A 1993 Clip of Bernie Sanders Advocating Subsidies Shows a Classic Broken Window Fallacy

 

On October 28, 1993, then Representative Bernie Sanders was on the floor of Congress advocating for the United States to adopt a Canadian-style agricultural supply management system in order to boost the prices that dairy farmers across the country received for their produce. He then specifically lamented that the number of farms in his state of Vermont had decreased from over 8,000 in 1960 down to 2,200 by 1993. Aside from mentioning how young people there ostensibly did not want to follow in their dairy farmers footprints because of low milk prices, he doesn’t give any evidence showing this to be the result of agribusiness, but he all the same suggests that it is those dastardly more efficient farms offering a lower price to the consumers that accounts for his state’s decrease in their number of farms. He claims this story to be the same across the nation and makes the dubious claim that relying on agribusiness and “foreign nations” (as though their governments had nationalized food production and there were no foreign agribusinesses) means that America’s food security is at risk. He cynically invokes the rhetoric of decentralization to argue that relying on family farms who would charge higher prices would be better for Americans than relying on larger entities who charge lower prices. Without a hint of irony, he then argues for the federal government to adapt the centralizing policy of supply management through his proposed Milk Supply Management and Nutrition Assistance Act of 1993. For context, supply management was (and unfortunately, still is) a federal Canadian policy that artificially raises the prices of Canadian milk, eggs, and poultry and keeps out foreign competition in order to help that country’s farmers at the expense of their consumers. Thankfully, this legislation was not one of the three bills that Bernie Sanders managed to get passed in Congress during his productive career as a politician. But aside from it being an ironic scene that this man who now blames inflation on “corporate greed” was actively advocating for the price of milk and products containing it to be artificially increased by an unabashedly corporatist-sounding “National Milk Marketing Board”, this clip is much more important for showcasing economic fallacies that our elected officials alarmingly showed and still show decades or even centuries after the world’s great economists had tried to put to rest. In this case, it would be Frederic Bastiat’s Broken Window Fallacy that he articulated in his famous 1850 article “That Which We See and That Which We Do Not See” and which Henry Hazlitt further elaborated on his classic 1946 book Economics in One Lesson.

This proposed H.R. 3770 of the 103^rd Congress legislation revealed much about the importance of looking beyond the immediately seen effects of an economic policy on one group of people to see what the impacts it would have on everybody will be. To be specific, much as it would behoove a voter to know that throwing a rock through a window and creating jobs for a glazier would not make a society any richer because of the deferred spending and wealth that could have been created by that window owner should they not now have to pay for window repair and could have instead used that money for something else, so too would it be of use for them to know that having federal bureaucrats at this National Milk Marketing Board set an arbitrary price floor on what dairy farmers must be paid might be good for the farmers, it would make everybody else poorer by raising the price of milk and all the products they buy that contains milk. Subsequently, society would be no richer, as products that might have been purchased or investments made had milk remained cheaper would now no longer occur. It would just be more visibly seen that family farms were no longer struggling due to agribusinesses charging lower prices and it would not be nearly as seen that people’s wallets were hurting due to the sudden dairy price hike. If recent events are any indicator, the extent that such negative effects were seen, they would doubtless be blamed only on the greed of the remaining agribusinesses, which would doubtless have still existed and perhaps even flourished, in spite of their smaller competitors also getting this proposed corporate welfare.

You might be thinking that this was ultimately just the crazy wishes of some socialist politician and that this is no longer relevant, but sadly, this is not the case. Putting aside the fact that Sanders still has not grasped economics and thus still thinks that Canada’s supply management policy is a good idea, as shown by it being included in the platforms of both his 2016 and 2020 presidential campaigns, the reality is that America had far from a free market in agriculture before this legislation was proposed in 1993 and it still does not all these decades later. Indeed, the specific legislation that Sanders introduced would have amended the 1949 Agricultural Act and just adding a further layer of corporate welfare to this Truman administration legislation that was designed to “stabilize” agricultural prices. Ever since the New Deal, it has been the norm for the federal government to intervene directly in agriculture in order to keep prices artificially higher for the producers, regardless of what happens to everyone else’s bank account. In today’s Congress, it is definitely not just Bernie Sanders who supports corporate welfare for farmers. Even such ostensible free market supporting Republicans, such as Senator Marco Rubio, will throw that principle to the wayside when the topic of farming sugar or some other crop in their respective districts, comes up. All of this invariably comes back to the Broken Window Fallacy of seeing the higher prices for some of their constituents and ignoring the consequences of this policy to everybody else and to the economy as a whole. As shown by supply management being a specifically Canadian idea, this idea extends far beyond America’s borders. Only in New Zealand, in no small part due to Finance Minister Roger Douglas in the 1980s, have they fully appreciated what Bastiat wrote nearly two centuries ago by ending all agricultural subsidies. We can only pray that the rest of the world follows suit.