Sometimes apparently mundane cases best demonstrate economic ideas. A bill in my home state’s legislature would spend $250,000 to reduce deaths in farm-tractor rollovers. Whether wise or not, it’s an excellent chance to consider just what economic functions government should handle.
Recognize that while farm deaths are tragic, such rollovers are not a major problem for our society. About seven people a year in Minnesota, where I live, die in accidents involving a tractor in any way. Not all are rollovers, although these are the most common. Some 20 to 25 farmers a year die from all sorts of farming accidents. This is a fourth of all annual workplace deaths here, even though people working on farms are under 6 percent of all workers.
Understand that over 41,000 people die in the state each year. Nearly 2,500 of these are in accidents. About 700 are suicides. So occupational deaths in farming are about 1 percent of all accidental deaths and a tiny fraction of all deaths.
The question is not whether tractor deaths are reducible, but what role government should play.
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Most economists believe spontaneous market forces can resolve many questions of how we should allocate resources to meet our needs. Sometimes, however, market forces don’t bring an optimal outcome. These include when one party has great monopoly power, when there is imperfect or asymmetric information, when the actions of producers or consumers harm third parties, and when there are some goods or services with large spillover benefits, such as education or public safety, that are not adequately produced by pure market forces.
While the existence of one or more of these “market failures” may justify government action to restore efficiency, there is no guarantee that government will improve things. There is little dispute between liberal and conservative economists on the criteria for when government action “may” improve economic efficiency. Almost all arguments are about what a specific measure “will” do. That brings us back to tractors.
Money from the bill largely would subsidize rollbars — technically known as roll-over protection structures, or ROPS — on older tractors. A few other states, including New York and Kentucky, have such programs to pay part of the cost of these, typically $800 to $1,500.
Who could oppose this? Well, if you oppose government interference in the economy, or government taking money from some to give to others, you should.
There is no clear “market failure.” There is no monopoly power. Dangers of rollovers are well-known by owners. Most importantly, except when tractors are driven by employees, there are no “external effects.” Generally, the tractor owner who makes the decision about buying a rollbar also is the one who will be hurt in a rollover. Yes, the victim might be a family member, but the owner is able to limit who uses the tractor.
I’m in this situation. I have a 1974 Massey-Ferguson 165 tractor without an ROPS and use it on land with some very steep slopes. An old, very careful friend was killed in a rollover some years go. Other neighbors and friends have been injured. Occasionally I get into a situation that scares me. So there is a clear danger that a ROPS would reduce. Yet I choose not to install one.
I am a careful, experienced operator. My tractor has a low center of gravity and wide-set wheels. It does not have a dangerous tricycle front end. Of 100 hours of use a year, perhaps an hour has any rollover danger. I subjectively decide there are other things I’d rather spend on. Is this an error that harms society? Must it be corrected by giving me tax dollars?
I think not, and unless you believe that a “nanny state” should change your decisions just because others deem them unwise, it is hard to find any rationale for such a subsidy.
The issue is like mandating helmets for motorcyclists. Some states have such laws, mostly for riders under age 18. Some riders like helmets, others abhor them. If no one but the helmetless rider is harmed in a crash, should government stop people from doing what they enjoy because someone else thinks it bad?
For a time we did require helmets, but we would never tell farmers they had to install rollbars. For helmets, some argued an externality since medical costs of injured riders hit others through health insurance premiums and Medicaid. The counterargument is that so are the costs of bad health from drinking, smoking, poor diet, lack of exercise and dangerous activities like mountain climbing.
One can argue that in the case of tractor rollbars, there is an “imperfect information” market failure. If so, the best remedy is increased education rather than a subsidy. Farmers are pretty well-informed about the dangers of most of the risks they still choose to take, although education of adolescents on farm safety, for example, has been shown to reduce accidents.
It all may be a tempest in a teapot. In a state budget over $35 billion, $250,000 is peanuts. No one’s taxes will go up appreciably. Little, if any, other spending would be sacrificed. If any lives are saved, doesn’t this benefit justify the modest cost? And because it is a subsidy and not a mandate, is anyone’s “freedom” impaired?
On the other hand, if we want to spend $250,000 to reduce deaths and injuries, will giving it to farmers to put ROPS on old tractors save the most lives for the money? I think not. Not by a long shot. But opinions will vary.
In any case, this particular tempest lets us mull broader issues of what we should and should not spend public money on.
St. Paul economist and writer Edward Lotterman can be reached at email@example.com.