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.

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.

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.

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.

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.

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).

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.

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.