Prospects for the Obama Administration to further build on the New Deal legacy of Franklin D. Roosevelt already looked bleak when I toured the FDR estate and Presidential Library at Hyde Park, NY on November 1, just before Election Day. As results came in the following evening, bearing out many of the polling-based predictions, it became ever more clear that President Obama will have the fight of his life – if, indeed, he chooses to make the fight – to carry out additional Keynesian stimulus endeavors of the kind FDR pioneered and to effectively implement the recently passed health care reform legislation. At this time, the year of the 75th anniversary of passage of Social Security legislation, it is important to remember that FDR had to battle powerful reactionary forces in enacting his New Deal programs, forces strongly resembling those facing Obama.
If South Dakota’s political climate is at all representative of the Agricultural Heartland, long-term agricultural sustainability issues will be pretty much ignored in campaign debates this election season. Campaign statements and debates thus far in South Dakota’s lone Congressional race have been largely devoid of any meaningful discussion of sustainability issues. The electorate would benefit greatly from candidates addressing fundamental policy issues that have been raised in the recently released National Academy of Sciences report on sustainable agricultural systems.
The Obama administration’s recent proposal to reduce Federal crop subsidies going to large farms is heartening to some sustainable agriculture advocates, but it is causing a major stir among mainstream farm organizations. In its FY 2010 “budget framework” released on February 26, the Obama administration proposed to begin phasing out “direct” payments to farmers with annual gross sales over $500,000. It is estimated that, after a 3-year phase-out period, this would reduce Federal payments to larger farms by $1.2 billion annually. The Obama administration is also proposing to reduce crop insurance premium and underwriting subsidies.
I have been thinking a lot lately about what economics was like during the 1960s when I studied for my undergraduate and Ph.D. degrees in the discipline. We studied Milton Friedman, among others, in microeconomics, but Keynesian economics (The General Theory of Employment, Interest, and Money, 1936) was the accepted wisdom in macroeconomics. It was accepted that both monetary and fiscal policy had legitimate and essential roles in guiding and balancing market economies. It was also accepted that regulations over a wide range of market activities were necessary to check the excesses of capitalism and assure that market economies function for the common good. This included regulations covering banking and monopoly markets. (Systematic attention to the role of environmental regulations was just beginning at that time, however.)
Dramatically increasing food prices and the implications for poverty and hunger around the world have commanded front-page headlines for the past six months. Serious attention is now being given to the long-term challenges posed by this food crisis. The Food Summit in Rome during the first week of June, convened by the UN Food and Agriculture Organization (FAO), was intended to address short, medium, and long-term challenges. Last month, I wrote in Daily Kos about the role of ‘markets’ in addressing this food crisis. Here, I address interrelated issues of resource limits and technological change.
I made several trips to India and Pakistan between the late-1960s and the early-1980s. The ‘Green Revolution’ was just emerging during my first trip in 1967-68, when I spent 6 months collecting agricultural data for my Ph.D. dissertation near Allahabad, on the fertile Gangetic Plain of northern India. I later lived for 1-½ years in Pakistan during the mid-1970s, as an agricultural economist with the U.S. Agency for International Development. By the time of my stay in Pakistan, the Green Revolution pace of change in the subcontinent had begun to slow. During and immediately following my various trips, I was always struck by the contrast between the prevailing U.S. view of ‘markets’ and the views of Indian and Pakistani governments. It seemed to me that India and Pakistan needed to place more reliance on markets and the U.S. needed more regulation of markets.
I was recently invited to present testimony as part of an economics panel assembled by the Committee for “Twenty-First Century Systems Agriculture”. This committee was created by the Board on Agriculture and Natural Resources (BANR), a program unit of the National Research Council (NRC). The NRC functions under the auspices of the National Academies of Science and Engineering and the Institute of Medicine. The purpose of this Committee was presented in my most recent Daily Kos posting, drawing from the BANR website in early March. The Committee asked me to address four areas when it met in Kansas City on March 27th. I summarized the major points of my testimony in one area in my ‘Part 1’ Daily Kos posting. Here, in ‘Part 2’ I summarize my testimony about policy lessons and models from Europe.
I was recently invited to present testimony as part of an economics panel assembled by the Committee for “Twenty-First Century Systems Agriculture”. This committee was created by the Board on Agriculture and Natural Resources (BANR), a program unit of the National Research Council (NRC). The NRC functions under the auspices of the National Academies of Science and Engineering and the Institute of Medicine. The Committee asked me to address four areas when it met in Kansas City on March 27th: (1) the economic and policy conditions necessary to foster sustainable food and farm systems; (2) the policy lessons and models from Europe and other countries that might help the Committee frame issues; (3) alternative agriculture and the value chain—making alternative agriculture successful in today’s economic structure; and, if time permits, (4) the financial aspects of sustainable practices in the Midwest. In this posting, I summarize the major points I made in area (1). In a subsequent posting, I will summarize my testimony in area (2).
The past year was one of lost opportunities in Congressional action on what was to be the 2007 Federal farm bill. Going into 2007, an unusual set of forces from both the left and the right had proposed a series of reforms in crop commodity subsidies and conservation programs. The stage was set for the kind of new directions that occurred with the 1985 farm bill, when agricultural producer and environmental groups agreed to continuation of commodity subsidies in return for major new conservation provisions and programs.
The House of Representatives passed its version of a new farm bill in July, but it was not until December that the Senate passed its version. Conference Committee deliberations to resolve differences in the two bills are expected to begin soon. However, unless the President’s threat of veto forces Congress to make major changes, resulting legislation is likely to fall far short of hopes expressed in most of the progressive reform agendas.
Failures and modest successes in the farm and food policy process to date, as we enter the Conference Committee stage, can be grouped in three areas: (1) commodity subsidies; (2) agri-environmental programs; and (3) healthy food initiatives.