The ghost of Senator Ortolan Finistirre is laughing at us.
The federal government proposes to buy a small mountain of cheese from America’s dairy farmers, valued at $20 million. It does not have any particular use for all that cheddar, most of which will end up in food banks or quietly sent to a landfill.
Rather, it — we, taxpayers — is buying a mountain of cheese because America’s dairy farmers are not very good at some parts of their job, especially the part about planning for the future.
The day before yesterday, you could not lay your hand on a block of cheese that was not spoken for. Cheese prices were strong, in no small part because of strong demand abroad, especially from China, where the discerning palates of the new affluent classes have a deep appreciation for the subtle flavors of Made in the U.S.A. cow-juice sediments. With demand strong, dairy farmers invested in new production capacity and started flooding world markets with Vermont’s finest . . . right around the time the Chinese stopped hollering whatever the Mandarin is for “Laissez les bons temps rouler!”
American dairy farmers, like all of those financial geniuses who were flipping houses back in 2006, fell into one of the oldest errors: the belief that prices move only in one direction — up. That leaves them with too much cheese and too few cheese-eaters.
So, who is going to eat those losses? The people who made the bad investments?
No. Not them.
In a normal world — a world not ruled by the iron fist of Senator Finistirre and the iron . . . hooves . . . of Big Bossie — what happens when there is a glut in a particular market is that prices go down. Suddenly, that $4 queso is a $3 queso, they stack up the grated cheddar on your steakhouse salad to distract you from the fact that they’re skimping on the avocado, and instead of pumpkin-spice lattes, Starbucks is trying to sell you a Halloumi danish or Camembert cappuccino. The opposite happens, too: Back in the 1990s, there was a weird spike in lettuce prices, and for a few months you had to tell your Subway sandwich artist to put lettuce on your BLT, and he’d charge you $1 if you wanted more than a microgram.
Not in our world, though. In our world, you can count on Uncle Stupid to step in and save us all from the earth-shattering threat of low grocery prices.
It’s national security, you know.
That’s what Senator Marco Rubio said when his Republican primary opponents got on his case for his undying loyalty to Florida’s sugar pimps. If we fail to protect our sugar producers, pretty soon they’ll be down to six or seven Rolls Royces instead of the full Bhagwan Shree Rajneesh complement, foreign producers will move in on them, Florida’s cane fields will be converted into medium-priced condominia for retired vice principals from Bergenfield, and, when war breaks out — because that’s what we’re really talking about here! — we will be entirely at the mercy of the Chi-Coms or the Brazilians or the bloody Dominicans when it comes to non-corn natural sweeteners. And then we will truly be up that infamous scatological creek with no burrito coverings whatsoever.
The same argument is made in the more consequential context of international trade.
The recent trade debate has reopened and widened some fissures on the right and in the Republican party. The debate is not really between those who support international trade and those who oppose it, but between those who believe that the word “fairness” means something and those who know better.
The argument goes like this: Ford wants me to buy a Focus, but I want to buy a Honda Civic, because it is a better car for the money. Americans buy a great many Hondas, and the Japanese do not buy very many Fords. (The Chinese love Buicks, but that’s another story.) Ford may argue that the Honda Civic is a better deal because Honda enjoys unfair trade advantages, such as indirect subsidies from the Japanese government. That may be true, but I still think it is a better car at a better price. All “fairness” means here is that the interests of people who make and sell cars are privileged over the interests of people who buy cars. For all I care, the Japanese government can send people in to cook Honda executives a hot breakfast at home five days a week — if that saves me $500 on my Civic, so much the better.
The Trumpkins and Buchananites will make approximately the same argument as Senator Rubio and the sugar pimps: that failing to save American consumers from the yellow peril of affordable and well-made Japanese cars will result in the hollowing out of our industrial capacity (the opposite has in fact happened over all these years of liberal trade, with U.S. manufacturing output achieving record highs), and, when there’s war — because that’s what we’re really talking about here! — we’ll be at the mercy of the inscrutable Orientals when it comes to mobilizing our fuel-efficient hatchbacks in the cause of liberty.
Producers always conspire to elevate their interests over those of consumers. There’s a National Association of Manufacturers (good people, mostly) but no National Association of People Who Buy Manufactured Goods. There’s a National Association of Realtors working very hard to keep housing prices high, but not a National Association of People Who Might One Day Want to Buy a House working to keep housing prices low. Adam Smith knew this: “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” So did the great Frédéric Bastiat, who brilliantly lampooned such plots against consumers, most famously in the “Candlemakers’ Petition.”
‘People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public.’
— Adam Smith
The scoundrels soon take refuge in patriotism, with Donald Trump and Barack Obama talking about “economic nationalism” and “economic patriotism.” These are two terms deployed to help insulate incompetent American firms from the effects of competition, both foreign and domestic. The jihads against Uber and Airbnb are based on similar appeals to “fairness” and solidarity. If you’ve ever tried to hail a taxi in midtown Manhattan at 5:30 p.m. on a rainy Friday, you understand that this is a very one-sided sort of solidarity. A few years before General Motors ran into its most recent round of trouble and was bailed out by the federal government, I went through a financial crisis of my own, a liquidity event that resulted in a telephone call or two about an overdue payment on a midsize SUV. They did not read me an essay from Pierre-Joseph Proudhon. No, they read me a speech from Goodfellas: “F*** you, pay me.”
During the financial crisis, those arguing for bank bailouts argued that the worldwide credit system would simply cease operating, that it would collapse never to be heard from again. But lending money is a very old profession. My own belief is that anything ancient enough to have an Old Testament prohibition against it is probably going to be with us for a very long time. Usury and sodomy will outlive us all.
So will dairy farming. And the American people will weather the storm of cheap cheddar without the federal government being deputized as the national cheesemonger.