In the United States, politicians, bureaucrats, and farmers confronted a fractured administration, partisan wrangling over policy alternatives, and political conflicts among producers of various commodities. Interest group pluralism in the making of farm policy assured decisions on agriculture were the product of coalition and compromise between urban and rural interests in Congress. The contemporary politics of horticulture and agriculture reflect these institutional developments. Declining farm-sector employment, mounting stocks of surplus commodities, and increasing international trade in farm products prompted critics both in and outside government to call for the retrenchment of farm subsidies. But because institutional effects vary according to the types of policies governments pursue, efforts to dismantle portions of the agricultural welfare state presented policy makers with a new set of tasks and, consequently, a new array of institutional assets and liabilities. (Baumgartner and Jones 1998)
Whereas the regulation of agricultural production and prices benefited from a close policy partnership between farm organizations and the government, retrenchment required policy makers to sever these ties. Whereas market intervention flourished in institutions that insulated policy decisions from external influences and restricted access to a select few, retrenchment benefited from overlapping policy jurisdictions and a pluralistic interest group environment. Whereas electoral alliances between farm organizations and political parties fueled the development of a mature subsidy regime, clientele relations made the reduction of farm subsidies politically difficult. In other words, differences in the historical development of the agricultural welfare state shaped the capacity to reduce farm subsidies in the United States.
Gary Becker, in his theory of competition among interest groups, argued that the social cost of subsidies influences lobbying capacity. According to Becker, higher costs encourage lobbying by taxed groups and discourage lobbying by subsidized groups. (Becker 1983) Politicians will respond to this change in political pressure by adjusting the policy mix of subsidies and taxes.
According to Peltzman, lower subsidies will maximize political support for reelection-seeking politicians, other things being equal,“as long as deregulation benefits some part of the relevant coalition.” (Peltzman 1989) In the case of horticulture the rising cost of farm subsidies will stimulate political pressure by taxpayers, consumers, and so on, possibly leading to retrenchment and deregulation.
In fact, political pressure for farm subsidy retrenchment did increase with the rising cost of the agricultural welfare state in the 1970s and 1980s. Specifically, the budgetary cost of price support programs increased as low farm prices and excess supplies raised public expenditures for export subsidies, price support payments, and other government aids. In the European Community, the cost of price support policies doubled in real terms between 1974 and 1984, while export subsidies increased at an annual rate of 13.5 percent over the period. (Baumgartner and Jones 1998) In the United States, expenditures for the Commodity Credit Corporation grew by more than 20 percent per year in real terms between 1976 and 1986. (Baumgartner and Jones 1998) Fiscal pressures became an important component of agricultural politics in Europe, the United States, and Japan.
Price support policies also sparked trade conflicts over horticulture and agriculture. In order to maintain high domestic prices for agricultural products, governments restricted access to cheaper imports through quotas or tariffs, and subsidized exports in order to shift excess production on to world markets. In the initial decades after World War II, when farmers produced almost exclusively for national markets, countries could effectively “export” the cost of domestic price adjustment with tariffs and subsidies. At the behest of the United States, in fact, the General Agreement on Tariffs and Trade (GATT) included exemptions from international trade law for farm trade barriers used in conjunction with domestic price support policies. (Baumgartner and Jones 1998)
S. position changed with the dramatic rise in agricultural trade during the 1970s. The value of U.S. farm exports increased 150 percent in real terms between 1970 and 1980. (Baumgartner and Jones 1998) With the help of export subsidies, French farm exports doubled between 1970 and 1980, a decade in which France became the second-leading exporter of farm products after the United States. (Baumgartner and Jones 1998) Facing increased competition in world markets, the United States became a forceful proponent of farm trade liberalization. The inauguration of the Uruguay Round in 1986 pushed agriculture to the top of the multilateral trade agenda, but disagreement over export subsidies and market access delayed conclusion of the round until 1994. The impasse over agriculture resulted in threats by the United States in farm trade disputes with the EC and Japan. The threat of retaliation highlighted the cost of agricultural protection for other sectors of the economy and contributed to domestic pressures for farm subsidy retrenchment in Europe and Japan.
