Rent-Seeking & The Fiscal Cliff

U.S. Treasury Secretary Timothy Geithner mentioned on several Sunday morning shows last week, that one program targeted for spending cuts was direct payments to farmers, which would total about $46 billion over ten years and could contribute to the large cuts needed to negotiate away from the "fiscal cliff".


Alfalfa, Alicante, Spain (Wikimedia Commons)

The government initiated direct payments to farmers in the wake of the Great Depression, as a way of encouraging farmers not to abandon rural areas for the cities when the price of crops decreased because of surpluses. The practice quickly caught on, as Joseph Heller described in his 1955 book Catch-22:

"Major Major's father . . . was a . . . God-fearing, freedom-loving, law-abiding rugged individualist who held that federal aid to anyone but farmers was creeping socialism. . . .

His specialty was alfalfa, and he made a good thing out of not growing any. The government paid him well for every bushel of alfalfa he did not grow. The more alfalfa he did not grow, the more money the government gave him, and he spent every penny he didn't earn on new land to increase the amount of alfalfa he did not produce. Major Major's father worked without rest at not growing alfalfa. On long winter evenings he remained indoors and did not mend harness, and he sprang out of bed at the crack of noon every day just to make certain that the chores would not be done. He invested in land wisely and soon was not growing more alfalfa than any man in the county."

--Joseph Heller, Catch-22 (New York: Scribner Paperback Fiction, 1996), p. 93 (first published in 1955)

[From the back cover of Journal of Political Economy, Vol. 116, No. 3 (June 2008) Published by: The University of Chicago Press]

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