Durable, transportable, and divisible—in other words, salable across time, space, and scales. Austrian economics recognizes these as core properties of sound money. However, beyond the marvelous social phenomena that is sound money, these properties can be relevant in describing another of humanity’s great marvels: cheese.
It is these very properties—combined with nutritional density—that gave cheese a significant role in military history. From feeding the Ancient Roman legions to, quite remarkably, sustaining the rise of the Mongols in what was the largest contiguous land empire in history. Crop-based diets tied armies to fixed territories; the Mongols, by contrast, could conduct brutal siege campaigns far from home by carrying dried meat, fermented milk and hard cheese.
Cheese’s “sound money” properties also led to historical cases where it functioned as a medium of exchange or a store of value—two key functions of money. Rents were paid in cheese in West Mediterranean kingdoms of the early Middle Ages, and Himalayan pastoral communities paid taxes in cheese well into the 20th century. Such barter use of a commodity is yet another example of how money arises spontaneously and in a decentralized manner—contradicting the chartalist and MMT “state” theory of money. A famous anecdote of cheese being used as an economic store of value was when, during the Great Fire of London (1666), diarist Samuel Pepys recorded how he dug a hole to safekeep his parmesan wheel as a valuable. Still, Austrians would rightly stress that cheese is not money in the strict sense; that would entail it being the most commonly-accepted medium of exchange within a given territory.
Aside from helping us disprove fallacious etatist theories of money, cheese can help us expose another fallacy that seems to be as common as air, namely, that interventionism benefits society. As Mises proclaims in his brief and commendable book, Economic Policy: Thoughts for Today and Tomorrow, interventionism occurs when government wants to interfere with market phenomena. And few stories illustrate interventionism more dramatically than the one of government cheese. We can begin this story with its climax—the mind-blowing fact that the US government currently has an estimated 1.4 billion pounds (635 million kilograms) of cheese in storage, mostly in Missouri “cheese” caves. To put that into perspective, that is enough to feed the entire US population for roughly 4 days if they all switched to an all-cheese diet (purely calorically speaking).
How we got to this point will be of no surprise to followers of Hazlitt’s One Lesson, which—following Bastiat’s teachings of looking at the unseen effects of an economic government policy—compels us to look at the longer effects of a policy, tracing the consequences of that policy not merely for one group but for all groups. After a 1970s dairy shortage, milk prices rose and the Carter administration introduced subsidies. Over four years, $2 billion was funneled to the industry, predictably creating overproduction. Farmers knew the government would buy whatever consumers did not. Due to the perishability of milk, the government processed the surplus into cheese, butter, and powdered milk.
Whilst acknowledging it as an economic trainwreck, mainstream outlets such as NPR’s Planet Money view this subsidy program as “well-intentioned.” However, as always, we must question the government’s intentions themselves. Many food aid programs that were portrayed as being devised to help the poor, actually stemmed from a need to get rid of a surplus, which was the result of interventionism. According to Andrew Novakovic, professor of agricultural economics at Cornell University, “almost all of the major food assistance programs were ideas that came from agriculture because we had too much of something.” In 1981, the then-Secretary of Agriculture told White House reporters, while holding in his hand a molding five-pound block of cheese, “We’ve got 60 million of these that the government owns… It’s moldy, it’s deteriorating… we can’t find a market for it, we can’t sell it, and we’re looking to give some of it away.” Consequently, the Reagan administration enacted the distribution of government cheese through the Temporary Emergency Food Assistance Program (TEFAP), with government cheese being given away at food banks and community centers, and becoming a “totem of American culture.”
Economic intervention by the government, however minute it might seem, can have deep cultural impacts. Inflation of the money supply, for example, has been said to destroy civilization. In our case, the subsidies on dairy and its subsequent overproduction led to milk being pushed heavily on consumers; this is exemplified in the infamous Got Milk? Campaign.
Mises warned us that a middle-of-the-road policy between free-market capitalism and a socialist planned-economy leads to an unstable economic system, and is merely a method for the “realization of socialism by installments.” The case of government cheese is a prime example—what began as subsidies for dairy producers snowballed into expansive food assistance programs. The story of government cheese is one of big dairy corporations influencing government policy to benefit themselves, at the expense of all other producers, including small-scale dairy farmers, as well as consumers. It reminds us how pernicious the outcomes of interventionism can be in our current democratic system susceptible to lobbying interests. The history of the corn industry in the US is a clear parallel: subsidies led to vast overproduction, and soon enough we had corn syrup saturating processed foods and corn ethanol marketed as a supposedly “green” fuel. The same story can be told of seed oils—once industrial byproducts, now aggressively promoted under US government nutritional guidelines.
Lobbying interests are, of course, not monolithic. The wave of anti-animal product mantra has seemingly won over the health establishment of the US government, surpassing the milk lobbyists. Recent signs of change with the new health secretary notwithstanding, dairy consumption in the US has been steadily falling. This decline likely reflects the broader phenomenon of “fiat food”—a consequence of unwise government dietary recommendations, downstream of inflationary economic policies (in other words, cheaper foods are promoted to reduce the inflationary burden felt by consumers). This reduced consumption helps explain how the US government has ended up sitting on the mentioned 1.4 billion pounds of surplus cheese. From government cheese to high-fructose corn syrup, from seed oils to the food pyramid itself, the pattern is clear: interventions serve lobbyists, not public health.
To conclude, government cheese is yet another legendary—or shall we say legendairy—failure of interventionism. Interventionism hampers both liberty and prosperity. The state’s monopoly on law and protection enables it to extend its influence into ever more sections of the economy. In this light, even a minimal “night-watchman” state may be less feasible than dismantling the monopolized, involuntary apparatus of the state altogether.
