Although I have a deep-rooted aversion to utopian ideologies (Seriously dudes, stop trying to immanentize the eschaton!), I recognize that all utopianists are not equally annoying.
Personally, I prefer the type of utopianist who has read so much fantasy by J.R.R. Tolkien or sci-fi by Verner Vinge that it has infected their views about the polis. This is why I have a mild affection for agrarians and transhumanists.
Agrarian conservatives are charmingly anachronistic and mostly harmless since even they don’t take their ideas too seriously. (When the agrarian professors give up their tenure at Ivy League U, move back to the farm, and teach at Wendell Berry Community College, I’ll believe they mean what they say). Transhumanist liberals, on the other hand, are confusing, weird, and would be scary if their ideas weren’t so silly. (Do they really think we’ll upload ourselves to machines as if our souls were a copy of Windows Vista? Really? Really?)
Based on this criterion I should be most favorable to a utopian scheme—Distributism—that was inspired by my hero G.K. Chesterton. But while I am deeply sympathetic to distributists, they have the annoying habit of taking their philosophy very, very seriously. They are True Believers, which, when found in utopianists, is always a bad thing.
A prime example is a commenter at the Acton Institute’s blog who writes,
Because distributism is people-centred, things like medicine would be a priority. There’d need to be infrastructure for that, but nothing like the grotesque infrastructure we presently have for shipping frivolous imported goods around the country.
John Couretas provides a fitting and funny reply:
I know it’s futile to point out obvious things to a distributist. The fixed, false beliefs undergirding distributism are impervious to reason and experience. But let me try one more time, perhaps for the benefit of those new to this nonsense.
Wishing a “people-centred” economy into existence is integral to the distributist fantasy. But how does its magical, humane “infrastructure” come into being? Would you have the steelworker who loads the arc furnace at the mill that supplies the metal for the dentist’s drill become more “people-centred”? How? Maybe he is ordered to pause every 30 minutes to read Wendell Berry poems to his co-workers as the furnace melts its batch of scrap? Or perhaps the fellow on the diesel engine line gets a union-mandated break to strum folk music on his banjo? Or maybe the jumbo jet assembly plant can set aside plots of land for organic gardening?
These examples are as absurd as distributism. Which is more of an aesthetic, a sensibility, a nostalgia for a bygone era that conveniently ignores pervasive wretchedness, than an economic possibility. And at the heart of distributism is the hidden coercive impulse that would prohibit ordinary folk from behaving and consuming, as pauldanon says, in “frivolous” ways.
That’s the key isn’t it? In a distributist economy, we’ll need a Czar of Aesthetic Consumption to decree what is “frivolous” and what is not. That’s how you order “priorities.” Perhaps the Czar would publish a regular Compendium of Consumer Errors, updated to thwart any new and distasteful consumer demand. But pauldanon’s frivolity and mine won’t always line up. Imagine all the frivolous things and past times that actually make life tolerable for masses of people who care nothing about the distributist program. Would the Czar of Aesthetic Consumption allow a person to walk into Walmart and buy a box set of some really bad TV show for viewing on a monstrously large flat panel HD screen? Horrors! How about a weekend bus trip to Branson to take in the latest Elvis tribute? Are you kidding? Playing golf on a summer afternoon? The Czar would not be amused.
This gets to the heart of my concern about distributionism. I’m afraid that if they ever got their way they would enthrone a Czar of Aesthetic Consumption whose first decree would be to banish LOLCats. I can live with most of the effects of a distributistism (more guilds, calluses, and self-employment taxes), but I don’t want to live in a world without LOLCats.
November 18th, 2011 | 9:48 am
The fellow you mention – John Couretas – has placed it squarely. Distributism is in no way an economic or governing model. It is a collection of sweet sentiments. It’s a pretty little landscape painting.
That would be fine, if its adherents didn’t pretend differently.
November 18th, 2011 | 10:00 am
Or maybe we could just retarget agricultural subsidies to small farmers rather than large agribusiness conglomerates. Does that sound maybe a little more reasonable?
Distributism *can* be a utopian totalitarian scheme, but so can any political viewpoint if taken to an extreme. I don’t think you believe that the existence Randian free-market radicalism invalidates the the idea of free markets.
