Front Page Titles (by Subject) Protection for Farmers, Antony Fisher - Toward Liberty: Essays in Honor of Ludwig von Mises, vol. 1
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Protection for Farmers, Antony Fisher - Friedrich August von Hayek, Toward Liberty: Essays in Honor of Ludwig von Mises, vol. 1 
Toward Liberty: Essays in Honor of Ludwig von Mises on the Occasion of his 90th Birthday, September 29, 1971, vol. 1, ed. F.A. Hayek, Henry Hazlitt, Leonrad R. Read, Gustavo Velasco, and F.A. Harper (Menlo Park: Institute for Humane Studies, 1971).
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Protection for Farmers
|Poverty Level||Net Income at Tax Threshold|
|Two-child family (children aged 8, 10)||14||17||14||6|
|Four-child family (children aged 6, 8, 10, 12)||18||17||18||9|
There are “over 1, 500 different methods of means testing used by different local authorities and central government departments."!
In 1968 the average family income at which all taxes cancelled out benefits was just under £18 a week. The average family income was about £27 per week. Some may argue that taxes should cancel out benefits at the average family income of £27 per week, that families below the average should not subsidise others yet poorer. Others argue that the break-even point is too high—too near the average. Only one thing can be certain, that with a G. N. P. of £40,000M. and government expenditure of £22,000M., there must be fearful losses or wasted resources or ‘internal haemorrhages’, because of the lack of choice.
Must there not be serious defects if a family of husband, wife and one child in 1969 balanced taxes with benefits at only £620 per annum or £12 per week?15 If the average family income in 1969 was £28 per week, the family of three with an income of £28 per week would be paying £7.10/-d. per week more in taxes than it received in benefits from the government, thus leaving them with £20.10/-d., and on March 25th 1971 the ‘poverty level’ has been increased for some to £20 per week.
We in the United Kingdom and others in many countries are plunging through the stages of the age-old syndrome, which has more often run its course to confusion, death and destruction, than it has been corrected by intelligent action. Yet there must be hope.
On the 22nd January 1969 a British Labour Minister of Agriculture announced the end of both a compulsory marketing scheme for eggs and a £20M. subsidy to egg producers. These were to be phased out over two years. There is one small compromise; the Board is replaced by an “Authority” which has £3M. per annum to spend. Since total sales exceed £200M. per annum, the compromise is not likely to do harm.
The event attracted international interest and a Harvard Business School document referred to it as ‘unprecedented’. The ending of the Board and the subsidy by a ‘Socialist’ administration, which believes that the best interests of all are served by the minimising of individual choice, relieved tax payers of a subsidy payment of £20M. per annum. It has also freed egg producers to organise themselves in the best way to produce the highest quality egg, at the lowest price, at the right time and place. A compulsory situation has been replaced with a voluntary one. It is an irony of fate that the Egg Board was set up by a ‘Conservative’ Government.
This ‘unprecedented event’ is yet one more milestone in a developing story. Since 1945 I have been involved in three separate activities which have tended to point me in one direction. Demobilised from the R. A. F. in 1945 I bought a ‘mixed’ farm in 1946, whilst still working in the City of London. In 1953 having left the City I pioneered the broiler industry in the U. K. by founding the Buxted Chicken Company. A change of policy on my farm was made possible when a Conservative Government removed farm feed rationing. Progress is almost impossible when animal feed is rationed. Buxted became the largest integrated business in Europe with sales of £20M. per annum.
In 1946 I had asked advice of Professor Hayek, then at the London School of Economics, as to what, if anything, I could do about the wrong direction in which British policies were, and are still, taking my country. He advised me to keep out of politics and to set up an organisation to do independent economic research.
In 1956 the compulsory Egg Marketing Scheme was set up, supported by a huge egg ‘subsidy’.
Both my meeting with Professor Hayek and my entry into the broiler industry had their consequences on my future, which in turn had much to do with the unwinding of the Egg Board. My entry into the broiler -chicken meat - industry made me a leader in that section of British agriculture which, unhampered by government ‘aid’, grew rapidly and became probably more efficient than any other branch of British agriculture; it enabled me to found the Institute of Economic Affairs in 1955 and finance it through its early years. The needs of my business in producing chicken, made it necessary to study and disprove the policies on which the egg subsidy and Board were based. Either these ideas would eventually be applied to chicken and make my business difficult, if not impossible, or the Egg Board must be proved harmful, and not a benefit, and be wound up.
