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May 6, 2015

Raisin Objections to Government Theft

There are millions of Americans across this great land who could tell a story about how federal bureaucracy and the gargantuan regulatory state we now bear have caused them frustration and grief, but few are more bizarre, or have such far-reaching implications, as the story of Marvin and Laura Horne and their quest to be raisin farmers.

Marvin Horne was once an agent of the all-powerful administrative state that he now wages battle against, working as a tax auditor before he and his wife decided to retire to the small farming enclave of Kerman, California, to try their hands at growing raisins.

The Hornes soon discovered they were slaves to an obscure agency of the federal government called the Raisin Administrative Committee (mull THAT one over in your brain for a few minutes), created nearly seventy years ago immediately following WWII. During WWII, the federal government had purchased massive amounts of raisins as part of the soldiers’ rations, and with the war over and the need for soldier rations greatly reduced there was an excess of raisins, and so the price of raisins fell precipitously. Thus, the RAC was formed with the stated goal of stabilizing prices for farmers to help them keep their farms. As with most government programs, the intention and the outcome were on opposite ends of the spectrum, as the Hornes came to learn and lament.

In 1949, in an attempt to help farmers who saw raisin prices diving, the Agriculture Department issued Market Order 989, under which farmers were compelled to hand over to the federal government a portion of their raisin crops, which would in turn be packaged and sold overseas. By removing a large portion of the crop from the supply side of the market, government created a manufactured scarcity, which in turn drove the price of raisins up.

Like all government programs, it not only survives, but thrives, long after its purpose has been accomplished (or has been shown to never have come close to being accomplished). That is why, more than sixty years after the end of WWII, the federal government still dictates what it determines as the right volume of raisin production in the United States.

From the government’s perspective, the farmers’ loss of a portion of their crop was offset by the elevated pricing and artificially expanded profit margin created by the manufactured reduction in crop size, and by whatever compensation that the government felt was adequate after it covered its costs and dispersed a portion of the remaining revenues. From the Hornes’ perspective, this was an abuse of government power and the antithesis of the free market.

It all came to a head in 2002 when Marvin Horne said enough was enough, and refused to give up any of his grapes to the federal government. Showing entrepreneurial ingenuity, the Hornes purchased equipment to process the raisins, thereafter arguing that they were raisin “handlers,” and not raisin “growers,” and therefore Market Order 989 did not apply to them. In response, the USDA hammered them with a fine of almost $700,000. In 2003, the federal government took just under half their raisin crop, and gave them ZERO dollars in return for the confiscation. The Hornes decided to fight back, and sued in federal court.

In their lawsuit, the Hornes argued that the confiscation violated their 5th Amendment protections, which state that government cannot take private property “for public use without just compensation.” The “Takings Clause,” as it is generally known, is what allows government to take private property (commonly known as “eminent domain”) to be used for the building of a road, school, water treatment plant, or other project that will benefit the general public.

In rebuttal, the USDA argues that the Takings Clause applies only to land (which the government has not confiscated), and not to the goods — the raisins — produced on the land (which government HAS taken). Or, as one federal appeals court stated, in justifying the theft, “In order to participate in the world of raisin marketing, growers must surrender a portion of their crop as an entrance fee.” That sure sounds a lot like the “protection” fees once charged by the Mob…"sure is a nice farm you have there…be a shame if anything happened to it.“

The Hornes correctly counter that, if that is true, then the federal bullies "can take away one’s car, furniture, refrigerator, books, silver and clothes” at its whim. Indeed, with such an expansive interpretation of the Takings Clause, what is to stop them?

Last week, the Supreme Court heard arguments from the government and from the Hornes, and will soon decide whether government exceeded its constitutional powers, or if, as the Hornes assert, we have gone from being a nation of citizens to a nation of serfs. A ruling in favor of the Hornes would go a long way towards restraining the power of the federal leviathan and protecting private property rights.

The Supreme Court gutted our constitutionally-protected property rights in 2005 when the 5-4 majority issued a ruling in the case of Kelo v. the City of New London that essentially reduced the “public use” requirement to a “public purpose” requirement. This occurred when the Court upheld the Connecticut Supreme Court in its ruling that the taking of riverfront homes and land from dozens of middle class families by the local government, to raze the homes and hand the land over to Pfizer Pharmaceuticals for the building of a massive corporate complex, met a threshold of a “public purpose” in that it expanded the tax base, and would therefore benefit the general public.

In the aftermath of the Kelo decision, outraged citizens from the political left and right joined forces to pass legislation at the state level to rein in the power of eminent domain. The Supreme Court got it wrong with Kelo, but it now has a chance to reverse the steady encroachment on liberty by government, by standing up for individual property rights. Let’s pray they do so.

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