Misbegotten milk money lost in the spending mill

Americans consume an unrivaled amount of milk.

Statistically, there is nothing as American as gulping a frothy glass of milk with breakfast. So it should come as no surprise that one of the U.S. Department of Agriculture’s largest program groups is devoted to the dairy industry. What may come as a surprise is the enormous cost of this undertaking: $1.15 billion a year, according to the watchdog group Citizens Against Government Waste. $1.15 billion is an enormous sum, even for the federal government. This begs the question: What is the government doing with all that green?

The answer is convoluted beyond rational comprehension or explanation. The official USDA abstract and online program descriptions cite regulation, subsidies, price supports, and price controls all aimed at “balancing the supply of milk with the demand for milk.”

As anyone who has sat in an economics lecture knows, most private goods require only minimal regulation, as the market naturally ensures a balance between supply and demand. The government explanation for this bloated program never suggests that milk is a public or common good, but nevertheless insists on significant economic regulation of the dairy industry far beyond the safety regulations necessary for comestibles.

The only explanation given to citizens by the USDA is that “the physical uniqueness of milk complicates many of the pricing arrangements.” I’m assuming the “physical uniqueness” the USDA is referring to is milk’s tendency to carry dangerous bacteria before pasteurization and its equally unruly habit of spoiling after just a few weeks, which does nothing to explain the economic overregulation of the entire dairy industry.

No sane person opposes the federal government’s food safety regulations, but the facts as cited by multiple taxpayer-oriented watchdog groups show that the overwhelming majority of the money spent on regulating the dairy industry (almost a billion dollars) is spent on micromanaging the economic end of things rather than ensuring food safety. I don’t see how subsidizing major dairy farms and instituting price supports and even practical price floors to force consumers to cough up more per gallon makes milk any safer to drink. What I do see is a complex system of federal and state government intervention on the side of firms in one particular industry against the interests of the citizenry and consumers at large.

The federal government created what the USDA itself admits was a ludicrously complex price support system as well as a contradictory system of subsidies and mandatory public consumption. The price support system was theoretically designed by economists but was often influenced by political concerns, while the subsidies and public contracts were openly determined according to political influence.

The logic of implementing price supports, designed both to reduce consumption and subsidies and to increase production, is hard to follow in a nation where there has not been a significant shortage of milk in generations. In fact, a search of the USDA archives shows that the logic of reducing domestic consumption while increasing domestic production only made sense to the government during World War II, when U.S. propaganda emphasized the need to produce milk for export to Britain. In the modern day, price supports and subsidies simply cannot both be necessary; there isn’t a shortage of dairy and America’s children shouldn’t be discouraged from drinking milk.

The latter is openly acknowledged by the government in its school lunch program, which guarantees that milk be provided to all schoolchildren at low cost — a price control for consumers and a subsidy-guaranteed sale for producers. There are literally hundreds of similar programs all designed to subsidize the dairy industry while influencing quantities of consumption, all in an elaborate balancing act attempting to imitate what the market would do on its own. In effect, about a billion dollars is spent every year in order to create an artificial market that looks similar to the natural, free market.

The current government dairy program is wasteful and unnecessary. Politicians and bureaucrats have finally begun to recognize it.

Some aspects of the current structure, such as emergency price supports (preventing milk prices from falling below marginal cost in the event of an economic crisis) and subsidies for lower income schoolchildren should remain in place. The vast majority of this billion-dollar behemoth, however, is outdated and was only saved from the axe by the nefarious acts of special interest lobbyists.

Starting under the 1999 Congress, efforts were made to decrease the impact of price controls and consequently the intensity of the balance. It was a good start, but stalled under the past Congress, which gave in to lobbyists in keeping much of the expensive regulatory and subsidy program in place. Let’s put this leviathan expense to rest and let the market work itself out — after all, to grow, the free market needs to drink its milk too.

Trevor Wagener is a freshman in Trumbull College.

Comments

  • Anonymous

    i have no idea what they're doing with that money..but i know where all that corn syrup is going…right into my gas tank….and where's our oil going to ? China?Mexico?