In 1954 Professor Karl Brandt invited me to read a paper on the State and the farmer at a Mont Pelerin meeting in Venice. The knowledge I have acquired over the years as a result of these annual meetings, has aided me in the intellectual conflict on the agricultural front.
The more clearly have I understood that a ‘subsidy’, despite its good intentions, can only harm producers, because by increasing the supply it does the opposite of that which is required, the more I have had a chance of convincing leaders in the industry and also civil servants. Further, because statutory marketing power endeavours to divorce marketing from production, and to make the producer more important than the consumer, both farmer and producer must suffer. Amongst many self-defeating activities attempts are then made to treat over-production as if it does not exist. Resulting huge costs are charged to the farmers on a communal basis, who do not understand what is hurting them. Problems arise, but the causes not being understood, usually more statutory powers are demanded (as they were for the Egg Board) and granted; and history indicates that this is the ‘road to serfdom’. The issues are further complicated because there will always be some producers who being ‘incompetent’ are forced out of business anyway.
I was told repeatedly between 1956 and 1968 that it was ‘politically impossible’ to get rid of the Egg Board and the subsidy and that I was an ‘extremist’. Very few in the industry understood what was happening. They wished to ‘reform’ the Board.
By 1967 the egg market was in disarray, but it became possible to analyse the trouble. Out of the total retail sales running at some £200M. per annum, some £100M. worth, and a rising figure, were being sold legally or illegally through the ‘free’ market. The ‘free’ market was returning 20% more than the Board and of the Board's payment 20% came by way of subsidy! It is easy to appreciate the forces that this differential let loose. I was able to prepare a written case both for a free market, also exposing the absurdities and their enormous costs, which the regulations produced. This was a matter of logic and analysis; and not of personalities.
There was a small legal free market over the farm gate and not practical for large producers, but by 1967 over half the eggs ‘in shell’ were reaching their customers mostly illegally by somehow avoiding the ‘benefits’ of Board and subsidy. I now think in terms of involuntary or compulsory situations as producing ‘losses’ and voluntary situations as producing ‘profits’. A poultry magazine headlined its comments on a lecture I gave to Wye College of London University as “Protection for Farmers? - Antony Fisher suggests that freedom provides better protection than legislation.”16
The British broiler industry was based on the assumption or principle that ‘chicken production is for consumption’ whereas the Egg Board, milk and many other marketing regulations were and are based on the assumption that ‘production is for the benefit of producers’. Such a basic false assumption led in the case of eggs to the trouble which I have described, and which became visible in mathematical terms.
A similar situation exists for the marketing of milk which has its own Milk Board. Here there is no ‘free market’ and therefore it is much harder to prove that the resulting interference with markets is producing colossal waste in resources. These have been analysed by Linda Whetstone in “The Marketing of Milk”.17 She makes a case which has so far not been found wrong in any respect by any individual or organisation. This is the more remarkable because the Milk Board has stated at intervals that it would prove the criticisms false. Unable to do so, it has avoided any discussion. That this avoidance can continue is unlikely.
“The Marketing of Milk” hit the headlines on its first day as have many Institute of Economic Affairs' publications. Linda Whetstone's photograph appeared on the front page of the Daily Express, a leading national newspaper. Like other I. E. A. publications it is written for students and they are recommended reading at universities and colleges. There were many references to the Whetstone paper in every relevant journal as well as in all the ‘dailies’. This is of interest because we are often asked “Who reads I. E. A. documents?” As Professor Hayek originally recommended, the I. E. A. was set up to search out the whys and the wherefores of economic cause and effect. It is not a political organisation and it therefore can and does achieve a high level of press reporting. The researchers do not have to compromise over principles. The I. E. A. most nearly achieves Socrates' “private station”.18 “This is what deters me from being a politician….he who will fight for the right, if he would live even for a brief space must have a private station and not a public one.”
I sent a copy of “The Marketing of Milk” to Professor von Mises. He was kind enough to approve it. So much so that Mrs. von Mises, with great consideration, typed out his brief comment. She rightly appreciated how much this would mean to the I. E. A., to Linda Whetstone and to me.
“The essay ‘The Marketing of Milk’ by Linda Whetstone is precisely the kind of economic monograph that is badly needed in order to substitute a reasonable analysis of economic conditions for the uncritical repetition of the complaints and wishes of various groups of people who are merely interested in the creation or preservation of conditions that further their own interests at the expense of the consumer.” (Signed) Ludwig von Mises.