The fundamental position of distributism is that ownership and access to the means of production ought to be distributed — that’s why it’s called “distributism” — as widely as possible among the population.
That could mean anything from employee-owned corporations to small farms, or big farms owned by lots of small farmers.
Nothing inherently totalitarian about that.
November 18th, 2011 | 10:10 am
I actually like the idea of distributism. But I have yet to see anyone actually give a remotely practical plan for implementing it in today’s reality.
(And yes, I read John Medaille’s book – it contains a lot of valuable information, but it’s policy recommendations – such as they are – have about the same chance of actually being implemented and working out the way envisioned as Ron Paul has of being elected President.)
The ideas sound great, but tell me how we get from here to there in realistic, doable terms.
And yes, Distributists are utopians.
November 18th, 2011 | 12:56 pm
I have to agree with Ethan, above. Distributists are no more utopian than any other system that begins with an understanding of what is good for the human person and then endeavors to put that understanding into action, including capitalism. The notion that a social order is more likely to be just when land is distributed widely can be encouraged in all kinds of ways that are non-totalitarian (beginning with agricultural policy that stops dramatically favoring big agribusiness and stops trying to regulate small farmers out of business).
Sure, a centralized aesthetic czar wouldn’t be preferable. Neither would a purely randian capitalist system. But once we have an anthropology and an understanding of what justice looks like, making policy decisions with that in mind isn’t bad.
I suspect that most of the reason people like those at acton dislike distributists is simply because they disagree about what the person is (fundamentally individual versus fundamentally in community) and what justice looks like.
November 18th, 2011 | 1:40 pm
Or maybe we could just retarget agricultural subsidies to small farmers rather than large agribusiness conglomerates. Does that sound maybe a little more reasonable?
I think it would be more reasonable to do away with farm subsidies altogether. Why drive up the price of food (which mostly affects poor people) to subsidize farmers?
Nothing inherently totalitarian about that.
No, there’s certainly not. But I don’t think I’ve ever heard anyone criticize that goal of distributism. It’s the idea they have that if property were more evenly distributed that it would change the way we live that is questionable.
Also, I don’t think any distributists desire totalitarianism. That is just what would be required to achieve some of their goals in the real world.
November 18th, 2011 | 2:19 pm
[...] Carter says that he loves G.K. Chesterton, but he thinks Distributism is silly, because it’s utopian. He [...]
November 18th, 2011 | 3:16 pm
Joe,
Bingo!
In John Medaille’s book (and in much of Distributist literature) – Taiwan’s “Land to the Tiller” program post WW2 is held up as a model of Distributist reform. The results economically were certainly positive, but it overlooks the fact that during this era, Douglas MacArthur was basically a benevolent dictator of Taiwan (and Japan obviously) and was able to force changes on these countries without any real opposition. I just don’t see “benevolent” dictatorship is a viable option for reform, particularly if it takes a World War killing hundreds of millions of people worldwide to make it happen. And what are the chances that any dictator ends up being benevolent and willingly cedes power to an elected government after a few years?
November 18th, 2011 | 4:14 pm
I think it would be more reasonable to do away with farm subsidies altogether. Why drive up the price of food (which mostly affects poor people) to subsidize farmers?
Joe, I don’t believe that farm subsidies make food more expensive — quite the opposite, in fact. Not that this is a reason to support them, but still.
November 18th, 2011 | 4:25 pm
Joe said:
“It’s the idea they have that if property were more evenly distributed that it would change the way we live that is questionable. ”
It seems to me that as we have changed the distribution of property in the other direction, toward greater concentration in the hands of a very few, it has changed the way we live — we’re more vulnerable and nervous about economic forces beyond our control, we’re more pessimistic about the future, and we’re more likely to spend all our time working rather than having one stay-at-home parent caring for children.
Does it seem reasonable that by reversing the present wealth redistribution trend, we might be able to reduce some of these consequences?
November 18th, 2011 | 4:25 pm
John Schwenkler Joe, I don’t believe that farm subsidies make food more expensive — quite the opposite, in fact.
I’m not sure how they couldn’t make food more expensive. After all, the very reason for price subsidies is to keep the equilibrium price artificially higher than the market would normally be. When prices for commodities are inflated by price subsidies, they cause any foods that contain them to be higher than they would be without the subsidies.
