Paying Dead Farmers Not to Farm:

Today's Washington Post reports that the U.S. Department of Agriculture has continued to make subsidy payments to farmers who are deceased.

The U.S. Department of Agriculture distributed $1.1 billion over seven years to the estates or companies of deceased farmers and routinely failed to conduct reviews required to ensure that the payments were properly made, according to a government report.

In a selection of 181 cases from 1999 to 2005, the Government Accountability Office found that officials approved payments without any review 40 percent of the time. . . .

In a letter responding to the GAO report, the Agriculture Department said that the payments were not necessarily examples of fraud or abuse and that auditors did not prove any specific cases of cheating. The department's field offices defended the practice of routinely paying dead farmers' estates without fully investigating the claims, citing staff shortages and competing priorities. The agency also said that any overpayments would amount to less than 1 percent of farm subsidies paid between 1999 and 2005.

The Case for Paying Dead Farmers Not to Farm Instead of Living Ones:

Jonathan Adler's post about how the federal government pays dead farmers not to farm has generated predictable outrage from commenters. I sympathize. But the critics are ignoring some important reasons why paying dead farmers not to farm is a lot better than paying living ones.

It's hard to deny that dead farmers can do just as good a job of not farming as living ones; perhaps even better! At the very least, paying the dead not to farm isn't worse than paying the living to do the same "job." However, there are three major reasons why it's actually likely to be better.

I. Lower Enforcement Costs.

When you pay living farmers not to farm, there are going to be enforcement costs. Those ungrateful peasants might be tempted to do some illicit farming on the side in order to make an extra buck or two. You may even have to file a lawsuit to get them to stop their nefarious black market farming. If you're really unlucky, the case might even go all the way to the Supreme Court, and then you're talking really big litigation expenses. By contrast, enforcement costs are rarely a problem when it comes to the dead.

II. Lower Deadweight Losses to Society.

When you pay living farmers not to farm, you deter them from engaging in productive activity that might benefit society as a whole. You reduce the production of food and raise the cost of living, especially for the poor. You don't have to worry about any of that when you pay the dead.

III. Less Rent-Seeking.

Once you start subsidizing the living, they will have strong incentives to lobby for ever larger subsidies and to reward politicians who hand them out, while punishing those who refuse. This activity increases deadweight losses by deterring ever-more productive activity, and also by diverting resources to the unproductive activity of lobbying and away from the socially useful purposes. Economists call this "rent dissipation." The good news: the vicious cycle of rent-seeking, lobbying, and rent dissipation is not a problem if subsidies for not farming are confined to the dead.

The Bottom Line.

I'd prefer that we abolish subsidies for not farming entirely. But if we have to have them, I hope as much of the money as possible goes to the dead.

Related Posts (on one page):

  1. The Case for Paying Dead Farmers Not to Farm Instead of Living Ones:
  2. Paying Dead Farmers Not to Farm: