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December 10, 2006
Lactose Intolerance

Build a better mousetrap, and the world will beat a path to your door. Ralph Waldo Emerson's advice has informed American self-perception of their economy: inventive, individualistic, and dynamic. However, milk apparently gets different treatment than mousetraps, as Dutch immigrant and dairyman Hein Hettinga just discovered:

In the summer of 2003, shoppers in Southern California began getting a break on the price of milk.

A maverick dairyman named Hein Hettinga started bottling his own milk and selling it for as much as 20 cents a gallon less than the competition, exercising his right to work outside the rigid system that has controlled U.S. milk production for almost 70 years. Soon the effects were rippling through the state, helping to hold down retail prices at supermarkets and warehouse stores.

That was when a coalition of giant milk companies and dairies, along with their congressional allies, decided to crush Hettinga's initiative. For three years, the milk lobby spent millions of dollars on lobbying and campaign contributions and made deals with lawmakers, including incoming Senate Majority Leader Harry M. Reid (D-Nev.).

Last March, Congress passed a law reshaping the Western milk market and essentially ending Hettinga's experiment -- all without a single congressional hearing.

"They wanted to make sure there would be no more Heins," said Mary Keough Ledman, a dairy economist who observed the battle.

The long Washington Post article should be required reading for anyone interested in national politics and economics. Members of both parties have vested interests in keeping farm and dairy subsidies in place, and the government-run system has developed over the decades into a syndicate that protects itself rather ruthlessly. The American consumer and taxpayer pays for it all, with every glass of milk and every bite of cheese.

In this case, the threat that Hettinga represented came to the attention of an unlikely pair in the US Senate -- Jon Kyl and Harry Reid. Both have worked to assist dairies in Nevada to avoid the federal combine pricing; both have worked to make sure Hettinga couldn't do the same. It's a classic case of how cronyism winds up at the heart of every government-run program, and how political contributions act to directly distort what should be open markets.

As for Hettinga, he was not exactly a babe in these political woods, and he has decided to fight the system in the usual way. He's suing the federal government, which promises to do nothing except add a level of judicial activism to the federal interference with the price of milk. It's hard to see any solution to this that includes federal control of the dairy markets.

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Posted by Ed Morrissey at December 10, 2006 2:55 PM

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