Also, farm subsidies cause market distortions that are detrimental to our food supply. The crops that most heavily subsidized (wheat, soybeans, corn) push out other crops that they should be growing, such as fruits, vegetables, and other grains. If there were more farmers growing vegetables rather than corn for ethanol, then it would drive their price down and be a boon to poor Americans.
November 18th, 2011 | 4:33 pm
It seems to me that as we have changed the distribution of property in the other direction, toward greater concentration in the hands of a very few, it has changed the way we live . . .
I think the greater problem is equating property (land) with wealth. When we tried to distribute land to more people in the form of home ownership, the unintended consequences nearly destroyed our economy. The distributists couldn’t have seen it coming (almost no one did) but it was a natural outcome of their policy preferences. The fact is that many people do not have the resources to support land that is nothing more than a house, how would they sustain land that is used for production?
The distributist might say that this is this very thing that is needed. but unless we force people to move away from their family and friends to the outskirts of North Dakota, there is simply not enough land for every worker to have enough to make a living from. Not all land can be used for farming, much less for other productive capital uses.
Does it seem reasonable that by reversing the present wealth redistribution trend, we might be able to reduce some of these consequences?
The problem with wealth distribution is that you cannot as easily distribute the productivity that makes wealth possible. The reason many people are not wealthy is not because they don’t possess property but because they are not sufficiently productive. You could give the average worker 40 acres and a mule and within a year they’d be broke (if not dead).
November 18th, 2011 | 4:54 pm
Distributism has some good insights, but it isn’t really a full-fledged, implemenentable alternative to capitalism. It has value as a critique of the direction our economy has gone in, which isn’t really a true free market, but a crony capitalist system, or as Chesterton called it, “the servile state.” A truly free market—one where the power of the state didn’t operate to prop up certain favored businesses with subsidies, bailouts, foreign invasions, etc, but instead simply provided an equal playing field—would look a lot more like the distributist system than what he have now.
Joe: in response to your skepticism towards the viability of small farms, it’s worth pointing out that since WWII, the government has consciously pursued an agricultural policy to support massive industrial-style farming. This has mainly been done through subsidies, but also through allowing the massive use of pesticides and fertilizers that has wreaked havoc on soil, rivers, and even the Gulf of Mexico. Those costs have been externalized onto others, rather than paid for by the farming conglomerates. Really, it’s the current agricultural system that’s unsustainable; if the large farm conglomerates weren’t so favored by our regime, there’d be a significantly higher proportion of our food production coming from smaller farms.
November 18th, 2011 | 5:58 pm
My problem with distributism is the question of who decides. Who decides which businesses or farms are too big? Where will the limit be? Are 10 employees ok, but not 11? Can a farmer have 200 acres but not 201? There is a whiff of totalitarianism here, because someone would have to decide and then enforce the decision.
November 18th, 2011 | 6:38 pm
I’m not sure how they couldn’t make food more expensive. After all, the very reason for price subsidies is to keep the equilibrium price artificially higher than the market would normally be. When prices for commodities are inflated by price subsidies, they cause any foods that contain them to be higher than they would be without the subsidies.
This is just wrong. The effect of farm subsidies is to lower the “sticker price” of food (thus all the complaining about cheap corn), since the government picks up part of the price of producing it. The one case I can think of that fits your description of artificially inflated prices is that of milk, but that is achieved through price controls.
You are correct about the market distortions, though.
November 18th, 2011 | 6:57 pm
John Schwenkler This is just wrong. The effect of farm subsidies is to lower the “sticker price” of food (thus all the complaining about cheap corn), since the government picks up part of the price of producing it.
That would make sense if we assume that the U.S. agriculture is (and should be) a closed market. In a closed market the wealthy (i.e., those paying taxes) would indirectly subsidize the food consumption of the poor by paying farmers who will use the subsidies as part of the payment for the input and thus lower the price they ask at market (there is not reason why they couldn’t just take the money and charge the higher price, but we’ll set aside). Since it presumably costs all farmers in American the same to produce similar crops, the effect would be to lower the commodity price.
