Monday, August 13, 2012

Fix Agriculture, Fix Everything

After World War 2 the Government of Canada decided to double its subsidies to Western farmers. A subsidized commodity has a tendency to be overproduced; a subsidized industry causes all kinds of havoc. Between 1951 and 1967 the total number of Canadian farms declined while those remaining expanded. Labour-intensive work was replaced by mechanized farm units as the gap between "commercial" and "family" farms increased their degrees of separation.

By the close of the 20th century Canadian agriculture would be a victim of crony capitalism. W
ith global corporate trade agreements, central bank fiat and public-private partnerships with governments - to call it economic fascism is to put it lightly.

Yet a growing force in consumer sovereignty is the appeal for organic, sometimes locally-grown food. Farmers markets are more popular than ever, with many individuals even growing a small portion of their own food supply. If government food policy is going to resemble consumer wishes, a host of reforms will need to take place.

Technology didn't cause labour-intensive farm work to diminish, it was merely an effect of increased capital in the form of state spending. The reason machinery replaces labour is because of capital accumulation. Increased capital into agriculture post-WW2 was a misallocation of resources. Consumers' accumulated capital would have been used differently if not forced into agriculture. As this capital first had to be taxed, everybody found themselves marginally poorer. Further interventions and the establishment of permanent bureaucracies worsened the problem. Decades of malinvestment have distorted the price system between consumers and producers by supplanting it with a bureaucratic central plan.

Returning capital (which is not homogenous
but an intricate structure that is sensitive to time) to its rightful owners is not an easy task. Ideally, sound money would be introduced as interest rates rise. And rates will most likely rise. Not to an arbitrary number determined by central bankers but to the price arising from individual valuations in a free market.

Other interventions in the market would have to be repelled as well. Taxation, minimum wage laws, anti-trust regulations, forced unionization, zoning laws and plenty of others. The less power the state holds over an economy, the freer people will be to establish their own commerce exempt from bureaucratic influence.

Key to fixing agriculture is abolishing the Bank of Canada, ending the Chartered Bank oligopoly and the legalization of free banking. This would ensure the accounting between farmers and bankers remains honest.

Most, if not all, statutes, regulations, bureaucracies and other market interventions would have to be reversed as well.
As other market participants are bound to denounce the special treatment of farmers, the abolition of these taxes and regulations should be across the board. The end result would be a truly competitive market where no one uses the state apparatus for gaining wealth and power. To ensure no one ever abuses this coercive apparatus again, the state itself should be phased out.

1 comment:

  1. Agriculture is the very strong part of any economics industry of any country. After World War 2 good decision by the Government of Canada to double its subsidies to Western farmers. In this way life of farmer good and they able to work good in farms. Actually, I want research paper service reviews but hope farmers happy with it and fully try to increase the production of agriculture.