It is my contention that a well argued and documented case, even alas one which is not sound, will have consequences. Keynes19 wrote “Practical men who believe themselves to be quite exempt from any intellectual influences are usually the slaves of some defunct economist….sooner or late it is ideas not vested interests which are dangerous for good or evil.”
I met Ralph Harris in 1947. A Double First in economics, he became a lecturer at St. Andrew's University, and by 1956 a part-time journalist. He agreed from January 1st 1957 to take over the running of the I. E. A. The remarkable output of this independent economic research organisation run by Ralph Harris and Arthur Seldon is still developing. Its income continues to rise but at no time has it been great. Today it is a recognised authority both in the business and academic worlds and its supporters include leaders in business, industry and banking. As Professor Hayek explained to me in 1946 there has been a gap in the supply of well-researched information to those whom he described as “the secondhand dealers in ideas”, the intellectuals of the press, radio, television and general communications' media. This gap the I. E. A. is filling.
In October 1970 Professor T. W. Hutchison20 wrote “1960 has been described as ‘the year in which everything really happened but which no one really remembers’. A great process of ‘re-thinking’ was apparently initiated which in the ensuing years was to bear, among other fruits, such typically ‘sixtyish’ phenomena as the exaltation of economic growth (quantitatively expressed in the 4% target) along with ideas for the rapid, and apparently almost costless, attainment of this objective either by talking about it (that is, by French planning, another cheerfully dubious use of the adjective ‘French’) or by ‘purposive’ planning and ‘purposive’ direction…. Professor Alan Day has very aptly referred to the ‘drugs of economic folly which were pumped into British public opinion in the early and mid 1960's.’ Pushing such drugs constituted one of the major growth industries of the early sixties.”
“But something else happened in 1960, an intellectual event of rather different tendencies and presuppositions. This was the publication of Hobart Paper No. 1, Resale Price Maintenance and Shoppers' Choice, by Professor B. S. Yamey, which had the remarkable distinction of being largely implemented in terms of legislation within four years of publication. On the eve of the seventies Hobart Paper No. 50 appeared. The Hobart Papers are important and unique as a series of, so far, some fifty studies, covering a wide range of the most significant problems of economic and social-economic policy.”
In the Preface Ralph Harris writes “When the Institute of Economic Affairs was established as an educational trust in 1957, its purpose was ambitiously set out as ‘fostering public understanding of economic principles and their application to the great public issues of the day’.”
I have personal evidence that it was indeed Hobart Paper No. 1 which without any particular such intention did result in changes in the law.
Professor Hutchison continues “A healthy and illuminating dialogue on the principles and main issues of economic policy would require that those economists who hold to this more ‘left’-inclined pattern of preferences and objectives should put forward their policy proposals spelt out in terms of economic analysis and generalisations of a similar quality, carefulness, consistency and rigour, and of comparable range, to those of the Hobart Papers. Instead, economists of different political colourings tend usually to talk past one another, intermittently complaining of the bias and prejudices of those who do not share their own bias and prejudices….”
“We must emphasise that we….are not, concerned to criticise or evaluate the value-premisses of policy-preferences of ‘leftish’ economists, but only the record of conceptual vagueness and positive predictions (or prophecies), for example, on how far various combinations of objectives can be simultaneously attained, how far the rate of growth can be rapidly raised by ‘purposive’ direction and planning, as well as regarding the dollar shortage and the development of the West German and Soviet Russian economies….
If predictive success is the test of the quality of the economics underlying policy proposals, then at least to put it negatively, there is nothing in the Hobart Papers remotely resembling the record of failure sketched out above. On the contrary, the quality of the ‘micro-economic’ work in the Hobart Papers on industrial and monopoly problems has been recognised even by economists who do not necessarily share the same value-premisses and political preferences…
It is fortunate for the enlightened discussion of economic policies, and, it is to be hoped, will be through the seventies, that at least from one direction, if not from any other, proposals are being put forward in terms of economic analysis and predictions of the technical quality, range, carefulness, consistency and rigour generally shown in the Hobart Papers.”
I have now seen the law changed in respect of egg marketing and R. P. M. The conditions for the success of economic sanity must be such a clear understanding of what needs to be done in the particular and in the general that this can be documented, so that others can understand the cause and consequence relationships. This is a difficult positive exercise and is vital. A negative case with appropriate prophecy may also be necessary, constructive, and useful when an economy is in or going to be in trouble. If such a case can quantify the measure of failure as I did for eggs, the chances of good consequences must be increased.
