Mrs. Westerholm is a Registered Nurse, housewife, and student of liberty of Inglewood,
If television, newspaper, and radio comments have caused your youngster to ask occasional highly embarrassing questions about such assorted small gems as price support programs, parities, subsidies, and surplus commodities, I would first like to extend a sympathetic welcome to the Puzzled Parents Club. And then I’d like to tell you about a wonderful little tomato-patch.
Now, maybe you have had better luck than we had in answering “What’s a parity?” by words alone—in which case your membership in the P.P.C. is hereby cancelled! We ruefully discovered that quotations from the dictionary and long explanatory chats just weren’t getting us anywhere except into further confusion.
For one thing, it is mighty difficult to give a calm, clear explanation of a process about which you feel anything but calm; and secondly, this whole subject of agricultural price control is an untidy mixture of both physical and intangible factors, some of which can be explained to a child by using familiar examples, and some of which cannot. Finally, you don’t easily explain just one part of an octopus. The establishment of a parity leads to a price control, which leads to crop control, which leads to a subsidy, which often leads to a surplus, which has to be stored; all of which increases government spending and debt, which increases inflation, which influences the original parity—and brings us right back to the P.P.C.!
We wrote for help to an uncle who has been a ruggedly independent, modestly successful farmer for some fifty years. We suspected just a touch of sarcasm when his answering letter opened with: “Can’t be much help to you right now, since I’m smack in the middle of setting out my last crop of summer subsidies; but when I finish up—at parity, naturally—I’ll sit down and write you all about it. In triplicate copies, of course. In the meantime, if you’re tired of sanity, try farming….”
We chuckled in appreciation of his wit, but then took a second reading and saw part of a real answer peeping out of the sarcasm. We had a fair-sized back yard, and an empty bulb-bed that was lying fallow for the summer; so we’d just follow that snide advice about farming—on a miniature scale.
Our ten-year-old son thought it a great idea to have his own garden plot, together with the proceeds there of, and cheerfully agreed to follow whatever rules and regulations we might set up. After much serious study he decided upon a crop of tomatoes. The local nurseryman was happy to supply him with a flat of brave young plants—following due crossing of palms with silver—and even gave him helpful detailed advice about their planting and care. (I had offered the lad an agricultural loan, at a modest 41/2 per cent interest, but the little tight-wad had saved enough out of his spring chore money to cancel out that potential lesson in economics!)
The next morning, with a light heart and a long hoe, he started industriously preparing the bed which would grow the tomatoes, which he would sell to the neighbors, for money which would purchase the new baseball mitt—which as far as he was concerned was the real reason for this crazy little tomato-patch, anyway. Perfectly simple and logical. And about two blisters and one sunburned nose later, he was ready to start setting in the plants. Obviously, the time had come. So out we went, and called for a Rules and Regulations Recess.
Subsidized Acreage Control
Right there in the warm sensible sunlight, we proceeded to explain that our neighborhood could be reasonably expected to consume only a certain quantity of tomatoes. Now, if too many tomatoes were produced in the neighborhood, he would have to sell his tomatoes at a lower price, in order to entice people to buy his instead of someone else’s. This in turn would force the other tomato-growers to lower their prices to compete with him—the same grade tomatoes having little individually to recommend them to the buyer, other than price. If these prices went low enough, some of the tomato-growers might actually lose money. Since we didn’t want such a catastrophe to occur, we could permit him to plant only a certain portion of his “acreage” in tomatoes. We call this crop control.
(We carefully staked off the last three feet of the bed.) However, being a benevolent “government agency,” we would pay him in cash for this portion of his crop which we were not allowing him to plant.
(We solemnly handed him three one-dollar bills.) And this, we informed our amazed son, was what was known as a subsidy.
He looked at us. He looked at the staked-off part of the bed. He looked at the three crisp bills in his grimy hand. Finally he ventured, “O.K. So you’re the government agent, and you don’t want too many tomatoes grown; but it wouldn’t be fair to make me just give up part of my own crop for free—so you pay me for it. Right?”
“That is reasonably correct,” we confirmed.
“And that’s what a subsidy is?”
“In essence, yes; although it’s not done quite as directly as this. A subsidy is simply a grant of money.”
“Well, it doesn’t make much sense to me!” he stated.
“How true,” we murmured.
He went back to work, carefully setting each tiny green plant in place and pressing the rich soil firmly around the tender roots.
While he worked, we talked. He asked how the money to pay these subsidies was obtained; and the answer, that it came from all of us by way of taxes, was received in thoughtful silence. A few more plants went in, and after a long look at the marked bed, he had another question. How had we decided how much of his patch to stake off; and how much to pay for it?
Statistical Complications
We admitted that for the sake of example we had just guessed at his three-foot area, and three-dollar subsidy; but that the actual government employed many trained experts who arrived at the various figures concerning the different commodities and localities involved. They too made guesses, but much more educated ones than ours—based on population, previous annual consumption rates (clear back to 1910!), rainfall figures, long-range weather predictions, present market trends, and so on. Then they correlated all of this agricultural data with the statistical records regarding national average industrial wages, cost-of-living estimates, and current purchasing power of the dollar. By manipulating these two sets of figures carefully, they arrive at a final total price which is supposed to equalize the pay-per-hour of the farmer to that of the industrial worker. This final figure is what we call parity.