But this is only true if we add trade barriers to the subsidies. If a farmer in Africa was able to produce wheat more cheaply and was able to sell it on the U.S. market without any tariffs, the price of the commodity would fall. But we add trade barriers to the importation of foreign commodities, which drive up the prices and justify the need for subsidies.
Technically, you could say that subsidies in and of themselves do not cause higher food prices. That is (technically) true if we assume a friction-less market with not other factors at play. But that is not the case in the U.S. We have farm subsidies which need trade barriers for their justification. But if we didn’t have the subsidies, we would have less reason for the trade barriers which are the real cause of higher food prices.
November 18th, 2011 | 7:58 pm
I fail to see how farm subsidies lead to trade barriers; rather, in the story you tell they are the effect of the increased cost of food due to trade restrictions, and the subsidies themselves (which, again, I think are wrong or at least wrongly directed) make things cheaper. So it’s not true that “if we didn’t have the subsidies, we would have less reason for the trade barriers” — instead it’s the other way around.
November 18th, 2011 | 11:00 pm
John Schwenkler So it’s not true that “if we didn’t have the subsidies, we would have less reason for the trade barriers” — instead it’s the other way around.
As soon as I posted that I heard my grad school macro professor’s voice in my head saying, “But you left your assumptions unstated.”
Indeed, I did and have since the first of this thread (saying that subsidies drive up the price of food is like saying that rain clouds lead to wet sidewalks).
So which comes first, the trade barriers or the subsidies? And which causes the rise in prices?
Let’s first state my unstated assumptions:
A) The only reason that a country would implement trade barriers for a specific commodity is because they cannot compete with the price set on the global market. For example, if no other country could produce rice as cheaply as the United States, we would have no incentive to put tariffs on rice. American consumers would buy the cheaper rice produced by the U.S. rather than the more expensive foreign rice.
B) If a country implements a trade barrier on a commodity (we’ll stick with rice), the price consumers in that country pay will be higher than if they did not have the trade barrier.
C) A country that keeps the price of a commodity artificially inflated (by implementing a trade barrier) is harming its poorer citizens.
D) In order to keep the trade barrier in place and offset the harm to poorer citizens, the government can provide subsidies to farmers. This will drive the price lower—but still not as low as it would be without the trade barrier.
With these unstated assumptions now stated, I’ll try to explain my earlier claim that: “We have farm subsidies which need trade barriers for their justification. But if we didn’t have the subsidies, we would have less reason for the trade barriers which are the real cause of higher food prices.”
We can now see why the first statement is true: if we didn’t have trade barriers, the price of the commodity would already be low and we wouldn’t need the subsidies.
But does the second claim make sense? Here’s my thinking: If subsidies weren’t an option we almost certainly wouldn’t have trade barriers on commodities. Citizens of the U.S. would not justify paying a much higher price for rice when every other country (that had free trade) could buy it much more cheaply. Trade barriers may be put in place first but they are only possible because of subsidies.
That’s my reasoning, though now that I see it laid out I need to modify my claim: I think that when it comes to food commodities, trade barriers and subsidies have to go together. If you do away with one, you can’t justify the other. So my new contention is that they work in unison to keep food prices higher.
Note to onlookers: My friend John Schwenkler is a professional philosopher. I am not only making a weirdly complicated argument but presenting it for a guy whose job is to evaluate complicated arguments. Even if I turn out to be wrong, I should get props for boldness, no? ; )
November 18th, 2011 | 11:02 pm
I won’t say too much here because distributivism falls into that depressingly-large file labeled “things I want to read about but haven’t yet.” That said, what I have gathered from it makes me enormously sympathetic to its concerns.
It might be helpful to think of capitalism, distributivism, and Marxism as black or white labels and more as a continuum. I don’t think the distributivists imagine a completely agrarian utopia when they argue for a different model of economics. Well, perhaps some do, but certainly not all. (Berry, for instance, is not so strident or naive as some of his critics make him out to be.) Our basic gripe is that both the American right and left wish to isolate a great majority of the money and political power in very small groups. We want to find another way because we value democracy, family, tradition, and creation and we’ve seen how concentrating all the power in the hands of a political or corporate elite is a losing strategy.
