Cornography: Perverse Incentives and the United States Corn Subsidy

Abstract

U.S. corn subsidies alter incentives for corn growers, agricultural producers, and the manufacturers of countless corn-based products. The ripple effects of these changed incentives contribute to a range of environmental problems, increase domestic healthcare costs, and create distortions in international food and labor markets. Despite mounting political opposition, U.S. regulators and legislators have proven unwilling to confront these externalities and continue to actively fund subsidies Farm Bill after Farm Bill. The persistence of these policies can only be properly understood when viewed in the context of the incentives and structural constraints facing policymakers themselves. This paper attempts to understand both the mechanisms through which the corn subsidy alters incentives and the mechanisms through which corn subsidy legislation is reproduced decade after decade. The paper begins with a historical overview of American agricultural legislation and attempts to elaborate the ways that the impact of the U.S. subsidy systems radiates throughout the economy. Lastly, the paper attempts to analyze the incentives and constraints on legislators and regulators that have produced the distorted incentive structures of American food policy as reflected in the corn subsidy.