Of course the subsidies actually pass through the individuals hands. They ultimately end up in the hands of the processors, bankers and other input salesmen. That is the reality. They serve to distort our markets, give the farmers a black eye for being on the dole and yet as soon as some subsidy is put into place the money passes through the farmer's hands and into the hands of the salesmen. Insurance is a perfect example of that. Look at how much your premiums are on crop insurance, then look at the "subsidy" that you receive. The argument being that without subsidization no one would be able to afford insurance. In reality we don't know what insurance should really cost because we don't know exactly how distorted the market is. What we can be certain of is that the market is at least distorted as much as the subsidy is. It is also reasonable to assume that the premium that the individual has to pay is highly inflated because there is really no competition in price. The only "competition" to speak of is on the service side because it is so tightly regulated. Of course the insurance companies don't care because their markets are largely protected from competition and are for the most part static. Customers don't move from one agent to another because there isn't a lot of price incentive to do so.
Several years ago when the farm bill was in place that paid the LDPs there was no provision for sunflowers in the bill. The processors lobbied until they got sunflowers to qualify for an LDP. All for the poor suffering farmers of course. There is a little problem though, there are two types of sunflowers raised in the US, one is for oil and the other is for food. In order to get the LDP placed on sunflowers they got them included as an oil seed and lumped them with soybeans. All fine and good, except there is no use in the oil market for the confections. While there might be some overlap between the markets, in that they both compete for some of the same acres, the confection market has always been at a significantly higher price level than oils. There was no reason to include confections in with the oilseed program. You can grow confections under an act of God contract, which removes all of the weather risk, so there was no reason to think they should be included in the LDP program but they were. Care to guess what happened when the LDP was placed on confections? Bureaucrat logic would tell you that the price increased to the farmer by the same amount as the LDP right? Nope, the contract prices all stayed the same or even slightly decreased. When we asked the processors why the price didn't change they said it was because they were taking the LDP. That was necessary, according to them, in order to compete on the world stage. This illustrated to me as clearly as anything ever could that every time we have the various lobbying groups in Washington lobbying for the poor farmer that what they really are doing is expecting, and reasonably so based on historical record, that the subsidies will pass right on through the farmers hands and directly into the various industry groups pockets.
Direct subsidization is not actually ever intended to benefit the farmers, it is for the various support industries. The mandates like the ethanol mandate did actually help the farmers for a time, but forcing people people to buy something you are selling is immoral. We don't need any of this, fear keeps people at the government trough because they have never known anything different. The fact is we would all be better off without any interference from the government. Unfortunately, I don't think we will see that anytime soon.
By the way, Hayek wrote "The Road to Serfdom."
:lol2: Its a simple one step program.