Speaking only for myself, I don’t care what you call the model. I just care that local businesses are protected, that the rights of private individuals are respected, and that healthy local communities aren’t crushed under the weight of business-destroying box stores or strangling regulations from the government. My picture of that model is less a comprehensive picture of all of life and more a set of some basic principles that provide an expansive framework in which we can live freely.
November 19th, 2011 | 6:59 am
What you say is plausible, Joe, but it remains that even on your account, farm subsidies don’t raise food prices. Rather, they lower them, and this make the voting public tolerate other policies that make food more expensive. If you say that it goes the other way as well, then you should also be saying that trade barriers make food cheaper: after all, without them there would be less rationale for the price-lowering subsidies!
November 19th, 2011 | 10:22 am
“Does it seem reasonable that by reversing the present wealth redistribution trend, we might be able to reduce some of these consequences?”
This is one of those things that seems eminently reasonable, but actually probably isn’t so. Reversing a trend rarely undoes the effects of the trend unless you simultaneously address those effects as such.
(This is why, for example, I find the “legalization of drugs will make our inner cities into the kind of bastions of hard-working, family-oriented people you found in the rural south around 1900″ argument rather naive. There may be good arguments for legalization; that ain’t one. You’ve got miles and miles to go to undo the damage, even granting that it mostly belongs at the feet of the illegal drug trade; undoing the cause won’t do much that way.)
And undoing the effects, as least those effects that most interest the distributivists, gets you right back to what John Couretas is saying.
November 19th, 2011 | 4:10 pm
I think it would be more reasonable to do away with farm subsidies altogether. Why drive up the price of food (which mostly affects poor people) to subsidize farmers?
Most of the farmers I have known would not be producing food at all if they weren’t subsidized – because the crops they grew sold for less than the cost of producing them.
I don’t know anything about huge agribusiness, but for smaller and medium sized farms, the reason for subsidies is because the costs of inputs has soared. We may be paying the farmers, but it’s the chemical and bioengineering companies, not the farmers, are the ones who benefit from subsidies. (As regards the real big farmers, I suspect “farmers” and “chemical and bioengineering companies” are probably one and the same, or very close….)
November 19th, 2011 | 10:10 pm
(Do they really think we’ll upload ourselves to machines as if our souls were a copy of Windows Vista? Really? Really?)
Here’s the better question, would anyone want to upload their soul onto a server running anything Windows?
More seriously, ‘people centered’ economy? If a Martian was looking thru a telescope at all the roads, bridges, ships and planes that mar Earth’s surface, who would he say was using all that? LOLcats? A people centered economy would ship “frivolous imported goods around the country” because people like frivolous imported goods just like they like clicking on fake farms on Facebook.
Ethan C
The fundamental position of distributism is that ownership and access to the means of production ought to be distributed — that’s why it’s called “distributism” — as widely as possible among the population.
Isn’t that sort of what we have now? We have 401K’s, mutual funds etc. all which distribute ownership to the ‘means of production’. I would predict that even if you could ‘reset’ the system and start everyone off with nearly even shares of ownership of the S&P 500 you would quickly discover that they would trade off shares and end up with a radically skewered distribution very much like we see today.
In fact didn’t something like this happen in the old USSR? The transition to a market economy happened, I believe, by ‘distributing’ roughly even numbers of vouchers good for ‘shares’ of the old state run enterprises to all citizens. Stock markets quickly emerged but those who were already insiders or those who were just luckly were able to amass huge fortunes and end up owning large chuncks of what was originally a much more even distribution.
Joe
I’m not sure how they couldn’t make food more expensive. After all, the very reason for price subsidies is to keep the equilibrium price artificially higher than the market would normally be.
Depends how they work. If the subsidy works by buying up excess crops then yea that would make food more expensive. But if the subsidy works by simply paying the farmer for growing a crop, but let’s him sell that crop to whoever he wants, then it would lower prices by artifically expanding supply.
November 19th, 2011 | 10:50 pm
I think those stupid “click and click again” facebook games reveal the problem with distributionism. In those games everyone starts out with an equal allotment of farmland, coins, Mafiabucks orwhatever. Come back in a week and you’ll find the top 10% of players account for 90% of the game’s ‘wealth’. Even if you do create a distribution of, say, small farm shares, the financial industry is going to figure out how create megafarms even if the law says tiny farm owners can’t transfer ownership of their plots (hint, you’d probably do it with some type of long term lease where you technically retain your ‘small farm’ but lease it to a megafarm to use).
