 Our first speaker today is a gentleman who has appeared on Judge Napolitano's Freedom Watch, if any of you are familiar with that program. He recently testified on Capitol Hill in Ron Paul's subcommittee meeting and had a fairly spirited sparring match with the brightest of minds in Washington. He is a senior faculty member for the Ludwig von Mises Institute. He's been doing work for us for two to three decades. He's been around for a long time. Holds a PhD from Virginia Tech. He's written a number of books. If you don't know the real story behind Lincoln, he tells it in The Real Lincoln. Lincoln Unmask. He has a book, I think, on Hamilton, you know, that great guy, Hamilton. And so he pretty much rips the facade off these old, all these old guys that sent America the wrong way. So he's a wonderful speaker, a wonderful friend of the Institute, author of two essays in reassessing the presidency. He's going to talk about the Agricultural University Complex, Destroying Agriculture for 80 Years, Tom DeLorenzo. Thank you all for coming and thanks to the Weaver family for supporting us in this event. I'm glad to see the 14 of those students here. And when I was asked to participate in this, I haven't written that much about agriculture, as far as that goes. But the first thing that came into my mind was the work of someone who was probably the best free market economist who was writing, who has written over the past several decades on agriculture and agricultural economics. His name is E.C. Passore. Those were his initials, E.C. If you look them up on the web, P-A-S-O-U-R is how he spells his name. And I've never met E.C. I've read a lot of his writings. Some people call him Eddie. Some people call him Zeke. I don't know how they get Zeke out of E and a C, but that's sort of a nickname. And so I thought, since I'd read a lot of his writings, I thought the topic I would give would be the relationship between sort of the academic support system for the government's farm programs and the effect of that academic support system for the government's farm programs. But the first thing I want to do, though, is give you a little historical perspective from my perspective. Does anyone here happen to know which president, which American president, started the U.S. Department of Agriculture? I know a few people I talked to last night knew. What did I guess? FDR now? I don't know. It was Abe Lincoln. If you look up the USDA on the Internet, you'll find out during the Lincoln administration that the Department of Agriculture was created. Those were the land-grant universities. It was a politician from Vermont named Moral, who was also the author of the Moral Tariff, M-O-R-R-I-L-L, Tariff, around the same time, who started the business of the government giving hundreds of acres of land to the states for state universities, like one of my alma modders, Virginia Tech, to be an agricultural college. And so that was the beginning of it. From the very beginning, my interpretation of this was sort of an interventionist scam because look at Mr. Moral, Justin Moral, he was responsible, the sponsor of the Moral Tariff Act, which more than doubled tariff rates in the United States. And high tariffs had always been disproportionately harmful to farmers, especially because American farmers have always exported a lot. And at this particular time, the Southern farmers were exporting about three-fourths of everything they grew to Europe mostly, and Midwestern farmers were exporting a lot, too. So there's always been a discriminatory effect on farmers. And let me try to explain the economics of it to you, of how high tariffs discriminate against farmers by quoting the late Milton Friedman. A lot of you probably know who Milton Friedman was, you've heard of Milton Friedman. He wrote this famous book with his wife called Free to Choose in 1980. And the students in the class, I would recommend that you read this book sometime, there's students in the room. And so here's a short passage on how people who export things are disproportionately harmed by tariffs, which are taxes on imports. And of course, farmers would be included in there. They wrote this, if tariffs are imposed on, say, textiles, and there's a tax on textile goods coming into America, that will add to output and employment in the textile industry. However, foreign producers who can no longer sell their textiles in the United States earn fewer dollars. They will have less to spend in the United States. Exports will go down to balance the decreased imports. And so one of the laws of economics is that tax on imports ends up being a tax on exports as well. So if you're in the exporting business, a tariff on the stuff coming into the country will eventually hurt you, or hurt your business. And farmers understood this in the 19th century. Another book that I would highly recommend, I don't think we have it here today because we have sort of a truncated sales list of books here. But it's called The Income Tax, Rude of All Evil by Frank Chaturow. It's one of the great titles of an economics book. And there's a passage in there where Chaturow is talking about the plight of Midwestern farmers during this time of the late 19th century with the high tariff policy that was put in beginning with the moral tariff. Here's what he said. The plight of these farmers, Midwestern farmers, was made worse by the protective tariff policy of the government. The best they could get for their products was the competitive world price while manufacturers they