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Mensa Quiz for the Day: Which is More Powerful, the Mohair Industry or the Financial Industry?

May 28, 2010

As further evidence of the futility of “folk activism,” consider the fate of mohair subsidies:

Federal price support for mohair was first enacted in 1947. The National Wool Act of 1954 established direct payments for wool and mohair producers. The purpose of the program was to encourage production of wool because it was considered an essential and strategic commodity. According to the Congressional Research Service, no similar purpose was stated for the mohair program. While this program was phased out in 1995, ad hoc payments were provided in 1999 and 2000 and the program was reinstituted in 2002. Eliminating this program once again would save taxpayers approximately $1 million a year.

Source:  Eric Cantor, Republican Whip, YouCut, in which the Republican leadership bravely proposes cuts, according to Cato, of .017% of the federal budget.

For as long as I can remember, mohair subsidies have been ridiculed as an example of government waste.  I know of no economist, left, right, or Marxist, orthodox or heterodox, who supports them.  Indeed, as far as I know neither the Democratic nor the Republican Party supports them.  Nor does The New York Times, National Public Radio, Rush Limbaugh, or Fox News.

On the positive front, one of the few real accomplishments of Newt Gingrich’s “Contract for America” was to eliminate the much-maligned mohair subsidies following the Republican victories in 1994.  And yet we see ad hoc payments returning in 1999 and 2000 and a full blown re-institution of the program in 2002.

If we can’t kill, and keep dead, one of the least supported and most easily ridiculed of all federal subsidies, how can we hope to eliminate subsidies supported by both Republicans and Democrats, supported by mainstream media, and supported by numerous respected academics?  Moreover, unlike mohair subsidies, the financial industry has thousands of esoteric ways to ensure that their interests are cared for, including technical rule changes that only a highly specialized expert can understand.  They don’t need to have their interests furthered by the crassness of mere subsidies.

Until and unless we change something fundamental about our electoral system (Hayek? Buchanan? Durant? Other suggestions?), we are destined to continue with government favors for the financial industry, most likely to include government guarantees, visible and invisible, explicit and implicit.  Therefore until we change something fundamental about our electoral system, we will continue to destroy the financial well-being of our nation every twenty years or so by means of making a few of the richest people in the history of the human race a whole lot richer.


  1. August 5, 2010 8:57 pm

    Can we be certain in which order reforms must come? Perhaps first we need a Constitutional Convention. Perhaps a visible public campaign not against any particular subsidies but against subsidies in general. Perhaps not a campaign against anything but for something — a Citizens Dividend. The money would have to come from somewhere, and then proponents could argue against subsidies and counterproductive taxes and for a commonsense sharing of the commonwealth — the essence of geonomics.

  2. Eelco Hoogendoorn permalink
    May 28, 2010 5:46 pm

    Yup. Excellent example. Libertarianism is simply systematically incompatible with an advance auction of stolen goods.

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