What’s the Price of Income Equality?

LarrypigfarmerI’ve been reading articles about income inequality, covering a wide array of topics, since the economy crashed in 2008. Wall Street has been picketed. The minimum wage is too low. Rich people are simply hoarding all the money. But in The Des Moines Register on Tuesday, Sept. 16, a front page-article by Mike Kilen explained how the Ag economy has contributed to growth in the rich-poor gap.

The story doesn’t out right blame farmers for causing this gap, but I did take it to be the underlying theme of the story. Admittedly, that’s my perception of the article. Kilen includes information from Iowa State University sociologist David Peters that three Iowa counties are in the nation’s top 10 for inequality of income growth. That’s not surprising as farming had a pretty good run from 2000-2012 while the economy, as a whole, did not. Logic tells me that this would make a spread.

Is it the farmers’ fault? Should the farmers be “fair” and share the gains made?

Before you answer “yes,” remember that farming goes in cycles. Farming was great in the 1970s, and then in the 1980s, we experienced a farm depression that took out many farmers. Those who survived were usually ended up farming more ground. Do the math: There are fewer farmers but the same amount of land is being farmed. Of course, the farmers are “bigger.” Is it their fault? Of course not! That’s how a capitalistic society functions.

These farmers took a risk by taking on more land, and they’ve enjoyed some good times. The last five years have been probably some of the best ever for farmers who were raising crops or livestock with strong market prices and were doing a decent job of controlling their business expenses.

Now, however, the cycle has turned. The price I can sell my soybeans and field corn for today is below the cost of production. My income this year will be well below minimum wage. It probably will be a negative income! Does anyone who stands to make a profit this year want to share his income with me? I’m sure there will be people standing in line, waiting to give their money to me, right? Not!

“It’s difficult to imagine the economic mindset of those who consider that government forcing an increase in the minimum wage can bring about improved prosperity,” was posted today on one of my friend’s Facebook pages yesterday.

Let’s ask ourselves if question: If economic prosperity through minimum wage levels promises such an advantage, why not mandate a minimum wage of $100 per hour or higher?

Those who see government as the great provider can’t seem to grasp the emptiness of their vision! Numerous attempts have been made to for the U.S. government to become all-powerful, the end-all and be-all. The results have been devastating, yet so many Americans continue to promote these failed beliefs.

Our country is headed in the direction of socialism. We want everyone to be equal… I see this in kids’ contests where every kid gets a ribbon or prize. I see it in this article in The Register article, indicating that all Iowans should have equal net worth.

Let’s examine why the net worth gap is spreading in Iowa. First of all, land values have increased significantly. The incomes of some farmers have followed, but not nearly as much as one might think because a lot of this value is only on paper.

Commodity prices, on the other hand, greatly impact the amount of disposable income farmers have to purchase new machinery and equipment and to build buildings or buy land. The more money there is made in farming, the more money gets released into the U.S. economy. But it takes more than that.

We must find the will for everyone to achieve. We need better jobs. We need to get people trained and educated to do those jobs! When I was running my construction business, one of my biggest constraints was finding people with the skills and “will” to work. Even the social fabric of our society played a role. Many employees would work until the state paperwork for child support caught up with them, and then they did not show up to work. I visited with a friend last week who is still involved in the construction, and his biggest challenge is finding people willing to do the work.

The spread in wealth brings to mind the story of Jack Ma, an entrepreneur from China. His company, Alibaba, went public last week. He worked hard and took a chance. He also had the knowledge and talent. Jack is now worth billions. Should we take away his incentive to dream big?

I know… Let’s allow tax policy to level the playing field as Senator Tom Harkin likes to say. After all, the Government is here to help you! I keep reading about all the programs USDA has to help the disadvantaged farmers get started.

Half of the people in this country are being subsidized by the other half! Keep this up, and we will take away even the most energetic worker’s will to succeed. If you take from one who is working and give to the one who isn’t working, doesn’t that limit the amount of work being done by both groups?

“When everybody owns something, nobody owns it, and nobody has a direct interest in maintaining or improving its condition. That is why buildings in the Soviet Union — like public housing in the United States — look decrepit within a year or two of their construction.”