Lobbying and the Way the World Works

Dairy Industry Crushed Innovator Who Bested Price-Control System

So reads the headline over a story on the front page of Sunday's Washington Post. It's well done, too, as one would expect from the lead reporter, Dan Morgan. It's about a Dutch-American farmer who figured out how to produce milk outside the federal subsidy system so as to undersell producers who are part of the subsidy system.

So what happened? The subsidized farmers got Congress to pass a law stopping the independent. There's a lot of emphasis on the campaign contributions of those doing the lobbying. And it notes that one of the leading members pushing the change in the law was Rep. Devin Nunes, from the No. 1 dairy-producing district in the nation, whose grandfather started a dairy business still owned by the family. That district, by the way, is not in Wisconsin or Vermont. It's near the southern end of the Central Valley of California, the milkshed of greater Los Angeles.

I suppose the reaction of many readers will be: We've got to stop these lobbyists from affecting legislation; we've got to stop them giving campaign contributions; we've got to stop members like Nunes from aiding their own economic interest. The problem is that lobbying is and campaign contributions should be protected by the First Amendment to the Constitution:

Congress shall make no law … abridging the freedom of speech … or the right of the people … to petition the Government for a redress of grievances.

Yes, I know, the Supreme Court has upheld some restrictions on campaign contributions, and Congress attempts in various ways to restrict lobbying. But free people are going to want to affect the outcome of elections. And free people with an economic interest in government action are going to try to affect that action. You can attack Nunes for his ties to the dairy industry. But given that his district is the No. 1 dairy district in the country, I imagine he would be only pleased if you did so. Bring it on!

The problem here is not free people; the problem is big government. More specifically, it's a big government program set up during the New Deal whose purpose was not to stimulate economic growth and competition but to freeze the economy in place and stifle competition. Remember that the New Dealers believed that the Depression showed that free markets don't work and that economic growth was a mirage.

Franklin Roosevelt on taking office in March 1933 faced a deflationary downward spiral, and, to his credit, he stopped its momentum with an otherwise cockamamie scheme called the National Recovery Act, which set up 700-some industry codes barring price and wage cuts. NRA was foundering in May 1935, since it was obvious that everyone was gaming this ridiculous system, and Congress was uncertain to reauthorize it when the Supreme Court unanimously declared it unconstitutional.

Unfortunately, Congress kept passing freeze-the-economy-in-place legislation, including the dairy provisions of the farm bill. One in four Americans then lived on farms; they were a big constituency, and they were hurting. Things are different now. Only 2 percent of Americans live on farms. Our economy grows and grows and grows, and we realize, thanks in large part to the late Milton Friedman, that the Depression resulted not from the inevitable defects of free markets but from certain specific policy mistakes that we can, unless we take leave of our senses, refuse to remake.

But we've still got dairy price supports, which keep the price of milk well above what it would be if we had free markets. The people who benefit from these laws will, as the Post shows, work hard to defend them. And those people include not only dairy farmers but also trade association executives and lobbyists who are very well paid out of the money extracted by the system from milk consumers–a group tilted toward young families with small children, a group with very little wealth and tending to have below-average incomes. That's big government for you.

Also in the Sunday Post: a solid editorial on the Iraq Study Group and a solid column by Jim Hoagland. I don't fully agree with either, but they're both worth reading and pondering. Excerpt from the editorial:

Start with the supposition that resolving the Israeli-Palestinian conflict is somehow central to ending the chaos in Iraq. In fact, even if the two-state solution sought by the Bush administration were achieved, it's difficult to imagine how or why that would cause Sunnis and Shiites to cease their sectarian war in Baghdad or the Baathist-al Qaeda insurgency to stand down. It's no doubt true, as study group Chairmen James A. Baker III and Lee H. Hamilton have said, that every Arab leader they met told them that an Israeli-Arab settlement must be the first priority. But the princes and dictators of Riyadh, Cairo, and Amman have been delivering that tired line to American envoys for decades: It is their favorite excuse for failing to support U.S. initiatives and for refusing to reform their own moribund autocracies.

