Predatory Versus Productive Government: The Case of U.S. Agricultural Policies

This essay will argue that agricultural policy in the United States has led to both the enhancement of efficiency through "productive policies" and the transfer of wealth and income to special interests through redistributive or "predatory policies." These two activities can be labeled as PESTs and PERTs. PEST policies, or political-economic-seeking transfers, are meant to redistribute wealth from one social group to another and are not explicitly concerned with efficiency. In contrast, PERTs, or political-economic resource transactions, are intended to correct market failures or to provide public goods; these policies have neutral distributional effects, at least in design. A review of the history of public policy in agriculture reveals not only tension between the PERT and PEST roles of the public sector, but also some coordination between these two types of activities. As different interest groups pressure the political process, the government trades off PESTs and PERTs in its attempts to acquire, balance, and secure political power. At times this has led to combinations of programs that appear incoherent. In such a world, the challenge for economists is to design and advocate policies that are both economically productive and politically sustainable.