bought from the east were loaded down with duties. The populists clamored, therefore, for lower tariffs. So the Midwestern farmers understood that they were being ripped off by this high tariff policy. And so when the USDA was founded during the Lincoln administration, at the same time, tariffs were doubled, I look at it as Uncle Sam walking up to a farmer and handing him a penny and saying, here, this is from your government, aren't you lucky? Here's a penny. And while he's handing him the penny, he's reaching around into his back pocket and pulling out his wallet with $10,000 in it. And then the farmer walks away saying, thank you, Uncle Sam, for the penny. And that's how I view the creation of the US Department of Agriculture and the land grant system during the 1860s because the harm done to farmers by the high tariff policy was lasted until 1913, until the income tax came in. I think far exceeded any conceivable benefit from government bureaucrats talking to farmers about which kind of seeds to plant, which is pretty much what the USDA did for a long time, as though they needed that. And so that was the beginning of interventionism. And the farmers seemed to understand economics pretty well back then. They were businessmen, after all. But there was sort of a change in the type of interventionism, as far as I can tell, beginning with Herbert Hoover. And it wasn't just sort of technical assistance, subsidizing university research and so forth. There was pretty dramatic interventionism in agriculture. And it was Herbert Hoover who started the federal farm boards that established what were called stabilization corporations that were supposed to control farm surpluses and to prop up farm prices to make farm prices go higher. In other words, it was illegal cartel. You know, the antitrust laws, the first federal antitrust law, was passed in 1890, which outlawed what the government called conspiracies and restraint of trade. But by the time you get to the 1920s, the late 1920s, here's the president organizing illegal cartel to help farmers. And look at who was on the federal farm board. The federal farm board, the whole purpose was to push up prices of food. Here are some of the people who are on this board who controlled food production and prices. Let's see, there's James Stone of the Tobacco Growers Association, Carl Williams of the Cotton Farmers Cooperative Association, C.B. Denman of the National Livestock Producers Association, C.C. Teague of the Fruit Growers Exchange, William F. Shilling of the National Dairy Association, and Samuel McKelvie, a lobbyist for grain farmers. And so this is similar to what happened with the railroad industry in the late 1800s, when the Interstate Commerce Commission was created. The first supposedly to protect consumers from railroad monopolies, the first head of that was a railroad industry president. And so of course, the thing benefited the railroad corporations, not the consumer. And the same sort of model was used by Herbert Hoover to form a legal government-run cartel for the benefit of farmers. And so this was the business where farmers were paid for not growing crops and for not raising livestock. My old friend, Walter Williams, the syndicated columnist who sometimes guest host the Rust Limbaugh shows. I've been reading his columns for 30 years and one of my all-time favorites was when Walter read in a newspaper that Sam Donaldson, the former ABC Newsman, used to cover the White House during the Reagan administration. He owns a sheep ranch in New Mexico and he received a check for $200,000 for not raising sheep on a sheep ranch. And Walter, in his column, wrote the column in the form of a deer IRS letter. And it said, deer IRS, I also do not raise sheep on my property, where's my $200,000? And that's one of Walter's most memorable columns ever, I think. And so here's Herbert Hoover condemning wheat farmers for profiteering, how awful profiteering and harshly criticized the evils of overproduction. This was sort of something that was going on in the academic world in these days. There were a lot of economists and others who were condemning what they called excessive duplication, which is just another word for competition. And so they use the euphemisms for competition like overproduction and excessive duplication. I suppose you could say, since we have Toyota and Volvo and Dodge and Chevrolet and all this, there's excessive duplication of cars. But who would think that that's a bad thing, that we have competition in the car industry? But they were saying this about agriculture. Here's something that Murray Rothbard concluded in one of his books where he wrote about Herbert Hoover. This is his book, America's Great Depression, summarizing Herbert Hoover's efforts. He said, the grandiose stabilization effort of the federal farm board failed ignominiously. Its loans encouraged greater production, adding to its farm surpluses. So it created farm surpluses, which overhung the market, driving prices down, even though its policy was to drive prices up. The FFB thus aggravated the very farm depression that it was supposed to solve. With the FFB generally acknowledged failure, President Hoover began to pursue the inexorable logic of government intervention to the next step, where that is recommending that productive land be withdrawn from cultivation, that crops be plowed under, and that immature farm animals be slaughtered, all to reduce the very surpluses that the government itself had brought into being. And so from the