ANALYSIS: How American Government Became Encrusted with Subsidies

By Published on August 16, 2015

You probably never knew of the federal funding of museums commemorating America’s long-gone whaling industry. The funding existed for nearly nine years, until fiscal 2011, because almost no one knew about it. A mohair subsidy continues six decades after it was deemed a military necessity in the context of the Cold War. The subsidy survives because its beneficiaries are too clever to call attention to it by proclaiming it necessary, which of course it isn’t.

To understand these two matters is to understand how American government functions. And why James Madison, whose flinty realism is often called pessimism, was too optimistic. Federal funding went to whaling museums in three states from which whalers went to sea (Massachusetts, Alaska, and Hawaii) and in Mississippi, which was not a home of whalers but is the home of Republican senator Thad Cochran, an Appropriations Committee titan. The whaling program, which cost about $9 million in its last year, was administered by the Department of Education. It objected to doing this, which is one reason the funding ended: Government changed because part of it was annoyed. Also, a congressman publicized the subsidy.

The $9 million was a piddling smidgen of a fraction of the federal budget, as is the $5 million wool and mohair subsidy. It was smuggled into the 1954 National Wool Act, which was supposed to stimulate wool production, lest we run short when next we need 12 million uniforms for a two-front world war. Mohair had nothing to do with this supposed military necessity, but mohair producers wanted a seat on the gravy train. Their subsidy became briefly notorious and briefly died (it was resuscitated when no one was any longer paying attention) after Jonathan Rauch called attention to it in his 1994 book Demosclerosis. Rauch’s neologism describes government that is resistant to change because it is solicitous toward many minor but attentive factions.

These clients thrive in obscurity because of the law that governs much of government, the law of dispersed costs and concentrated benefits. Taxpayers do not notice, unless someone like Rauch tells them, the costs of subsidizing whaling museums or mohair, but the subsidies mean much to those who run the museums or produce the mohair. Similarly, consumers do not notice the cost of sugar import quotas added to the sugar they consume, quotas that substantially enrich sugar producers. And so on and on. This is why minorities constantly manage to milk money from majorities, which is not how Madison thought things would work. Greg Weiner, an Assumption College political scientist, notes that in Federalist Paper 10 Madison confidently says minority factions will be defeated by “the republican principle,” which enables the majority to trounce the minority “by regular vote.”

Read the article “ANALYSIS: How American Government Became Encrusted with Subsidies” on nationalreview.com.

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