the South, where people had both significantly lower incomes and lower living expenses than the national average.
Parity also presumed that there was no significant change in the value of items that farmers purchased. But in the Index Numbers of Prices Paid by Farmers for Commodities Bought, a report published in 1935, the USDA admitted that
“the quality and utility of many of the farm machinery items, as well as other items the farmers buy, change over a period of years. Engineers have estimated that the wearing quality and capacity of 25 items of farm machinery in 1932 averaged about 170 percent of prewar machinery. This means that the prices in recent years represent machines of greater producing capacity than in the prewar years.”
The doctrine of parity illustrates how bogus moral doctrines can be used to restrict freedom. Parity proved that politicians and bureaucrats must commandeer the agricultural economy. The failure of farm prices to supposedly achieve parity in the early 1930s helped justify the Roosevelt administration’s proclamation of a “national emergency” in regard to agriculture. The New York Times reported on March 12, 1933, shortly after Roosevelt’s inauguration, that Agriculture Secretary Henry Wallace and farm leaders were appealing to Roosevelt for the appointment of a “farm dictator” to solve the farm crisis.
After the enactment of the Agricultural Adjustment Act in 1933, bureaucrats used the doctrine of parity to dictate how many pounds of peanuts each farmer could sell, how many acres of tobacco he could plant, how many boxes of oranges he could ship, and where he could sell his milk. Parity provided a noble-sounding pretext to justify giving hundreds of billions of tax dollars to landowners and farmers, to justify the forced shutdown of scores of millions of acres of farmland to inflate farm prices (and the resulting destruction of hundreds of thousands of jobs and the death of many small towns across the Midwest), and to justify the arrest of thousands of farmers for planting or selling more of their harvest than the government permitted.
Once politicians claimed a duty to drive up prices, any farmer who disobeyed government orders was presumably acting unfairly. Rep. James Polk on March 22, 1933, praised the Agricultural Adjustment Act, saying that the secretary of agriculture “will have at his command a weapon to whip into line selfish interests who decline to cooperate in helping to bring up the price of these farm commodities.”
While parity advocates have long declaimed that crop prices are unfairly low, crop prices have fallen primarily because modern technology, better seeds, better fertilizers, and better-educated farmers have produced far higher yields and lower costs of production. The concept of parity presumed that there had been no change in the cost of production for major crops; yet farming underwent a mechanical revolution in the 1920s. Farmers bought almost a million tractors in the 1920s, resulting in a revolution in productivity and a sharp decrease in production costs. In Kansas, mechanization in the 1920s reduced by 50 percent the number of man-hours required to raise an acre of wheat. Wheeler McMillen observed in 1929, “The tractor farmer can plow four to eight times as many acres a day as a man with a two-horse team.” Since 1910, the start of the parity base period, corn yields per acre increased more than 450 percent, wheat yields increased more than 400 percent, and milk per dairy cow more than tripled. Yet, farm subsidy advocates choose to completely ignore the technological revolutions of modern agriculture.
Parity is a Luddite concept that implies that the American economy should be frozen to provide farmers with the same comparative advantage that their great-grandfathers enjoyed. Parity is also a protectionist concept, based on the idea that government should isolate the American economy in order to boost farm prices.
How would the public react if American television manufacturers stormed Capitol Hill to protest the fact that the price of television sets had fallen sharply in real terms over the past decades? Yet this is what farmers do almost every year. Most of the complaints about unfairly low crop prices in this century have stemmed largely from a refusal to admit that the cost of producing crops has fallen steadily, thereby leading naturally to lower prices. This is a trend that has been proceeding continually for centuries and has been fought tooth and nail by politicians and farm groups for at least a hundred years. Parity is “socialism for one class” — the doctrine that the economy should be controlled in order to boost the incomes of a single chosen occupation group.
Parity is simply a worship of ancient farm prices. Even though full-time farmers’ income is higher than nonfarmers’ income, many farmers claim that they are still victimized because crop prices are lower now in real terms than they were in 1910. But so are prices for most commodities, farm and nonfarm. The only justification for parity nowadays is that farmers are treated unfairly because nonfarmers don’t pay as much for farm products as their great-grandfathers paid.
And invocation of parity also blinds many people to the fact that most farm products in the United States are not subsidized or controlled by the government. Besides, many independent farmers have been hurt by federal farm subsidies that have aimed to inflate farmland values (thereby making it more difficult for young farmers to get a start) and to inflate rental rates (thereby adding to the cost of production for any farmer who rents cropland). While parity has generally lost respect among agricultural economists, the parity formula is still used by the Agriculture Department and in federal laws to justify restrictions on what farmers can sell or on how farm products can be marketed. A February 20, 1998, Federal Register notice justified prohibiting producers of spearmint oil from selling half of their 1998 crop in part because spearmint oil prices were below parity prices.
A March 31, 1999, Federal Register notice justified federal tobacco price supports by invoking a parity formula based on
“multiplying the support level for the 1959 [tobacco crop] by the ratio of the average of the index of prices paid by farmers, including wage rates, interest and taxes (referred to as the “parity index”) for the three previous calendar years, to the average index of such prices paid by farmers, including wage rates, interest and taxes for the 1959 calendar year.”
Current farm legislation expires in 2002. If a new law is not passed before then, farm programs will automatically revert to the so-called permanent farm legislation of 1949 and parity calculations will be used to set mandatory support levels for all major subsidized crops. That would both torpedo American grain exports and result in an explosion of federal handouts for farmers.
Federal farm policies have long presumed that decreed prices are inherently fairer than agreed price — that prices are set more fairly in the halls of Congress than in the grain elevators, grocery stores, and commodity exchanges of America. The moral foundation of agricultural policy is the “just price.” Congress sets prices according to political pull, not according to how much wheat is available and how much is demanded. For USDA and Congress, good and evil in farm policy are simply high crop prices and low crop prices. Coercion is presumed fairer than voluntary consent because coercion will produce a higher price. The sole measure of justice is the final price, rather than the process by which the price was reached.
In a free society, no individual or group has a moral right to the same income as any other individual or group. A profession’s income is the result of billions of voluntary decisions of that group and other groups throughout the economy. If people are dissatisfied with their incomes, they are free to change professions. But farm lobbies have always thought that the answer was not for some people to leave farming, but for the American economy, consumers, and even farmers to be shackled to benefit farmers. Yet there is no reason to equalize farmers’ and city folks’ income that would not justify forcibly equalizing the incomes of all professions.
Unfortunately, the absurdity of the parity doctrine has not been widely recognized by the American public — or by non-farm state congressmen. As a result, the farm lobby has cloaked farm subsidies in a cloud of mysticism — and put the onus of unfairness or injustice on any attempt to reduce handouts.