very beginning, government intervention in agriculture has been one big Rube Goldberg machine, not too dissimilar from the Soviet style central planning in agriculture, which Yuri Maltsev is gonna talk to us about. In fact, Roosevelt's top, when you get the Roosevelt, his top economic advisor for the duration of his administration was a man named Rexford Tugwell from Columbia University. And he wrote a book in 1930 on the American economy, in which he praised the Soviet central planners to the treetops. And he thought it was the wave of the future, and he boasted that we Americans will show these sloths how to do it. We'll show them how central planning works. And I have to think that his advice had something to do with what FDR eventually did. And so speaking of FDR, if you look up on the web, there's all sorts of information on FDR on the web. And if you wanna search around and find his role in agriculture, he pretty much continued what Hoover started. And here's one description of what FDR did. I think it's pretty accurate. It says, when FDR was elected as president, he appointed Henry Wallace as his Secretary of Agriculture. In 1933, Wallace drafted the Agricultural Adjustment Act, the AAA. The AAA paid farmers not to grow crops and not to produce dairy produce, such as milk and butter. It also paid them not to raise pigs and lambs. The money to pay the farmers for cutting back production above about 30% was raised by attacks on companies that bought the farm products and processed them into food and clothing. So the consumers were hit twice, once with higher prices caused by the 30% supply reduction. And then a second time, when a lot of these taxes were passed on to the customers of the companies that distributed the food. And so that was FDR's start in this whole business. And so what was going on here is similar to what was going on in the late 19th, early 20th century in a lot of industries in America. The Americans were basically adopting a European-style fascism as their economy. The Europeans, the Germans and the Italians especially, had intentionally created cartels of various sorts and run them under the sharp control of government bureaucrats. When the businesses, they were ostensibly private, would fail, they would be bailed out. The big bailouts were an essential ingredient of European fascism from an economic perspective. And we were essentially doing something very similar here in the United States with agriculture and manufacturing, especially during Roosevelt's era. The National Recovery Act was pretty much the same thing, government organized cartel system. And there are two good books that talk about this. One of them is called, In Restraint of Trade by Butler Schaefer. And the other is The Triumph of Conservatism by Gabriel Colco, KOLKO, to talk about how big business in particular was very active in seeking government intervention. Because the bigger businesses understood that they could work the system, but this interventionism would probably be very harmful to their smaller competitors, but good for them. And what was going on in farming seemed to be similar to this. And so the main effects of all this, in the name of stabilizing farm incomes, I think has not been so much to stabilize incomes, but to create greater inequality because the government farm programs benefit primarily larger agricultural corporations because of the way this program is set up. And so it pretty much guarantees that the larger corporations involved in agriculture will do very well. And then there's, I have in my notes here, the price support ripoff. The government for a long time had price supports on a lot of farm products, but this is politically risky because every once in a while the public would get wind of the fact that the reason why certain food items have gone up is that the government has forced them up. And so if you're a politician and you get caught having voted to raise the price of food, that's not a good thing for you. And so they've tried all sorts of subterfusions to try to hide essentially the same kind of thing. In fact, one of the reasons for price supports in the first place is that it's even worse to a politician if you're getting caught just literally giving cash to farmers or to anybody. Taxpayers are gonna say, why are you giving my money to this multi-billion dollar corporation, that's a food distributor or something like that. But if you can manipulate the system in terms of making the price higher of the thing that they sell, the average consumer is not gonna really know about that. But sometimes the consumers do even catch on with that. And one example is an article I read several years ago on Mises.org called Farm Derobbery. And there was an article in USA Today that caught my eye as a good example of this. It was about the cotton business. And there was a picture of a cotton farmer from Texas on the front page of USTA Today, USA Today. And he had a big smile on his face, just like Jimmy Carter, the older people in any room know what Jimmy Carter. He had those big horse teeth and a big smile, big politician's smile. So this guy, he looked just awfully happy. And it sort of caught my eye. I looked at his USA Today and it was this guy with big bales of cotton and a big smile on his face. And so I picked my interest enough to read what he was smiling about. And he was participating in a government program that said this. It said that the government would guarantee cotton farmers a price of 52 cents per pound, I guess. Let's see