Then comes the democratic problem. How are you going to enforce a smallish distribution scheme when the economics lean towards larger? Here’s a real life example.
Up until a few years ago, there was a rather sensible law in the US that said in a major media market, one person could own something like only one TV and one radio station (or maybe it was something like you couldn’t own a newspaper and a TV station). Anyway the idea was to avoid what you have in places like Italy or Russia where one guy has a monopoly on all the major media and uses it to force his way into office. Well as soon as Rupert Murdoch decided he needed more, he pushed and got Congress to get rid of that law.
Even a very, very mild form of distributionism seems to fall apart when confronted by the interests of big money. Anything you can come up with that isn’t going to be a rather trivial token is not going to be very viable in a democratic system where wealth is able to ‘buy speech’ IMO. Look at even farm subsidies. Yes nearly all small farmers get subsidies and depend on them to stay afloat….but even there most of the expense of subsidies goes to huge agribusiness, not small farmers. If subsidies raise the market price of a crop, the big farms will reap the most because they will produce most of that crop. If you pay farmers by how much of the crop they grow, the large farms will still grow more than the small farms. If you refuse to pay large farms subsidies entirely, agribusiness will stop lobbying for subsidies.
November 20th, 2011 | 7:18 pm
Joe Carter:
I disagree profoundly with this post, but I haven’t he time to register the precise reasons. But I will repeat John Schwenkler’s observation: it is flatly wrong to argue that subsidies raise food prices. Precisely the opposite, as he has noted.
Think of it this way: Imagine that it costs $10 to raise a bushel of corn in the United States. Farmers, thus, are able to sell that corn to consumers for $11. But in Africa, it only costs $7 to raise a bushel of corn, due to variations in labor costs, etc., so they can sell their corn for $8. This is putting American farmers out of business. Thus, the government of the United States institutes a subsidy of $5 per bushel of corn. Now American farmers can sell their corn for $6 a bushel (and accordingly remain in business). Obviously, the African farmers are squeezed out of the market because the American government has depressed the market price of corn below its actual production costs.
And, in fact, South American and African farmers are complaining for precisely this reason: their already-impoverished farmers (specifically cotton farmers) are unable to find buyers for their crops because American agricultural subsidies have artificially driven down market prices, and only American farmers, duly subsidized, can afford to sell their crops for such a low price.
November 20th, 2011 | 9:24 pm
Rob it is flatly wrong to argue that subsidies raise food prices. Precisely the opposite, as he has noted.
Actually, you yourself have just shown how subsidies raise food prices.
In the example you provide, the price of the bushel of corn didn’t change at all, the price was just divided between consumers and taxpayers (who are generally the same people).
Before the subsidies, the price of the corn was $11 a bushel with the consumer paying the entire $11. After the subsidies the price of the corn is $11 with consumers paying $6 and taxpayers paying $5. In both cases the price is $11.
Butsince the corn could have been bought from African farmer s for $8, the subsidies have driven up the price by $3 a bushel. The idea that subsidies “drive down prices” is an illusion. All that is being done is shifting the cost around so that the people who have to pay for the corn are not the only ones that are paying the market price. This makes everyone worse off—even American farmers since they could be focusing on producing other crops. The benefits of comparative advantage don’t cease to exist just because someone becomes a farmer.
November 21st, 2011 | 1:05 am
Distributism is a serious alternative to big state and big corporations crowding out community and reciprocity. It is in line with Catholic Social Teaching. The writer appears to prefer gently mocking to serious consideration.
November 21st, 2011 | 1:11 am
Sorry, one more point.
Distributism is not utopian. Check out the great achievements in Mondragon:
http://distributistreview.com/mag/2010/06/mondragon-and-the-global-economic-meltdown/
Here is a good overview:
http://distributistreview.com/mag/2010/08/the-mistake-about-distributism/
I hope these links contribute to good discussion.
November 21st, 2011 | 8:33 am
I gonna cast my vote with Joe C and against Ethan C, AJM and the others on this one.
If I ask Distributists whether D is a system or a personal philosophy, some will say “system.” If I then ask what the “system” looks like, I usually get a list of personal habits. I’ve never heard a coherent description of a distributist system.
