There was a great short article in Forbes Magazine November 10 by George Leef.  It also brought back memories from my law school days when I wrote about a very similar topic.  Leef’s article was about the Raisin Administrative Committee—yes you read it correctly a Federal agency named the Raisin Administrative Committee.  If only it referred to the raisins of commercial fame, we would all be happy.  It does not.  It is a committee established in 1949 to regulate the production and sale of raisins by simply ordering the removal and confiscation of about half of the total amount produced each year.  Well, all you Berean followers know that if supply is suddenly reduced, maintaining current demand, the price goes up.  But it doesn’t go up enough to compensate the raisin growers (should we say grape fermenters?) enough to make up for the loss of raisins that could have been sold on the market.  So the raisin growers are not too happy, and one is taking the government to Federal court based on the Fifth Amendment takings clause.

He argues that the taking of his property (raisins are property) was done without any compensation, let alone just compensation, as required.  The Ninth Circuit Court, very liberal, threw the case out, but the Supreme Court sent it back down for a rehearing.  This time, of all things, the Circuit ruled that no compensation was necessary for personal property, only for real property. Since raisins are not real property, compensation was denied.   All I can say is “incredible!”  To say that only real property can be compensated is just a leap of apocalyptic proportions—I might be exaggerating just a bit.  I think the Supreme Court will have to overrule the Ninth (Short) Circuit again.  There is ample case law to squash this ruling and, I hope, to hold for the grower (and ultimately you and me, the consumers).

But the real problem is that we even have such agencies and that they have this kind of power.  I mentioned my law school days.  Back then I wrote about the Onion Board in South Texas, which regulated in minute detail the size, shape, color, and pretty much everything else about onions.  If your onions didn’t meet their standards, you had to throw them away.  Of course that helped prop up the price of onions for consumers, and with no benefit in return, unless you like uniformly shaped and sized, more expensive, onions.

I haven’t tried to count the number of such boards and commissions, but I expect there is one for just about every agricultural product.  And they raise prices for everyone who purchases those products.   In essence the agency acts as a sort of “go-between monopoly-like” entity.

Leef makes the excellent point that even if the courts strike down this particular intrusion, there are still many such agencies.  Moreover, it is really Congress that should address their existence by repealing the statutes under which they were created.  Ultimately this is a political problem.  Will Congress act?  It is hard to say.  On the one hand, agricultural interests do still favor many of these kinds of regulations.  And they are a pretty powerful lobbying group in the agricultural states.  On the other hand, many in Congress simply can’t see the regulations for what they are.  Some still live with the illusion that propping prices up artificially is good for the economy.  But perhaps the time has come when it dawns on politicians that consumers, who have been hurt already by the “late” recession, are bearing the brunt of these archaic regulations.  We can all hope so—and pass the over-priced raisins please.