what it's, 52 cents. That year, in that particular year, it was a banner year for cotton farming. And so the huge supply drove down the price to 35 cents. So the world price of cotton was 35 cents. And the US government had a program that says, we, the government, that is attach-pairs, will pay you the difference between 35 cents and 52 cents if the price goes below 52 cents, which it did. And so this guy's name was Bednard's. He was a cotton farmer in Texas. So the reason he was smiling is that he had just cast a check for $340,000 because he had produced so much cotton, the volume of cotton that his farm produced multiplied by the difference between 52 cents and 35 cents ended up being $340,000. And so he got $340,000 in return. The consumers got absolutely nothing at all. Just the same cotton. Whoever bought the cotton gets nothing. And so that's another type of program that we have. And it turns out this type of program was recommended years and years ago, it's just a plain old rip-off. It's as legal plunder as what Friedrich Blasdiot called it. It's sort of like, I'm a college professor. We college professors make a lot of money, at least a million a year. And so it's as though we had a law saying that I can never make less than $2 million a year if my salary ever did. Say we have open borders immigration policy and 500,000 economists from India come here and drive the price of economists down to a very low level. I'm guaranteed the difference between $2 million a year and whatever low level the price is. That would be a pretty good scam. That's what they have in cotton farming. But this was recommended. There was a well-known agricultural economist named D. Gail Johnson who recommended this way back right after World War II. He was the president of the American Farm Economic Association and the American Economic Association. He was a pretty well-known economist of the last generation. And he recommended this. He recommended, quote, forward prices for agriculture. Now what is this? Here's a description of it. The government would determine and announce the right price for each commodity for the upcoming crop year. No markets would determine the price. The government would declare the correct price for the next year. Setting the price at the level that the government thinks would clear anticipated supply and demand. Good luck with that. If market prices fell sufficiently far below the forward price level, farmers would receive government payments. I think this was 1947 that this was being recommended. And the government has this policy for cotton at least in the last several years. I think this was the last farm bill that changed that went from price supports to this sort of tricky program of paying the difference between the world price and the government's arbitrary price. And so the first 15 minutes of my talk here, I briefly describe some forms of interventionism that the government has always been involved in and has always created instability. It creates agricultural surpluses and then it tries to do things to get rid of the surpluses. FDR was famous for carrying forward Hoover's policy of getting a slaughtering farm animals and destroying crops to try to drive up the price. But it was a public relations disaster for FDR because the Great Depression was on and there were long food lines, people nearly starving to death. And here's the government destroying food. And so he wised up and did more to pay farmers to not raise crops or grow livestock in the first place rather than allowing them to raise the crops and so forth or grow the crops and then destroying them. That's foolish, shouldn't do that. And so they had the other program. Now the role of the agricultural university complex beginning roughly the New Deal era, there was a big surge in a number of economists especially who became agricultural economists. And here's what ES Passour says in one of his articles. The New Deal farm programs markedly increased the demand for agricultural economists. From 1929 to 1939, the total number of agricultural economists increased about four times in the United States and by about two thirds in land grant universities. A prominent agricultural economist at the time concluded that after 1933, almost every agricultural economist was engaged directly or indirectly in the development administration or appraisal of government farm programs. So you're paid at least in part by the government and your job is to appraise the government's farm programs. That's like being employed by Coca-Cola and they're asking you, tell us what you think of Coca-Cola compared to Pepsi. You're an outside observer, you're at a university, which do you think is a better product? And so the government set up the system of paying all these academics to assess the government's programs and of course their pay and the continuation of their pay is always contingent on giving the right answers to these programs. If you start telling the government, you're creating a disaster for the farm economy, you're not gonna have a long career in agricultural economics. And so the economic livelihood of these agricultural economists is closely tied to the government's role in agriculture, the government's policies. And so this, that's why these land grants that occurred during the Lincoln administration was really the camel's nose under the tent, as they say, of political correctness. It was the first intervention of the federal government into higher education, the university system in a big way. And