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Farm “Shock Doctrine?”


 

While traveling recently, I had a chance to listen to most of the audio CD version of Naomi Klein’s book, The Shock Doctrine.  As someone keyed in to farm issues, I quickly noted how her thesis might apply to U.S. farm politics.

 


Specifically, in 1962, a corporate group, the Committee for Economic Development, in a report, "An Adaptive Program for Agriculture," called for the removal of "excess resources (mainly labor)" from agriculture, getting rid of farmers and farm laborers, that is.  The report features lists of the CED’s "Board of Trustees" (more than 200) and the "Research and Policy Committee," (47) identified by business, illustrating membership far beyond agribusiness input and output sectors.  A small "Research Advisory Board" from academia was also listed, including two economists from the University of Chicago.


The report stated:  "THE … – adaptive – alternative is a program to permit and induce a large, rapid movement of resources, notably labor, out of agriculture.  This is the program we recommend."  Expanding upon this point, they wrote:  "We do not favor a gradual lowering of farm prices to the adjustment level, although we took a position in our statement on farm policy in 1956 favoring gradualism," but "gradual price reductions in recent years have not affected the resources used in farming fast enough…."  Elsewhere they stated:  "What we have in mind … is a reduction of the farm labor force on the order of one third in a period of not more than five years."  


An obvious self interest in driving rural workers to the city, was to drive down the cost of labor there.


What was the method for implementing these changes?  "… It is recommended that the price supports for wheat, cotton, rice, feed grains and related crops now under price supports be reduced immediately" to a level sufficient to achieve the goal.  


Actually, in fact, such policies had already been enacted, more gradually, starting in 1953.  As measured by USDA "parity" calculations, U.S. agriculture as a whole had already dropped from 100% or more 1942-1952, to 80% in 1962, under Eisenhower and Agriculture Secretary Ezra Taft Benson.  


Some supplemental measures were also recommended, for example, to get farm youth to move away, "a main key" to the process.  "… The extent to which we may be successful in using this key will depend upon the impression the farm youth gets when he looks at the nonfarm economy with an eye to uprooting himself permanently from farming."  If he sees a bad nonfarm economy but also good farm economy, "this tends to perpetuate the farm problem," so a bad farm economy is needed.


Naturally, the CED report came as quite a shock to those in the farming community who found out about it.  This has been described by Iowa farmer Willis Rowell in his book, "Mad as Hell!  A Behind the Scenes look at the NFO."  Rowell wrote "The first news of the report literally exploded when Erhard Pfingsten first brought it to light at a congressional hearing.  And when ‘Fink’ brought this kind of news to the attention of the public, explosion might be too timid to describe the effect."


As it turned out, public attention to the CED plan came just as the National Farmers Organization (NFO) was rising in influence.  NFO had organizers in place and was looking for just this kind of an issue to help build their base.  So NFO didn’t exactly become disoriented.  As Rowell wrote with a bit of humor, "That report turned out to be one of the greatest tools we ever had to organize farmers; it really got many of them ‘MAD AS HELL’  and this tickled be because I was still ‘MAD AS HELL.’"


One response from NFO was tied to the fact that "Theodore V. Houser," "Director, Sears, Roebuck and Co.," was Vice Chairman of the Research and Policy Committee in the report.  Rowell, again with some relish, wrote about a response at a large rally in Iowa in the late 1960s, attended by thousands of NFO members from across the nation:


"We thought it only fair that we express our dissatisfaction of their rude intrusion into our personal lives.  So we were all asked to bring our Sears catalogs to Des Moines and throw them in a pile near the entrance to the auditorium.  We really brought them and piled them.  The last time I looked the pile was 14 or 15 feet high and had a diameter of 40 or 50 feet at ground level.  It was a good demonstration and the scorn on people’s faces was so evident as they walked up to the ever growing pile and forcefully disposed of their now tainted and almost evil Sears catalogs."


