There was an article in today’s Wall Street Journal about how the tomato industry is asking for $100 million cash to make up for lost revenue during the recent salmonella scare, and Congressman Tim Mahoney, a Democrat from Florida, where many tomato growers are based, is introducing legislation to make it happen.
This is today’s example of privatizing profits while socializing losses. This is a topic I will return to many times since it features several of my pet peeves:
- Greed in the private sector
- Venal politicians
- A system which benefits the powerful and well-connected at the expense of the average taxpayer
To be honest, this is not the best example ever. A legitimate case could be made that since government shut down the tomato industry to protect the health of all Americans, all Americans should pay for the damages. I reject that case because the food industry has long rejected government efforts to improve safety. I further reject it because if the government had done something that temporarily increased tomato industry profits (eg. FDA announces that tomatoes cure obesity, and then takes it back) you can be certain that the industry would not return its windfall profits to the taxpayers.
With that case summarily dismissed, like so many Lotharios in so many bars, let’s turn to why this tomato cause vexes me so. Tomato farmers and packers are in business to make money, so their incentive to recover losses is understandable, especially since it appears that their product was not the salmonella vector. But on the other hand, theirs is a risky business. Produce is susceptible to weather, to bugs, to the whims of the market – should the taxpayers pay whenever something goes wrong? The food industry in the US has had ample opportunity to clean up its act, but has chosen instead to save money. And now, because the food industry caused disease, they expect us to pay. My view: this is the cost of doing business.
As for Congressman Mahoney, representing the tomato district of Florida, in the 2007-2008 election cycle he has received nearly $95,000 in campaign contributions from agricultural concerns, making them his fifth largest donor base. He has a national debt clock on the front page of his web site, showing $32,525 in debt per citizen as I write this, but that isn’t preventing him from giving $100 million of taxpayer money away to a few connected tomato producers who provide campaign contributions which allow him to remain in power. That’s what I call venal.
Part of the problem – beyond greedy people and venal politicians – is that the system encourages this behavior. The greedy people with significant capital at stake have heavy incentives to apply their resources toward a leverage point. The venal politician who wants campaign contributions is that leverage point. And the average taxpayer has no say in the matter. Until there is some stronger system of campaign finance reform, or an organization with major dollars to deploy on behalf of the common citizen, we are going to have to rely on corporations not being greedy or politicians not being venal and power hungry. Good luck with that.