Finally, environmental activists linked government policies that encourage heavy input use to the destruction of wetlands and groundwater contamination from pesticide runoff and concentrated livestock populations. In the early 1990s, environmental and consumer concerns merged to include food-borne diseases, the health effects of pesticides, and new food technologies such as genetically modified organisms. (Baumgartner and Jones 1998) Because of the link between agriculture and environmental risks, environmental groups pressed for reductions in the subsidies that encouraged intensive production practices.
Thus, the rising cost of farm subsidies for taxpayers (due to higher government expenditures on horticulture and agriculture), producers of manufactured goods threatened by trade retaliation, and environmentalists and consumers concerned about agricultural production practices can increase political pressure for agricultural retrenchment. But retrenchment advocates still confront significant political hurdles to any changes in policy. Experiences in agriculture support the argument by Paul Pierson that “retrenchment is a distinctive and difficult political enterprise.” (Pierson 1994) Retrenchment is characterized by an asymmetric distribution of costs and benefits. In Pierson's words, it imposes “immediate pain on specific groups, usually in return for diffuse, long-term, and uncertain benefits.” (Pierson 1994)
In the case of horticulture and agriculture, subsidy cuts impose an immediate and identifiable cost on farmers, while the benefits of agricultural retrenchment, such as lower taxes, better relations with trading partners, or a cleaner environment, are distant and diffuse. Because this asymmetry creates a clear organizational advantage for groups threatened by retrenchment, farmers will likely overcome collective action problems and “inflict political retribution for … visible assaults on programs they favor.” (Baumgartner and Jones 1998) When risk-averse politicians calculate the political costs and benefits of retrenchment, they will likely support the status quo and oppose cuts in subsidies.
In his work on retrenchment, Pierson draws substantially on the concept of “blame avoidance” developed by R. Kent Weaver. (Pierson 1994) Blame avoidance is a rational response to the asymmetric distribution of costs and benefits. Concentrated policy effects, such as subsidy cuts, are more visible than diffuse ones, such as lower taxes, that might result from retrenchment. The negativity bias in constituency evaluations of politicians compounds the effects of this asymmetry. According to Weaver, “Voters are more sensitive to what has [been] done to them than to what has been done for them.” (Weaver 1984) In the context of retrenchment, as Pierson shows, blame-avoidance strategies include the use of side payments to buy off potential opposition to policy change, the selective distribution of pain and gain in order to divide those interests opposed to retrenchment, and the use of policy mechanisms that obfuscate or hide the true cost of retrenchment proposals. (Pierson 1994)
Unless politicians can employ these strategies and minimize the risk of political retribution, it is unlikely that they will advocate retrenchment.
This suggests a status quo bias in policies with concentrated costs and diffuse benefits. According to Weaver, “Because costs and benefits are perceived asymmetrically, policymakers fear that new policies will not win them as much support as dismantling the old ones will lose. They are thus afraid to dismantle policies.” (Weaver 1984)
But the presence of an entrepreneurial leader who will promote agricultural retrenchment as a political issue is often insufficient to facilitate policy change. Institutions, by design, restrict the introduction of certain issues into policy debates through agenda control and other instruments. Consequently, advocates of policy change also try to influence which institutions have authority over policy. Baumgartner and Jones refer to this institutional location of decision authority as the policy venue. Because a particular policy venue may be inherently biased toward the status quo, entrepreneurs often look for opportunities to shift the location of policy authority toward a more hospitable venue. (Baumgartner and Jones 1998)
The opportunity for strategic venue change of this kind is particularly important in cases of retrenchment. Quoting Pierson again, the principal obstacle to retrenchment is opposition by well-placed client groups “who can inflict political retribution for visible assaults on programs they favor.” (Pierson 1994) Retrenchment is a distinct and difficult political enterprise. The concentrated cost of subsidy reductions and the diffuse benefits from lower taxes or food prices make agricultural retrenchment a risky endeavor. Politicians will not support retrenchment as a policy option unless they can minimize the risk of political retribution by farmers through successful blame-avoidance strategies. For the political entrepreneur, however, lower farm subsidies may hold the promise of large political rewards. For these politicians, retrenchment success depends on the capacity to shift the location of agricultural policy decisions to a venue more favorable toward retrenchment.