of course, when you take the king's money, you always become the king's man to some extent, as the old saying goes, the paraphrase that. And so they began corrupting academics from the 1860s. Here's one example of this, of the type of corruption. This is from Eddie Passore, one of his articles. In 1943, an agricultural economist at Iowa State College wrote a pamphlet on dairy policy. The study concluded that margarine compared favorably with butter and nutrition and palatability and argued for federal changes in federal and state legislation that impeded the consumption of margarine. Following attacks on the pamphlet by groups of dairy farmers and the subsequent recommendation by review committee that the pamphlet be retracted and revised, the professor and several other agricultural economists resigned from Iowa State College. And the top professor, his name was Theodore Schultz, who later won the Nobel Prize in Economics. And so he dared to actually say the truth about this one program, and he was forced to leave his job. That was 1943. And I have a few other examples of the role of agricultural economists. A lot of them, in economics of the students in the room, if you go and take an economics course, you'll learn all about market failure, there's theories of market failure. And I categorize all of these theories and there are hundreds of them into something that an economist named Harold Demseths called the Nirvana Fallacy. They create an unrealistic theory of a competitive economy that the Austrians never bought into. It's called perfect competition. And it's a contrived theory. And then they compare the real world to that. And of course the real world is never perfect. Nothing on earth is perfect. And they'll say, aha, the market fails because it's not perfect. Well, nothing succeeds compared to perfection or Nirvana. And so there are many economists who have made careers, 40 or 50 year careers, writing paper after paper after paper just with applications of this silly Nirvana fallacy comparing actual markets to some sort of unachievable ideal that could never be achieved in the real world. And a lot of that is in agricultural economics too. And it's even worse in agricultural economics because the agricultural markets have been so perverted and changed around by government intervention that it's hardly realistic to call them free markets. And so when bad things happen, blaming it on the market system is very dubious indeed because there's so much interventionism in agriculture and has been for such a long time. But here are some examples of how the game is played. There's an agricultural economist named Daryl Ray who has the Blasing Game Chair of Excellence in Agricultural Policy and is director of the Agricultural Policy Center of the University of Tennessee. He says this in one of his articles, there is no recognition that when crop prices capsize, market demand does not provide a rigging to raise them back up again. There is also no recognition that market response on the supply side is no help in the search for a cure for low prices. While belief in the market self-correction via supply and demand response to depressed prices may have been a reason to embrace the 1996 legislation. He's talking about the Farm Bill. Why would we want to take that dog out to hunt again this time around? So he's saying markets don't work. He's proclaiming markets don't work. Another example is Neil Harrell. He was the Charles F. Curtis Professor of Agriculture. These guys all have huge job titles. Also Professor of Economics at Iowa State University, former president of the American Agricultural Economics Association. He supports a worldwide central planning of agriculture by the United Nations. How do you think that would work out? He says, here's what he says. Farm policy debate in the United States in the 1920s was largely about whether it was appropriate to have a national food and agricultural policy to a considerable extent. The decision was in the negative until 1933, Roosevelt. In many respects, farm policy today poses a similar question. Should efforts be directed toward a global food and agriculture policy? In the opinion of this commentator, the answer is yes. So we should have worldwide, since this was 2003, when did communism fail? About 1990, something like that. So you see a lot of this in academe. When, I can recall, right in the middle of the collapse of communism, I happened to be at the University of Tennessee at the time and there was a Marxist on the economics faculty. His name was John. And I remember running into him on the parking lot. You know, the Soviet Union had fallen apart and all of Eastern and Central Europe had left. And I said, well, John, now what are you gonna do? Carpenter, bricklayer, what? And he said, oh no, no, we're no longer tainted by all these bad guys like Stalin and all that, you know. And now we can really have a socialist paradise. And apparently the agricultural economists are of the same mind, at least some of them, some of the top ones. There are some good ones, I'm not saying they're all like this, but these are some big shots that I'm quoting. Another one named Robert Taylor. He's the, I'm thinking this might be a typo in this article I'm reading here. He's the Alpha Eminence Scholar. I thought it might be Alpha Alpha Eminence Scholar, but it's the Alpha Eminence Scholar and Professor of Agricultural Economics at Auburn University to look him up. He says this, the permissive attitude behind the approval of recent