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

  • Gordon C. Rausser

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.

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.6.3.133
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Article provided by American Economic Association in its journal Journal of Economic Perspectives.

Volume (Year): 6 (1992)
Issue (Month): 3 (Summer)
Pages: 133-157

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Handle: RePEc:aea:jecper:v:6:y:1992:i:3:p:133-57
Note: DOI: 10.1257/jep.6.3.133
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  1. Bhagwati, Jagdish N, 1982. "Directly Unproductive, Profit-seeking (DUP) Activities," Journal of Political Economy, University of Chicago Press, vol. 90(5), pages 988-1002, October.
  2. Foster, William E. & Rausser, Gordon C., 1990. "Price-distorting compensation serving the public interest," CUDARE Working Paper Series 567, University of California at Berkeley, Department of Agricultural and Resource Economics and Policy.
  3. Love, H. Alan & Foster, William E., 1990. "Commodity Program Slippage Rates For Corn And Wheat," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 15(02), December.
  4. Rausser, Gordon C. & Lapan, Harvey E., 1979. "Natural resources, goods, bads and alternative institutional frameworks," Resources and Energy, Elsevier, vol. 2(4), pages 293-324, December.
  5. Hochman, Eithan & Zilberman, David, 1978. "Examination of Environmental Policies Using Production and Pollution Microparameter Distributions," Econometrica, Econometric Society, vol. 46(4), pages 739-60, July.
  6. Gardner, Bruce L, 1987. "Causes of U.S. Farm Commodity Programs," Journal of Political Economy, University of Chicago Press, vol. 95(2), pages 290-310, April.
  7. Rausser, Gordon C. & de Gorter, Harry, 1988. "Endogenizing policy in models of agricultural markets," CUDARE Working Paper Series 482, University of California at Berkeley, Department of Agricultural and Resource Economics and Policy.
  8. Becker, Gary S, 1983. "A Theory of Competition among Pressure Groups for Political Influence," The Quarterly Journal of Economics, MIT Press, vol. 98(3), pages 371-400, August.
  9. Becker, Gary S., 1985. "Public policies, pressure groups, and dead weight costs," Journal of Public Economics, Elsevier, vol. 28(3), pages 329-347, December.
  10. Gordon Rausser & Richard Howitt, 1975. "Microeconomics: Stochastic Control of Environmental Externalities," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 4, number 2, pages 271-292 National Bureau of Economic Research, Inc.
  11. Rausser, Gordon C, 1974. "Technological Change, Production, and Investment in Natural Resource Industries," American Economic Review, American Economic Association, vol. 64(6), pages 1049-59, December.
  12. Rausser, Gordon C., 1982. "Political economic markets: PERTS and PESTS in food and agriculture," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt6ct5s49t, Department of Agricultural & Resource Economics, UC Berkeley.
  13. Zusman, Pinhas, 1976. "The Incorporation and Measurement of Social Power in Economic Models," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 17(2), pages 447-62, June.
  14. Rausser, Gordon C. & James, Chalfant A. & Love, H. Alan & Stamoulis, Kostas G., 1986. "Macroeconomic linkages, taxes, and subsidies in the U.S. agricultural sector," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt1nj635tk, Department of Agricultural & Resource Economics, UC Berkeley.
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