In this way NFO contributed to a "revisionist history" of rural mail order.  Since the 19th century the mail order catalog had been an important resource for isolated rural people.  It gave them access to a long list of items otherwise available only to city dwellers.  Mail order catalogs made a difference in rural standards of living and rural culture.  For these reasons, a Sears catalog is prominently displayed, for example, in the parlor of the "1900" farm house at Living History Farms near Des Moines Iowa.


The 1962 CED report was one among many, and not the first by CED.  The basic issue of the lowering of farm price supports (nonrecourse loan rate levels, with adequate supply management to back them up,) had been underway for a decade, with farmers increasingly fighting back.  In 1961 a compromise solution was implemented, commodity subsidies that directly paid farmers on program crops where price floors were further lowered.  This was based upon the earlier Brannan Plan, (named after Truman’s Secretary of Agriculture Charles F. Brannan). 


Under President Richard Nixon and Secretary of Agriculture Earl Butz and with the stimulus of the giant Russian grain deal, free market rhetoric gained ground.  Butz insisted that farmers should plant "fence rot to fence row."  He called the 1973 farm bill "an historic turning point in the philosophy of farm programs in the United States."   Meanwhile the NFO fell in the eyes of the media, with bad press over dramatic hog killings and even over milk dumpings.  Still, however, a compromise held, lower price floors with compensatory commodity subsidies.  In a 1974 report, nevertheless, the CED complemented themselves for having reached the goals of the 1962 report, not in five years, but in 12.  "In general," they wrote, 


"policies of this nature have been pursued by the U.S. government….  The farm population is now so small in relation to the total population that further migration from farms will not be substantial….  It represents approximately the optimum farm labor force that this committee envisaged for the 1970s."  


Under Reagan, and in light of the 1980s "farm crisis," price floors were significantly lowered as subsidies were greatly increased, resulting, however, in a further net loss per bushel.  "They’ve pumped a lot of money into the rural economy," Iowa State University Agricultural Economist Neal Harl proclaimed, referring only to the subsidies, not to the lower market prices and incomes.


Along the way some "Land Grant" (agricultural) academics emphasized the softer approach to running farmers off of farms.  In 1962, for example, Geoffrey Shepherd of Iowa State University addressed the issue in this way in a paper "Need Programs to Facilitate the Migration of Surplus Farmers Off Farms."  Shepherd approached the problem of low farm income by calling for fewer farmers so the smaller size of the rural economy would be divided among fewer people, without lowering per capita income.  He tied this to the familiar business practice of balancing supply according to demand.  Instead of living wage prices, get rid of farmers.  Shepherd also called for programs to compensate farmers for losing their farms, and also, since "local business people, the storekeepers, the bankers, etc." would also be hurt, compensate them too, all based upon the "Welfare Economics Principle of Condensation."  He also called for programs to reach "farm boys and girls while they are still in high school."


Likewise, during the 1980s farm crisis, academics from several land grant universities called for "Policies and Programs to Ease the Transition of Resources Out of Agriculture."   "In most years since world War II there has been a need to move excess resources out of agriculture . . ." they begin.  They advocate a free market approach for farm prices, but with a wide range of programs to help "ease" farmers off the land:  better career change resources, "skill training," education,  and "Homesteads in Reverse," for example.  The latter program was first proposed by University of Chicago economist Theodore Schultz, a subcommittee advisor and Research Advisory Board participant in the 1962 CED report.  This publication was still available at Iowa State University Extension publications in 1998, when I may have purchased all of the remaining copies for distribution to activist farmers.


Another document, "The Food Production System in Iowa:  Gaining World Market Share," from the Iowa Business Council and Iowa State University stated that changes leading to "the elimination of small towns" and farms were being "wisely continued."  Right up front, however, they stated that they feel the pain of these declines too.  


Each of these documents ignored the chronic issue of the lack of price responsiveness on both the supply and demand sides for agriculture, in close consistency with the "Chicago School."  "Family farm" groups and a few others, in contrast, have faced these realities and worked on "Developing an Alternative to the Chicago School," to borrow the title of a presentation by agricultural economist Daryll E Ray and Harwood Schaffer of the University of Tennessee.

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