When reading about President Trump’s promise to the farmers, the article kept mentioning how it will bring back the “government cheese” event from Jimmy Carter’s campaign. Prior to reading this article, I had not even heard of the term “government cheese”. To hear about more on the subject, I listened to the Planet Money podcast on Big Government Cheese.

Within this podcast, I was informed about how in 1976, Jimmy Carter was running for president and proposed to give farmers an equal break. He planned to do this by raising milk prices by 6 cents per gallon every 6 months. Carter followed through on his promise to the farmers and tried to figure out a way the government can step into the market to make it happen. They figured out they can either make demand greater or lower supply. USDA decided to go down supply the chain one step to find milk products that could store well. They came to the conclusion of cheese, specifically cheddar cheese. The government sent out sheet of paper to farmers that states they will buy as much butter, cheese or nonfat dry milk they are willing to sell at certain prices. By the government buying more cheese, cheesemakers buy more milk which in turn drives milk prices up.

Consequently, the government had an issue with storing cheese and had to store cheese in caves in Kansas because they had no other place to store the cheese. By early 1980s, the dairy support plan for cheese was costing tax payers around 2 billion and the government was buying 1 in every 4 pounds of the country’s cheddar cheese. This dilemma reached the point where the Agricultural Secretary held up hunk of cheese in a press conference and talked about the mold deteriorating cheese and how there wasn’t a market for it. A new program was created to give cheese away through food banks so that the market for cheese wouldn’t take a huge hit.

Government cheese became a symbol of crappy government handout as well as a parable in how government intervention in markets can have a butterfly effect, Jimmy Carter makes an innocuous announcement to help farmers and then the government ends up spending billions of dollars filling caves with cheese they couldn’t get rid of fast enough. The most prominent “Big Idea” for this course that is brought to our attention within this podcast is unintended consequences. Failing to acknowledge what might happen to the markets or the fact there will eventually be a large surplus for cheese came come back to bite the government. After finding the solution of food banks, the caves slowly emptied and the price for milk automatically froze every 6 months. The government did not foresee that price controls would be hard to unwind once they are started. Because of this, the government pondered how to get out of cheese business without harming the farmers too much. They ended up paying money to the farmers to encourage them to stop producing milk.

Due to the argument that our country has to be able to produce its own food because if our farmers go out of business, then we become reliant on other countries for food which is a security risk. It’s one thing for the government to provide stability and it is another to step into the market in a big way and possibly the wrong time because playing with price controls is like playing with fire.

(image on the left from twitter and image on the right from the podcast)