Why Not Web Advertising Insurance?

A blog about business and economics.
Aug. 28 2012 5:19 PM

Why Not Web Advertising Insurance?

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COLBY, KS - AUGUST 24: Dry stalks of corn, ravaged by drought, stand in a failed corn field on August 24, 2012 near Colby, Kansas.

Photo by John Moore/Getty Images

The just-released Republican Party platform is, naturally, largely a paen to the virtues of free markets but as is often the case in American politics there's an exeption for agriculture:

Agricultural producers and the jobs they generate throughout the entire food chain must confront volatility in both the weather and the markets. We support farm programs that enable them to manage the extraordinary risk they meet in the fields every year. These programs should be as cost-effective as they are functional, offering risk management tools that improve producers’ ability to operate when times are tough. [...]

Programs like the Direct Payment program should end in favor of those, like crop insurance, that help manage risk and are counter-cyclical in nature. We support the historic role of the USDA in agricultural research that has transformed farming here and around the world. Because food safety is a major concern of the American people, we urge Congress to ensure adequate resources for the Department’s responsibilities in that regard.
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What's interesting here is that by privileging crop insurance over direct payments, the text here creates a kind of veneer of free marketness. But while of course insurance against risk is an excellent thing, the question is why should farmers in particular benefit from a federal subsidy for their business model? Farmers are hardly unique in being exposed to weather related risks. Beach communities suffer when it rains, ski resorts suffer when it doesn't snow, ice cream trucks need hot days, etc.

And there are more risks in the world than the weather. We're all constantly exposed to random elements of bad luck. That's one reason that I favor broad social insurance against risks—things like Social Security and a universal health insuance program. But what's the logic behind offering insurance to one particular set of businessmen?

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.