Sometimes the mundane cases best exemplify economic ideas.
That is true of a bill introduced in the Minnesota Legislature this session to appropriate $250,000 to reduce farm deaths in tractor rollovers. This may or may not be a good idea, but is an excellent focus for the question of just what economic functions government should take on.
Let’s start by recognizing that while deaths of farmers are tragic, in the larger sense of things, such rollovers are not a major challenge for our society. About seven people a year in Minnesota die in accidents involving a tractor in some way. Not all are rollovers, although these are the most common. Some 20 to 25 farmers a year die from some sort of farming accident. This is a fourth of all annual workplace deaths in our state even though people working on farms are less than 6 percent of the labor force.
Keep in mind, however, that more than 41,000 people die in Minnesota each year. Nearly 2,500 of these are in accidents. Another 700 are suicides. So occupational deaths in farming are about 1 percent of all accidental deaths and a tiny fraction of all deaths.
The economic question is not whether tractor deaths are reducible, but what role government should play in reducing them.
Most economists believe that spontaneous market forces can resolve many questions of how we should allocate resources to meet our needs and wants. There are some times, however, when such market forces don’t bring an optimal outcome. These include when one party has great monopoly power either in buying or selling, when there is imperfect or asymmetric information, when the actions of producers or consumers have harmful effects on other third parties and when there are some goods or services with large spillover benefits, such as education, public safety or weather warnings, that are not adequately produced by pure market forces.
Note that while the existence of one or more of these “market failures” may justify government action to restore efficient use of resources, there is no guarantee that any government action necessarily 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. And that brings us back to tractors.
Money authorized by the bill largely would go to subsidize installation of Roll-Over Protection Structures, or rollbars, on older tractors lacking them. A few other states, including New York and Kentucky, have such programs that pick up part of the cost of retrofitting, typically $800 to $1,500. One suggestion for Minnesota is that no farmer should be out of pocket more than $500 with the state picking up the rest.
Who could be against this? Well, if you oppose unnecessary government interference in the economy, or government programs that take money from some to give to others, you should oppose it because it is hard to justify in economic terms.
The problem in pursuit of this bill is that there is no clear “market failure.” There is no monopoly power. The dangers of rollovers are very well known by tractor owners. Most importantly, except in cases where unequipped tractors are driven by employees, there are no “external effects.” Generally, the tractor owner who makes the decision about whether or not to buy 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 rollbars and use it on land that includes some very steep slopes. An old friend, a very careful man, was killed in a rollover some years go. Other neighbors and friends have been thusly injured. On occasion, I get into a situation where I myself am afraid. So there is a clear danger that a rollbar would reduce. Yet, I choose not to install one.
I am a careful, experienced operator. The tractor has a low center of gravity and set-out wheels. It does not have the tricycle front end of older tractors that is most dangerous. I carry the bucket of my loader low when it has weight in it. Of the 50-100 hours a year I run it, perhaps an hour or two is in situations where there is any danger of rolling. So I make the subjective decision that there are other things I prefer to spend money on than a rollbar. Is this an error that somehow makes society worse off? Must it be corrected by giving me Minnesota tax dollars to change the benefit/cost calculations in my head?
I think not, and unless you believe that a “nanny state” should intervene in personal decisions that some others deem unwise, it is hard to find any rationale for such a subsidy.
In many ways, the issue is like that of mandating use of helmets by motorcycle riders. Some states have such laws. Like many others, Minnesota only requires helmets for riders under age 18. Some motorcycle riders prefer wearing helmets, others abhor them. If no one else but the helmetless rider is harmed in a crash, and if there is no question of addiction impairing decision making, should government stop people from doing something they enjoy just because some other people think it is bad?
It is interesting that for a time we did require bikers to wear helmets, but we would not think of telling all tractor owners they had to install a rollbar. In the case of helmets, some argued there was an externality in that the medical costs of injured helmetless riders are spread to 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 and parachuting. The federal government once mandated that states require helmets, but after legal challenges, many states now have only limited mandates that often cover only teen drivers.
One can argue that in the case of tractor rollbars, there is an “imperfect information” market failure. In that case, the best remedy is increased education rather than a blanket subsidy. My gut feeling is that farmers are pretty well informed about the dangers of most of the risks they still choose to take, but education of adolescents on farm safety, for example, has been shown to reduce accidents.
It all may be a tempest in a teapot. In an annual state budget above $35 billion, $250,000 is peanuts. No one’s taxes will go up appreciably because of this; few, if any, other state allocations 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 reduce unnecessary deaths and injuries and as taxpayers are willing to spend an extra $250,000 to do so, would giving it to farmers to buy rollbars for old tractors save the most lives for the money? I think not, 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.