To me this is because there are inherent self-contradictions in D as system. Those contradictions can be illustrated by the first 3 words of a Chesterton intro to D: “Give a man…” (There follows a subsistence farm, a small shop, a house, and then a statement of general happiness ensuing.)
But those first 3 words beg the questions: who does the giving, and where does the property come from? The giving could not be done by anything but government, and the donor would be the persons who actually earned the property.
Thus, right at the outset of describing a D “system”, we have injustice piled on top of totalitarian destruction of the very essence of private property, which D claims to be the champion of. Self-contradiction at its heart.
November 21st, 2011 | 7:41 pm
Joe: I quite agree with you that corn subsidies (for example) “spread around the cost” to all taxpayers. This is why, accordingly, we say that subsidies “artificially” deflate the price of a subsidized good. They provide the illusion that a given good is cheaper than it “actually” is.
But you have done something that most economists would reject: we don’t consider the cost of a subsidy in the actual cost and price of a good. For example, a processed food manufacturer doesn’t evaluate the price of corn per bushel as $7(+$4 in subsidies). He only that American corn costs $7 and African corn, on paper, costs $9. Similarly, when you go to Wal-Mart and purchase a widget for $5 when it costs $7 at the local market, you wouldn’t typically conclude that the price is actually $5(+$3 in subsidies for the interstate highways that allow goods to be transported in bulk to Wal-Mart cheaply + $4 for the foreign wars that provided for the cheap petroleum to fuel such transportation, etc.).
In short, subsidies shift the cost…elsewhere. Away from the good. African cotton producers, I assure you, are not complaining that American cotton is too expensive. Rather, subsidies have made it so cheap–on paper–that they can’t compete fairly. (see also: subsidized Airbuses are cheaper than Boeings) This proves two things: 1) Subsidies deflate prices unnaturally in explicit terms and 2) Buyers do not typically consider the “hidden costs” that exist in the form of ambiguously distributed taxes, etc., that enable the deflated costs that subsidies provide.
And I still don’t see why distributism is totalitarian. In effect, the United States was, prior to, say, 1890, a distributist land of small farmers, small merchants, and small communities. And in many ways, the America of pre-1890 was a better place than the America of 2011 (no, “But but but modern medicine!” is not a sufficient rejoinder).
November 22nd, 2011 | 8:55 pm
Butsince the corn could have been bought from African farmer s for $8
Why would an African farmer be buying corn?
As I said, subsidies would raise prices if they are designed to buy up corn on the open market. They lower prices if they simply pay farmers a certain amount for every unit of corn they grow. The African farmer is more likely to object to the later not because it raises the price of corn but because it lowers it making his efforts unprofitable.
The shifting prices are not relevant to the question. Yes more corn in the market means lower prices for corn. Yes that’s accomplished by shifting costs onto other people (typically non-corn consumers). But Joe wasn’t just asserting that subsidies are bad because they have inefficient distributional effects, he asserted they raise the price of the good being subsidized. That is only true in some cases.
November 23rd, 2011 | 8:19 am
Before the subsidies, the price of the corn was $11 a bushel with the consumer paying the entire $11. After the subsidies the price of the corn is $11 with consumers paying $6 and taxpayers paying $5. In both cases the price is $11.
The flaw I think in both the original example and the analysis is the static assertion that it costs a single price in the US ($10) and in Africa ($7) to raise a bushel of corn.
The more realistic model is not a single price but a slew of different fields each with its own price for raising a bushel of corn. Some areas would be exceptionally expensive to try to grow corn on (say the roof top of a skyscrapper in Manhatten). Other areas it would be very, very cheap. If the market price of corn without any subsidies is, say, $9, then every field where the cost is $9 or less will be put into production growing corn.
Suppose, though, that the gov’t announces a $3 per bushel subsidy for corn. If you grow a bushel, you get $3 no questions asked. Now the fields that cost $9.50, $10, $11, all the way up to $12 to grow a bushel of corn will be put into production. The amount of corn will increase. But demand for corn is the same, people don’t like corn flakes anymore because the gov’t subsidized them. As corn production increases, the market price drops. Even with the subsidies, new high cost corn producers drop out as the price they get falls. I would guess at a market price of $6 we are back to the original corn producers (fields where the cost ranges $9 or less) and original corn production but with a lower market price of $6.
