Summary
William Henderson and B. McGraw discuss U.S. agriculture subsidies—what they are, how they work, and the tradeoffs they create. The conversation covers the history and structure of these subsidies, as well as political and economic consequences.
Agriculture Policy
We begin by examining the political durability of subsidies, driven in part by the disproportionate influence of rural states in the Senate. Despite the shrinking number of farmers, these programs remain deeply entrenched.
Next, we look at who benefits—mainly large agribusinesses—and contrast supply-side subsidies with programs like SNAP. We then explore New Zealand’s decision to eliminate subsidies in the 1980s, which led to higher productivity and stable employment.
We also consider national security arguments for supporting domestic food production, as well as the impact of consolidation, automation, and contract farming on labor and ownership.
Later, we question whether private markets (futures, insurance) could manage agricultural risk without government support. This leads into a discussion of grocery prices, inflation, and whether “greedflation” or broader economic forces are driving costs.
Finally, we touch on the unintended effects of subsidies on public health and the environment—like their contribution to obesity and monoculture farming—and explore climate policy, water use, and immigration’s role in farm labor.
The episode closes with a look at whether the current system is effective policy—or simply politically untouchable.
Timestamps
00:00 — Intro and political feasibility of removing subsidies
01:56 — Distributive effects and difficulty of reform
02:39 — Comparison to New Zealand’s reforms
03:03 — National security as justification
06:16 — Industrial consolidation and automation
04:20 — New Zealand outcomes and productivity
Cato Institute on NZ Reform
06:00 — Market price stability and crop insurance
7:44 — High prices and greedflation
09:27 — Inflation and COVID supply shocks
10:12 — National security and industrial policy
13:07 — Obesity and health outcomes
14:56 — Conspiracy theory
15:54 — Regenerative agriculture
21:52 — Environmental damage
23:58 — Subsidies and food prices
24:23 — Desert farms
27:47 — Immigration and labor supply issues