Mrs. Sidor's Chips

Recently a New York-based company, North Fork Potato Chips, won a $50,000 grant from the United States Department of Agriculture (USDA) to update its websites and brochures.

“Candice Celestin, spokeswoman for USDA Rural Development, said the Value-Added Producer Grant Program is designed to help companies expand their businesses to a wider audience.” Such a program would be news to many businesses. In years gone, businesses expanded by producing products that consumers needed in a way that was superior to their competitors.

Today, if you are a small business, it may be easier to get a government grant instead. If you are a large corporation, it may be easier to get huge government subsidies or, even better, get laws passed that block your competitors from doing business at all.

Government subsidized junk food? Government spending programs don’t shock us anymore. But how did this one come to be? The economics is quite simple. There are roughly 150 million Americans in the civilian labor force. That means the grant to North Folk costs each worker approximately 1/3 of a cent. Given that, how much time will the average worker spend opposing the grant? Of course we need to ask another question first: How much time will the average worker spend learning that such outrageous grants exist in the first place? No time at all is the answer. Those who choose to live off of others are counting on that answer to both questions.

Cleary there are perverse incentives at work here. The bureaucrats at USDA have a great incentive to lobby Congress for increases in their budgets and increases in their authority to subsidize anything they please. You and I have little incentive to opposing them. And once the budgetary authority is in place, North Fork Potato Chips has a greater incentive to apply for a grant than you have incentive to opposing it. The benefits of spending your money to subsidize junk food are concentrated in the hands of the USDA and those companies that receive your money.

Now, some may believe that such outrages will end when the “right” candidate is elected. History says that is a false hope. Elect Romney and perhaps no more potato chip grants are awarded; but wait a year and we will learn that a pretzel maker is subsidized. Reelect Obama and find that more subsidies to solar energy are granted; elect Gingrich and find that your money is subsidizing a nuclear power plant.

Two candidates, Ron Paul and Gary Johnson, promise to eliminate agencies that award these grants in the first place. This would represent a real savings to taxpayers. Instead of voting to eliminate a program that is costing them only pennies, taxpayers can choose a candidate that promises to save them thousands of dollars annually.

Clearly, given Paul’s and Johnson’s standings in the polls, a critical mass of taxpayers is not interested in such a deal. Americans say they are interested in cutting spending; but really, they aren't. They are only interested in cutting spending on programs that don't benefit them. If they were really interested in cutting spending across the boards, there would be a slew of Ron Paul-type candidates running.

A recent Heritage Foundation report found that nearly half (49.5%) of Americans pay no income taxes at all and that “Americans relying on the federal government received an average $32,748 worth of benefits in 2010.”

In other words, many Americans have a vested interest in living off the productivity of others. Carol Sidor, who owns North Folk Potato Chips with her husband Martin, said she’s “very pleased and excited” to receive the grant. If she has any qualms about taking taxpayer money, she doesn't express them. The truth is, in contemporary America, over the course of a lifetime, very few of us can claim to be subsidy free.

To be fair to the Sidors, they are probably fine people who work hard. They would probably tell you that they competed fairly for a grant; and they didn't create the grant program. They would probably add that they want to make a contribution to the economy and that the $50,000 they are receiving will be repaid many times in taxes. Wishful thinking! The government is a poor judge of which businesses will be successful; and in any case, taxpayers did not receive a share of Sidor’s business in exchange for the taxpayer’s involuntary largess.

Of course, Carol and Martin are small players in squandering taxpayer money. Aren’t there far bigger culprits to write about? Of course, but the Sidors help to teach us why government grows ever larger. When even fledgling potato chip manufacturers seek and receive government subsidies, the barn door has been opened wide for subsidies to banking institutions and automobile manufacturers.

The evidence is sad but true. Let's dispense with the niceties—Americans fundamentally believe it is okay to live off of others. To be sure, I am not writing about those born with a bad hand in the game of life. Some, such as the severely handicapped, are simply unable to provide for themselves. I am writing about those who could earn a living without subsidization but choose to do otherwise.

Until that fundamental belief changes, the size and growth of government will continue to unsustainable levels. While it may seem that an economic disaster is the likely result, it is not inevitable. Human beings have the power of choice. Before it is too late, we can make a choice—we can reflect on and discard the faulty belief that it is morally and economically justifiable to live off of others.