Ideally, if all the educated guesses were correct, there would be just enough tomatoes grown to fill the actual demand; and the prices received by the farmers would total out at the end of the year to yield them as much pay per hour as industrial workers received. (Based on a purchasing power ratio established during the 1910 [1909-1914] period.)
In short, parity literally means equality; so to achieve parity, you juggle predicted production and predicted consumption—and balance the difference with subsidies.
“Does it work?” asked my bright-eyed son of the soil.
“Well, now that you mention it—no.” we replied.
“Oh brother!” he moaned. “Let’s go have lunch!”
And so we did.
The days passed, the sun shone, the weeds were routed, the water flowed, and the plants grew. The stakes were set, and cord support-lines were strung. Everywhere except on that starkly bare, rather reproachful last three feet. As the plants grew, so did the talking. “The Cat” opined that since there are so many different crops grown—not just tomatoes—it must take an awful lot of experts to figure out all of those different parity prices every year. We agreed. He pursued the thought that this involved an awful lot of salaries, and since these were government salaries, that meant that they were paid for out of taxes from everybody—not just farmers. We agreed. He concluded musingly that this somehow didn’t seem altogether fair. Again we agreed.
Surplus Commodities
The plants grew so well, and so thick (perhaps because he had set all the seedlings out in less space than they were intended to fill), that he had to start thinning them. It is not a pleasant task to destroy something you have nurtured and protected and assisted to attain growth; but he did the job efficiently, knowing that all of the plants would suffer if not enough space were provided for growth expansion and sun penetration. As he discarded the extra plants, he gave many a glance of pure disgust at that bare, wasted end-section! And then another possibility occurred to him. What if these plants grew more tomatoes than the experts had figured? How could the parity be maintained then?
Ah, yes, a good question. “Too much” is called surplus. “Products” are called commodities. Put them together and you have another one of those original terms with which we were so plagued—the surplus commodity.
What can one do with too many tomatoes? If they go on the open market, prices will automatically drop—following the old and irrevocable law of supply and demand. But if prices drop, it would also put those final profit figures at the end of the year at some point lower than established parity. And according to the experts, if parity is not maintained, farmers won’t have enough money to buy the stuff the city industrial workers make; and if the industrial workers can’t sell enough of their products to make enough money to buy farm produce, why everybody will go broke—and that’s called a depression.
Now, the government could buy the extra tomatoes. But then they must either destroy the tomatoes, which is virtually the same as simply destroying the public funds with which they were purchased; or they must be processed and stored, which is quite an expensive little procedure in itself, when accomplished on a national scale! An alternative would be to apply a price control; but this would leave the farmer still holding all those extra tomatoes—because the public will purchase extra amounts of a product only if the prices are low enough to be particularly tempting. So, the government would have to supply some form of additional subsidy to bring that annual farm profit up to the parity level, anyway. No matter how you figure it, it is going to cost money; which means either increased taxes or increased national debt—which will increase inflation.
The Point Sinks Home
It took quite a bit of digesting to get this all assimilated; but bless his heart, he managed it. “But, wait a minute! If you pay me more money for my surplus tomatoes, I’m just going to have to pay it right back by a bigger tax on the money I make. Right? So, I still won’t have gotten up to parity, because I won’t really end up with any more money to spend!”
“That’s almost the way of it, son. But to take it all the way, you must remember that these subsidies are paid for from public funds, and will have to be replaced by taxing everyone—not just the tomato-growers.”
He pondered this for awhile, and then came up with a rather neatly thought-out solution. “Seems to me that everybody would be better off if they just quit using all those experts, forgot about parity, let me grow my tomatoes like I want to, and left it up to me to take care of my own extra tomatoes. Gee whiz! Nobody made me grow too many! And look at all the money the government would save. They could maybe lower everybody’s taxes, and that way we’d all have more to spend.”
“Sounds fairly sensible,” we agreed, “but, what if you went broke some season?”
“Well, geeeee! Everybody takes chances—on losing a league game, or going out of business, or breaking a leg—or growing too many tomatoes. That’s just the way the little old cup-cake crumbles! Maybe you can’t win ‘em all. You just do your best.” And with that, he went back to work tying up his vines. And I went into the house and started cheerfully reviewing recipes for tomato relish!
All of this is why I spoke at the start about a wonderful little tomato-patch. Of course, it hasn’t taught our son nearly all there is to know about this one lone phase of economics; but he has a much better understanding than he had previously—and so do we. We hope this understanding may be helpful to him in the years to come. One commodity of which we never have a surplus is knowledge!
Right now, we are all up to our eyebrows in tomatoes. Even the three-year-old is doing her gallant small best to help Brother with his surplus! The neighbors are inundated in a flood of juicy plump red globes. But when anybody says anything about the incomprehensibility of agricultural support programs, we just grin and say: “Look—first you take one flat of tomato plants…”
***
Old Saw Revised
Before events the economy churned a penny saved was a penny earned—but now inflation’s made its dent: that penny’s worth but half a cent.
Jim Mcgoldrick
