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First wheat, now healthcare

A Supreme Court ruling on New Deal farm policies has relevance today.

March 29, 2012|By James Bovard
  • Counsel Gregory G. Katsas, who represents some of the plaintiffs, speaks to the media before he enters the Supreme Court for the oral arguments on the Patient Protection and Affordable Care Act.
Counsel Gregory G. Katsas, who represents some of the plaintiffs, speaks… (Alex Wong/Getty Images )

The Obama administration is relying heavily on a 1942 Supreme Court case to sway today's justices as they consider the constitutionality of compelling Americans to buy health insurance. The 1942 ruling, in Wickard vs. Filburn, declared that "it is hardly lack of due process for the government to regulate that which it subsidizes." The case spurred a vast increase in political-bureaucratic control over American life, even though the court's ruling rested on mind-boggling economic illiteracy.

Starting in 1938, the Department of Agriculture dictated to the nation's 1.5 million wheat farmers exactly how many acres of the grain they could grow. Other programs to curtail wheat output had begun in 1933. Roscoe Filburn, an Indiana farmer who slightly exceeded his quota, claimed that the government had no right to prohibit him from growing wheat on his own land to feed to his own livestock. The Roosevelt administration, in a brief to the Supreme Court, claimed that it must have a free hand to "suppress ... a public evil."

And what was the "public evil"? Wheat surpluses. The court unanimously concluded that the government was justified even in restricting "the amount of wheat ... to which one may forestall resort to the market by producing for his own needs." The fact that Filburn's wheat might have influenced interstate commerce (if his hogs hadn't eaten it) was sufficient to sanctify unlimited federal controls over his farm.

The decision noted that wheat exports had fallen sharply since the 1920s, resulting in a "large surplus in production." But it didn't take into account that the surplus existed largely because the Roosevelt administration had driven the price of U.S. wheat to almost three times the world market price. FDR and company assumed that high crop prices would somehow make America rich, or at least spur a national recovery during the Depression.

Roosevelt was following in the footsteps of Herbert Hoover, whose Federal Farm Board sought to corner the world wheat market in 1929-30 and caused great havoc. By 1931, U.S. wheat exports had partially rebounded, but in 1933, the new Roosevelt administration considered the prices too low. It used price supports and massive wheat purchases to drive up American prices, and it intentionally let exports fall.

Higher prices encouraged production, and with falling exports, that meant surpluses. Soon enough, the Agriculture Department was paying farmers not to grow wheat. In 1938, it turned to the acreage quotas that Filburn rebelled against. The government, it was said derisively, would solve "the paradox of want amidst plenty by doing away with the plenty."

The New Dealers "built a 'Chinese wall' around our export farmers," wrote economist and Nobel laureate Theodore W. Schultz. Canadian and Australian wheat farmers survived the 1930s far better than American farmers in part because their governments did not intentionally throttle exports.

The Roosevelt administration first murdered the wheat exports and then threw itself on the Supreme Court's mercy on the grounds that wheat farmers were orphans. In Wickard vs. Filburn, the justices showed scant curiosity about the cause of the loss of exports, treating it like an act of God. The justices had no due process concerns regarding anything dictatorial done to farmers in the name of higher crop prices.

Depression-era farm policy was a tangle of contradictions and ad hoc manipulations. FDR's policies ensured that prices were no longer permitted to provide signals to buyers and sellers. An assistant USDA secretary assured farmers that "farm profit is no longer possible with uncontrolled production." Politicians cited the peril of surpluses to perpetually stifle the productivity of American farmers.

This week, the Supreme Court has heard oral arguments focusing on whether the federal government can compel individuals to purchase health insurance. Like FDR's agricultural policy, contemporary healthcare policy is a tangle of manipulation and contradictions. Politicians complain about soaring healthcare costs, neglecting to mention that Medicare and other government subsidies disrupted the markets for insurance and medical services just as U.S. farm markets were disrupted in the New Deal era.

Unfortunately, thanks to the notion that the government is entitled to regulate whatever it subsidizes, politicians feel entitled to rule anyone who depends on a market that they mangle. Does the Supreme Court believe politicians have a divine right to perpetuate their power regardless of how many foolish policies they previously uncorked? It would be far preferable to compel legislators, bureaucrats — and Supreme Court justices — to take a Hippocratic Oath promising to "First, do no harm."

James Bovard is the author of "The Farm Fiasco," "Attention Deficit Democracy" and seven other books.

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