mergers, acquisitions and joint ventures among agricultural corporations, appears to be based on the single-minded pursuit of economic efficiency. Imagine that, isn't that horrible? Legislation, including GATT, NAFTA and Freedom to Farm also reflect pursuit of economic efficiency as does the teaching of many present-day professional economists. And he's complaining about this. He's complaining that people want to make the most efficient use of resources in farming. This is a bad thing. We shouldn't allow that. Labor unions usually say the same thing. They're always complaining about economic efficiency, which is pretty bizarre in a competitive world economy. One more, there's Richard Rogers, Professor of Resource Economics at the University of Massachusetts and his co-author, Richard Sexton, Professor of Agricultural and Resource Economics at the University of California Davis. They say that markets for raw agricultural products are likely to be structural oligopsies and that monopsony slash oligopsiny issues deserve strong consideration in food policy debates. These are these models of market failure that I was referring to. And these are people that like once again are making models saying that first of all, it's a false that there's free markets in most agricultural products because there's so much intervention. And then second, they're saying we need to model these free markets as somehow being insidious because there's not enough competition in them. Okay, and so I guess you get the message of what I'm saying here is that there's always a whole industry of economists that they look at agricultural policy which started out as one big system of creating cartels and it has ended up being continuing to try to do that, to transfer income to farmers from the rest of the population with massive intervention with the credit programs and the regulations and the EPA regulations that affect all farmers and everything else. And they call this, they tend to refer to this as free market and they condemn the free market. They don't condemn the agricultural programs and when they do, they sometimes get fired for condemning the programs. And so we really need more people like Eddie Passore on our side of the thing. And I recommend to any of you who want to follow up on this to look him up on the web and read some of his articles on agricultural economics because he really is the one free market Austrian oriented economist that I know of who has spent a career writing and researching on agricultural economics and has written a lot of good stuff but I can't think of another one. I don't know of another one that's out there other than we have Rich Wilkie in the audience. He's sort of a close, where's Rich at? He's, is he here? There he is. And he's probably the closest we can get. But he's not been as prolific as Eddie Passore. I've been reading his articles for 25 years and he's a publishing dynamo. And so one final comment I'll make about this is one of the things I found out and digging into some of this literature is that the agricultural economists, like a lot of economists that aren't in agriculture that research other areas, they claim to be positive economists. That is they'll write things and they'll explain how a policy works, for example. Even if they do take the big step and explain how one of these cartel policies works, they'll never make a judgment saying that it's good or bad. They'll say it's not my role to say it's good or bad. And so that's one big difference between the Austrians, most Austrians anyway, and the mainstream is that if we see a policy that is sort of an immoral ripoff of the consumer we call it an immoral ripoff of the consumer. We're not afraid to, but we're not paid by the USDA. But if you're paid by the USDA, you can't say that. And so I don't know how many times in my career I've had letters or emails from people responding to my articles saying something like by academics or comment or personal comments saying something to the fact, gee, why don't you tell us what you think, De La Renzo, what am I supposed to tell them what I don't think? And that's sort of the attitude. What do you mean sarcastically tell us what you think? If you're an academic and you're a writer and you're a researcher, isn't that what you're doing? It should be, but these people are so cowed into not wanting to disturb their financial benefactors, the government, that they never ever make a statement on good or bad, they're scared to death. They might lose their funding of it. And again, it's not everybody who's in this business, but I think that's true of some of the big shots that I've looked up to prepare this talk, some of the highlights in the agricultural economics business. And I went to school with some of these people. I went to Virginia Tech, and I can remember taking a statistics class with one of the smartest and most brilliant statisticians I could ever imagine is employed in the United States. Guy was great, but the one thing that impeded my learning in that class was that I was in that class with all the Ag Econ people, and they would all come into class every day with chewing tobacco, being spit out into a Coke can, and horse manure on their boots, and the professor smoked a cigar. And so I would sit there with a cigar smoke and a manure and the tobacco juice, and by 50 minutes my head was pounding. I didn't learn nearly as much statistic. Maybe that's why I'm so critical today of these people. But I think my time is about up. Thank you very much.