How the gov’t pays for this subsidy is a different question but I think Joe’s guess that its from taxing corn eaters $3 a bushel is wrong. If that was the case, why would there be a lobby for corn subsidies? Farmers could just let consumers have the lower taxes and spend $9 themselves for a bushel rather than making gov’t tax them $3. The latter way is inefficient and costly since they have to pay for lobbying, pay for the gov’t processing of the subsidies and so on.
More likely the subsidy is paid for not from people who would otherwise be spending $9 on corn but by some combination of the below:
* Consumers of other things, say the gov’t taxes cigarettes $0.25 to pay for the subsidy. The income to corn producers and lower prices for corn eaters is coming from imposing costs on smokers.
* Slack capacity – If the economy is performing below full employment, the subsidy simply boosts demand upwards mopping up unemployed resources. This is the best case, ‘free lunch’ possible source of the subsidy.
* Off of investment, if the gov’t borrows or prints money for the subsidy interest rates go up which hurts those seeking to buy investment goods which basically rebounds to those whose income is from producing investment goods. In this case, where the economy is fully employed, the subsidy has the effect of shifting employment and investment out of other sectors and into the corn production sector.
The last often gets overlooked since it’s essentially industrial planning, but most who advocate subsidies are simply concerned with the health of a particular industry. But the stuff that gets subsidized also gets heavy investment. Being a farmer is often a hard way to make a living these days, but billions are spent on farming equipment, genetically engineered seeds and animals etc. Look at some other industries that have been built up over the last century and you’ll also see gov’t subsidies behind the scenes:
- Railroads – had gov’t land grants in the 1800s as well as the development of corporate law.
- Cars – Massive vehicle purchases in WWI and WWII, the Interstate Highway system as well as tax subsidies for people who left the cities to buy homes in the suburbs thereby generating demand for cars.
- Airlines – gov’t bomber production in WWII and the Cold War stimulated passenger airline investment, fighter planes stimulated the development of the jet engine.
- Computers/Internet – You had the code breaking in WWII, the massive data crunching needs of the Fed. gov’t after the New Deal, the space program.
- Nuclear power do we even need to spell out the subsidies?
Of course a lot of this was unintentional. The gov’t didn’t pick passenger airlines as a ‘winner’, it needed bombers and the companies that made bombers realized it wasn’t a big deal to retrofit the planes to carry people.
November 25th, 2011 | 1:41 pm
“I can live with most of the effects of a distributistism (more guilds, calluses, and self-employment taxes), but I don’t want to live in a world without LOLCats.”
Wow, I’m the exact opposite.
December 1st, 2011 | 4:13 pm
[...] one of us finds the time to slap down Joe Carter (as Rod Dreher called upon us to do), I’ll direct our good readers to a searing post by [...]
December 1st, 2011 | 6:27 pm
Thanks for quoting this, Joe. Now I know that this fellow doesn’t know what he’s talking about and can be summarily dismissed.
I’m curious though: how is free-market capitalism, which does not and never existed, somehow less utopian and nostalgic than distributism? Frankly, I hear plenty of pining from “free-market capitalists” for old times when there was less government regulation; is all criticism marked by a desire to conserve what is good in the past now considered nostalgia and so easily dismissed?
Well, there goes the conservative disposition.
December 2nd, 2011 | 1:29 am
To Joe regarding the original post, you point out an amusing discontinuity. Chesterton was able to look at the evils in the world and laugh. The ability to do so is a gift from God. Those of us who are proponents of Chesterton’s economics often do not display this gift. We have found something that answers many of our questions and we do not want to see it assailed from any quarter. Forgive us, for we have the enthusiasm of the neophyte and few of us have actually put our beliefs into any kind of practice.
Now, to launch into my neophytish enthusiasm, I will make the unsubstantiated claim that if Distributism is utopianist, so were Moses and the Prophets. I prefer to stand with them.
December 2nd, 2011 | 8:43 am
[...] Economics — Posted by Donald P. Goodman III on December 1, 2011 9:11 PM Joe Carter over at First Things has recently published a brief monologue about distributism that can only be described as [...]
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