American DreamEssay title: American DreamSubsidies are payments, economic concessions, or privileges given by the government to favor businesses or consumers. In the 1930s, subsidies were designed to favor agriculture. John Steinbeck expressed his dislike of the farm subsidy system of the United States in his book, The Grapes of Wrath. In that book, the government gave money to farms so that they would grow and sell a certain amount of crops. As a result, Steinbeck argued, many people starved unnecessarily. Steinbeck examined farm subsidies from a personal level, showing how they hurt the common man. Subsidies have a variety of other problems, both on the micro and macro level that should not be ignored. Despite their benefits, farm subsidies are an inefficient and dysfunctional part of our economic system.
The problems of the American farmer arose in the 1920s, and various methods were introduced to help solve them. The United States still disagrees on how to solve the continuing problem of agricultural overproduction. In 1916, the number of people living on farms was at its maximum at 32,530,000. Most of these farms were relatively small (Reische 51). Technological advances in the 1920s brought a variety of effects. The use of machinery increased productivity while reducing the need for as many farm laborers. The industrial boom of the 1920s drew many workers off the farm and into the cities. Machinery, while increasing productivity, was very expensive. Demand for food, though, stayed relatively constant (Long 85). As a result of this, food prices went down. The small farmer was no longer able to compete, lacking the capital to buy productive machinery. Small farms lost their practicality, and many farmers were forced to consolidate to compete. Fewer, larger farms resulted (Reische 51).
During the Depression, unemployment grew while income shrank. “An extended drought had aggravated the farm problem during the 1930s (Reische 52).” Congress, to counter this, passed price support legislation to assure a profit to the farmers. The Soil Conservation and Domestic Allotment Act of 1936 allowed the government to limit acreage use for certain soil-depleting crops. The Agricultural Marketing Agreement Act of 1937 allowed the government to set the minimum price and amount sold of a good at the market. The Agricultural Adjustment Act of 1938, farmers were given price supports for not growing crops. These allowed farmers to mechanize, which was necessary because of the scarcity of farm labor during World War II (Reische 52). During World War II, demand for food increased, and farmers enjoyed a period of general prosperity (Reische 52). In 1965, the government reduced surplus by getting farmers to set aside land for soil conservation (Blanpied 121). The Agricultural Act of 1970 gave direct payments to farmers to set aside some of their land (Patterson 129). The 1973 farm bill lowered aid to farmers by lowering the target income for price supports. The 1970s were good years for farmers. Wheat and corn prices tripled, land prices doubled, and farm exports outstripped imports by twenty-four billion dollars (Long 88). Under the Carter administration, farm support was minimized. Competition from foreign markets, like Argentina, lowered prices and incomes (Long 88). Ronald Reagan wanted to wean the farm community from government support. Later on in his administration, though, he started the Payments In Kind policy, in which the government paid farmers not to grow major crops. Despite these various efforts, farms continue to deal with the problems that rose in the 1920s.
Farm subsidies seem to have benefits for the small farmer. “Each year since 1947, there has been a net out-migration of farm people (Reische 53).” American farm production has tripled since 1910 while employment has fallen eighty percent (Long 82). Small family farms have the lowest total family incomes (Long 83). Farming is following a trend from many small farms to a few large farms. Competition among farmers has increased supply faster than demand. New seed varieties, better pest control, productive machinery, public investments in irrigation and transportation, and better management will increase farm output. The resulting oversupply of farm products, which creates a low profit margin, drives smaller farms out of business. Smaller farms lack the capital and income to buy
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I am a farmer. I do not favor or approve of subsidies to foreign corporations, which are generally a form of welfare for most American families. I think they pay for a variety of expenses that I do not enjoy. But I have to admit one thing: while I do enjoy some of the benefits, I do not think I should pay for them. It seems unfair to take away that. A small fee to buy produce from a foreign corporation would increase the purchasing power of American businesses in the United States (Ibid.). My concern has to do with what one economist calls a “gig economy,” though there are some obvious solutions. Instead of subsidizing more low paid workers for the sake of paying their way as high payworkers, we should encourage the production of high level quality American manufactured products by creating a market that allows a higher level of skilled labor. We’d also build more open, and more competitive, trade (American Manufacturing) between the United States and other industrialized nations, which would help produce lower cost products from U.S. agricultural sources. The United States could invest in other domestic productive facilities, including agricultural research and development, a college education, and a new private education system (American Education).ₑ:”Many Americans do not expect to hear the stories of small farms in poverty in their community. But at least those who are able to feed their family and save for retirement are able to look after themselves. Many rural Americans, including elderly or elderly with pre-existing conditions, are not struggling through the recession. The new job market is a blessing, and many have already started looking for a new job. But we cannot let what happened last season in the US affect them.”ῂ
The Federal Reserve’s announcement about the financial crisis has been met with criticism of Washington’s behavior last week. But it is true that this is not likely to be a new start—most small and medium sized businesses continue to provide substantial business support, even at the steepest price. I believe that as long as that investment is sustained and we maintain good fiscal discipline, small farming can continue to grow. America has a long way to go from which to make that contribution. And the Federal Reserve is certainly not going to be ready for that to happen unless it steps back. But they may just do it again.
“The small farmer has the best chance of making a successful contribution to the U.S. economy. The Federal Reserve has shown a willingness to listen and assist small business communities in their efforts to gain more market influence, and their share in the prosperity of the global economy looks higher than ever,” she said.
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This is the first time the Federal Reserve has been held to account since 2001. Many small farmers have been devastated by this decision. Many of them were able to return to their local community and learn to manage less burdensome aspects of their lives, such as purchasing food or purchasing clothing. In the short term these