The View From 1776

Stimulus Disincentives

      http://www.thomasbrewton.com/index.php/weblog/stimulus_disincentives/

Family farms are losers in the stimulus pork barrel.


Bob Utterback writes a regular column called Outlook.  It appears in the Farm Journal, the largest national circulation publication focusing upon family-owned farms. 

Mr. Utterback travels continually among farming communities across the nation to gauge market conditions and farmers’ market sentiment.  His February 14 column suggests that President Obama’s stimulus bill will be, on balance, a series of disincentives for family farms to run the risks of aggressive farming, because the stimulus bill unfavorably raises the risk / reward ratio.

Family farms have to contend with high levels of weather risks and volatile prices for seed, feed, and fertilizer, along with volatile sale prices for crops.  In addition, such farms are quintessential small businesses, ones which nonetheless require large, long-term investments in land, storage facilities, and equipment.

Farmers, more than average worker-consumers, understand the essentiality of maximizing saving and minimizing consumption expenditures.  They know that eating their seed corn will leave the fields bare for the next season.  Moreover, farm families work long, hard hours all year long to build and to preserve their farms for future generations of their families.  Reinstatement of punitive death taxes, as proposed in the President’s budget, is a meaningful disincentive to all that hard work.

Mr. Utterback’s interpretation of the stimulus bill, in the quote below, is that its primary effect is to transfer money from small businesses entrepreneurs to workers. 

Though he doesn’t make the latter explicit, the main worker beneficiaries will be labor unions, which can demand higher wages and make them stick in future economic downturns, thereby intensifying their impact upon the national economy (e.g., the many thousands of laid-off UAW members who get full pay and benefits from General Motors, without having to work a single day).  Democrat/Socialists, of course, aim to give labor unions new, special privileges to enhance their power to extort uneconomic labor contracts, which non-union workers, the vast bulk of the nation’s labor force, will pay for with lower wages, higher prices, higher taxes, and crushing inflation to offset labor union extortion. 

Because of the speed of the global contraction, many countries are quickly putting together financial stimulus packages to help stabilize and encourage their respective economies. As a result, the potential level of debt that