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Tarnished Gold: My All-Time Favorite Paper on Ag Policy

“Tarnished Gold: Fifty Years of New Deal Farm Programs” by Don Paarlberg was written in 1987. It is a withering critique of farm income support programs and one of the last papers written by Don, a long-time Purdue prof, and writer of extraordinary skill. Here is the link:

I actually had the good fortune to see Don present an earlier version of the paper at the 1983 AAEA annual meeting held on the Purdue campus when I was a graduate student in ag econ there. Yes, this was back in the old days when the meetings were held on campuses and you stayed in dormitories. I recall a packed meeting room with Don and other luminaries. But what I most remember is Don telling how it was his habit to write the first draft of a paper and then throw it in the trash bin and start over fresh. This was his way of purging his own biases. I later learned he was not joking either. He seriously did this! Sorry. I live with my biases 🙂

Don said in this article that farm programs originally were devoted to “Relief” “Recovery” and “Reform”, all defensible public goals. However, Don makes the case that farm programs morphed over time to be “Preferential” “Profligate” and “Perennial”, with far less noble characteristics. In more modern economic terms, farm programs originally could be justified based on public good arguments but then devolved into just another mechanism for rent-seeking by a favored group. No wonder Don was not popular among farm groups!

This also gives me a chance to state my personal views on farm programs. As a confirmed freshwater economist, I have always been opposed to farm programs (after all Don was one of my mentors). I truly believe the ag sector as a whole would be better off without them. However, you won’t hear my out there banging away about getting rid of farm subsidies. Not that I disagree. Rather, I discovered it was a waste of my breath. I was highly influenced by what Don wrote at the end of his magnificent paper:

“Some 30 years ago President Eisenhower learned that there was a Tea-Tasting unit in the Department of Commerce, placed there in the early days of the Republic to assure that the tea merchants of China and India did not sell us low-quality tea or stretch out the product with some adulterant. The President, intent on economy, thought this was an agency that could be abolished, and so intended. But the grocery chains rose in protest; their quality control and pricing schedules had become institutionalized around this governmental unit. Rather than use his political capital on this small issue, the President receded. I leave you with this question: Have the New Deal farm programs become equally institutionalized so that, despite their obvious failure, they cannot be basically changed?”

That was written in 1987. Prophetic words for sure.

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