When Ralph Harris told me he was to publish R. P. M. I pointed out that to me the document was dull. His answer was that ‘the argument is so convincing’. I was later to hear the same words used in connection with the documentation provided to a Government Commission studying the problems of the Egg Board.
I am now out of the chicken business. Buxted Chicken became Allied Farm Foods and was taken over for a sum in excess of £20M. in 1969. But I am still a large farmer and still interested in achieving security for myself and fellow countrymen, and this leads me into asking more questions. We have been successful on two minor fronts. Will the same techniques work at higher levels of national policy? I am sure the answer is ‘yes’.
But we cannot claim that these developments indicate that success is in sight. However, they do indicate that understanding can produce results. As conditions deteriorate more ears will listen and our homework must be done and be ready. There are historical precedents which indicate that the syndrome can be reversed. Instead of a rapid succession of laws designed to reduce choice in an attempt to solve the problem, governments have deliberately set about increasing choice.
In “The Sumerians”21 Professor Kramer tells of Urukagina of Lagash in the year 2350 B. C. “It was in the course of….wars and their tragic aftermaths that the citizens of Lagash found themselves deprived of their political and economic freedom; for in order to raise armies and supply them with arms and equipment, the rulers found it necessary to infringe on the personal rights of the individual citizen, to tax his wealth and property to the limit…. Under the impact of war, they met with little opposition. And once introduced, the palace coterie showed itself most unwilling to relinquish the domestic controls, even in times of peace…. From one end of the state to the other, our venerable reporter observes bitterly, ‘there were the tax collectors’.”
When Urukagina had completed his reform which included establishing and regulating ‘honest and unchangeable weights and measures….’ Kramer tells us “…from one end of the land to the other, our contemporary historian observes, ‘there were no tax collectors’.”
Surely the most remarkable and reassuring of all determined efforts to maximise choice was the action taken by Dr. Erhard in Germany in 1948. Professors Eucken and Röpke understood what they were doing and were able from their ‘backrooms’ to supply Dr. Erhard with detailed legislation designed to maximise choice. The result has been acclaimed ‘a miracle’. It must be within our power to repeat this process in our own countries. We must continually convey the message that wrong policies will produce wrong consequences which we can forecast.
As the situation deteriorates, others will be prepared to listen to the measures required to correct the economic disease. ‘Socialism’ or the reducing of choice, is not wrong for ‘academic’ reasons, but because its application, despite good intentions, produces unpleasant consequences, especially for the poor. It is now becoming possible in the U. K., and no doubt elsewhere, to quantify in comprehensible terms the failure of compulsory ‘welfare’, and to document the policies required, which by maximising choice will achieve true and ever-developing welfare, especially for the poor, the less competent, whether they be employees, businessmen, farmers, intellectuals, or rich or disabled. The success or failure in achieving such desirable ends, is not a question of ‘politics’ or numbers, but of depth of documented wisdom and understanding.
Warde Fowler, W. The City State of the Greeks and Romans. London, Macmillan, 1966. p. 254.
ibid., p. 258.
Ardrey, Robert. The Social Contract. London, Collins, 1970. p. 293.
Yutang, Lin. The Wisdom of Confucius. London, Michael Joseph, 1958.
Freeman, E. & Appel, D. The Wisdom and Ideas of Plato. Premier Book, Fawcett Pubs, Greenwich, Conn. 1962. p. 20.
Ardrey, Robert. The Social Contract. p. 23.
Financial Times, London. 14th November 1970.
Streissler, E. (Ed). Roads to Freedom. London, Routledge & Kegan Paul 1969, p. 47.
Gold and World Monetary Problems. National Industrial Conference Board Convocation, Tarrytown, New York, Oct. 6–10, 1965. New York, Macmillan, 1966.
Friedman, M. The Counter-Revolution in Monetary Theory. IEA Occasional Paper 33, 1970.
Clark, C. Taxmanship. IEA Hobart Paper 26, 1964.
Economic Study Association, London.
Piachaud, D. Political Quarterly Review, January/March London 1971.
Economic Trends. H. M. S. O. February 1971. Table “A”
Poultry World, 25th December 1969.
Whetstone, L. The Marketing of Milk. IEA Research Monograph 21, 1970.
Freeman, E. & Appel, D. The Wisdom and Ideas of Plato p. 22.
Keynes, J. M. The General Theory of Employment Interest and Money. London, Macmillan, 1936.
Hutchison, T. W. Half a Century of Hobarts. IEA Hobart Special, 1970.
Kramer, S. N. The Sumerians. Chicago & London, University of Chicago Press, 1963.