Excerpt from Hoagland:

Their 79 recommendations turned out to be a mixed bag of good intentions (Hamilton's strength) and profound, manipulative cynicism (a Baker talent) that Bush cannot find congenial. By blanketing a withering silence over the concept and term, the report even rejects Bush's contention that Iraq is the central front in the "global war on terrorism."

The value of the report lies not in what it says about Iraq and certainly not in the insincere scheme the group hatched–without seriously consulting Israel–to have Israel hand the Golan Heights back to Syria as part of an American-led "New Diplomatic Offensive."

House Ethics Committee on the Mark Foley Affair

The House ethics committee's investigating subcommittee released its report on the Mark Foley affair on Friday afternoon, typically a time for dumping bad news.

But the subcommittee was still hearing testimony four days before, on December 4, and its (unanimous and bipartisan) report I think is a solid and serious product. The subcommittee makes a clear distinction between the worrisome but not sexually explicit E-mails that were circulating starting in 2005 and the sexually explicit instant messages. It says that it found no evidence that any House member or employee saw the IMs before September 29, the day that ABC News put them on its website and Foley resigned. (Of course, Foley saw them before September 29, but since he resigned he is no longer a member and the ethics committee ceased to have jurisdiction over him.) The subcommittee decided that no disciplinary action was in order, though it made it very clear that the IMs would have justified the expulsion of Foley from the House.

While the subcommittee did not recommend an official reprimand, its report does in fact reprimand members and employees. It concludes that Rep. Jim Kolbe should have asked to see the IM from Foley that a former page told him he was disturbed by. Of the E-mail that a former page reported to a staffer for Rep. Rodney Alexander, the subcommittee found that "few of the individuals who ultimately came to participate in those events handled their roles in the manner that should be expected given the important and sensitive nature of the issues involved." It criticizes the refusal of Alexander's staff to show the E-mails to then Clerk of the House Jeff Trandahl after press inquiries were made in November 2005, stating that the refusal "defies logic given that the reporter already had copies of them, and that Rep. Alexander's office gave a copy of one of the page's E-mails to the reporter." It found that Speaker Dennis Hastert's counsel Ted Van Der Meid "showed an inexplicable lack of interest in the E-mails and the resolution of the matter with Rep. Foley, particularly in light of his prior knowledge regarding concerns raised by Jeff Trandahl about Foley's close (albeit not sexual) interaction with pages." It also says he should have shared his concerns with superiors in the speaker's office or with the speaker himself.

Despite Hastert's testimony that he had no recollection of the Foley E-mails being mentioned to him by Majority Leader John Boehner and campaign committee Chairman Tom Reynolds, the subcommittee accepted their testimony that they had told him and criticizes them for not being more curious about the E-mails and for not asking Hastert to take action. The subcommittee found that Trandahl did much to rein in Foley over many years but criticizes him for dealing solely with Van Der Meid and not going to the speaker himself. The subcommittee criticizes Page Board Chairman John Shimkus for not learning "more facts about the E-mails before concluding that he should handle the matter himself without informing the other members of the Page Board or seeking their input."

The subcommittee report also notes that two Democratic staffers, including the press secretary of the Democratic Congressional Campaign Committee, obtained copies of the E-mails sent to Alexander's office and shopped them around to the press. The St. Petersburg Times and the Miami Herald after some investigation decided not to run stories. These Democrats, like several of the Republicans, treated this as a partisan matter, not an institutional matter.

The subcommittee has been criticized in some quarters for leniency in this case. I think its decision not to recommend disciplinary action is defensible. As the subcommittee says, not every act of bad judgment violates the rules of the House, and judgments should be made on the basis of what the individuals knew at the time, not on the basis of what everyone has come to know later. I thought this subcommittee would do a good job, and I believe it has.

Iraq and the Oil Trust

In my Creators Syndicate column for this week, I once again call for an oil trust fund for Iraq similar to Alaska's Permanent Fund. Now I see from the Iraq the Model website that such a plan is being considered by Iraq's parliament. The proposal the website describes has got a few too many gimmicks to suit me–lower payments for children, no payments for people with income above a certain level–but it's still worth at least two cheers.