Why I believe the government must subsidize food production, even as a libertarian.

I have to say beforehand that I am not an economist and I do not understand the full depth of what I am talking about. These are just the thoughts that I have about our current situation. 

I believe in small government and the power of private business to fulfill almost all needs a human may have or want. The free market is powerful and produces efficient, cheap, and high-quality products at ever-increasing scale. Where there is demand for a product, companies will make more of it. For example, all luxury goods (everything from computers to dresses) are greatly benefited by capitalism. However, there are some goods that are not very compatible with capitalism. Stay with me here. 

When a good is a) very easy to produce; b) has a limited possible demand; c) has a lag between commitment and production; and d) is necessary for survival, you get a good that is not treated well by pure capitalism. 

Let's start with a. Food is, actually, very easy to produce. So easy to produce that, if people were left to their own devices and planted all the food they wanted, prices would drop to below profit margins for everyone and everyone would lose money, thus causing a retraction of planting in the next harvest. Market swings like this are tolerable for non-essential goods, and even non-essential foods, but a single shortage of food could cause huge problems to any society. 

Secondly, people can only eat so much food. Demand for food rarely goes up, and when it does it's because a new market for processed goods has emerged. Take orange juice, for example. When California growers encountered the problem outlined by a, they decided to turn their oranges into juice. Every bottle of juice contained many more oranges than could be eaten normally by people. The growers artificially increased the demand for oranges. Behavior like this is part of capitalism and it should be encouraged, but it illustrates that in order to increase food demand one has to upturn the status quo and come up with new ways to use things. But demand for food doesn't grow infinitely.

Third, prices of food fluctuate faster than food grows. Food is a special good in that it must be planted at least four months before harvest, and in that time prices of food can change enough to influence the next harvest. This is an example of the "tragedy of the commons." When food prices are high, everyone plants more food for next year. But when next year comes around, because everyone planted so much food, the prices go down and farmers lose money. And then, because food prices are so low, they plant less food, and next year there is a food shortage. One of the main boons of capitalism is market fluctuation. It's a good thing for the market to decide what a car is worth, or what a house is worth. Those do not spoil and can be assembled relatively quickly. However, the hidden hand of capitalism works like a pendulum around an attractor. Because food production is delayed in reaction to its price, this pendulum-like motion is increased. Thus, we can have a glut of food one year, and then high food prices the next, and so on and so forth. 

And finally, food is necessary for survival. If food prices are too high, the people suffer. If car prices are too high, people take the bus. If house prices are too high, people pick a cheaper place to live. But if food prices go up, what are they to do?

And this leads to what I call the "value of the glut." The best way to manage food production is, in fact, to a) pay people not to produce food; b) buy food and destroy it; and c) subsidize the food that is produced.

What is best for society is a little bit too much food at middle of the road prices. The key to this is working within the free market as a government to regulate food prices through manipulation. If, one year, people produce too many potatoes, buy enough to settle the balance between price for the consumer and profit for the farmer and destroy them or give them away to the poor. This is where government cheese came from. I believe it was Reagan who instituted this policy, and he is touted as one of the most conservative presidents of this century. Food destruction may seem wasteful, but the alternative, which is not enough food, is worse. 

Now, there probably is a completely pure market balance that could be achieved without government interference. The orange juice story is an indicator of this. If people find themselves with too much product, they can be creative and find ways to sell it as something else. 

Another story about too much food causing innovation. One day, a certain meat company had produced far too many turkeys for thanksgiving. For weeks they sent the refrigerated cars holding the turkeys from one place to another, trying to sell them. One day, an employee had an idea: what if we froze the turkeys and sold them as meals to be reheated? 

And thus, the TV dinner was born. The company sold all their excess turkeys and we gained a valuable part of American cuisine. 

However, because of the actions of people like FDR during the Great Depression, our economy is hooked on the drug that is subsidization. Like an opioid addiction, it started at first as a way to relieve immediate pain, but then became an addiction that would cause severe withdrawal systems if we were ever to go off it. I believe that, if allowed, the free market will pull an orange juice or a TV dinner for overproduction and create more wealth and good things than anything government economic triage will ever do. 

I will leave you with this quote, which I will paraphrase from the book 1984. "War is just a way for countries to get rid of overproduction."