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Freedom to failI am scared to death at what is happening in financial markets. I am even more frightened of the potential for a shock wave hitting rural America, as no financial institution or business will be spared in this economic meltdown. While I don't know how we got into this huge mess, I dislike the lack of accountability for those who put us here. I'd like to have special treatment in everything I do. It would have been so much easier in school, business and personal life if I were excused from my responsibilities. However, try as I may, there has been earthly culpability for my actions and I'm assuming there will be a judgment day if I reach the Pearly Gates to negotiate for admission. Therefore, I can't understand the reasoning of government to bail out those who caused this financial crisis and allow them to avoid the consequences. It is my philosophy that the American economic system works because we have "freedom to fail." To me this means we reward those who risk and win but those who risk and lose will fall. This has been proven in farming since the first settlers headed west to homestead land and make a better life for themselves and their families. Many failed and turned to other employment or even to the depths of poverty for the remainder of their lives. But those who succeeded in taming the land and producing a crop were rewarded with equity that allowed them to secure greater assets and pass a portion of their holdings on to future generations. They saw that the best way to build on their economic base was to educate their children and diversify their investments and slowly, but surely, the continuum has achieved great victories. Now, in New York and Washington, D.C., those who risked primarily the money of others, in shaky financial schemes, are viewed as too important to be allowed to fail. Investment banks and insurers who took risks that now look foolhardy are going to be propped up with hundreds of billions of dollars because the politicians can't stand the fallout of failed financial institutions and the risk of economic depression. Even with a government bailout approximating $700 billion, can we truly believe there won't be serious repercussions? "You can't repeal the laws of economics" was the cry of one of my college professors. We are seeing a run to solid assets as gold, oil and even farmland are viewed as far more substantial than paper that can become worthless overnight. The term "hyper-inflation" is now being bandied about. If we undermine our financial system, which we are sure doing a fine job of right now, then our currency has to find a new value. Agricultural products may shoot up in price along with all inputs and other assets necessary to produce crops or livestock. This proved beneficial for agriculture in the 1970s as each expense was paid off with cheaper dollars but it required a day of reckoning, as we saw in the 1980s. Government oversight should be a major function of our federal system but government intervention should be done as a last resort. The crisis in subprime lending appears to have no end as to the number of financial institutions that were weakened by their involvement. I don't think government has the ability to prevent a recession unless it nationalizes the entire financial system. If the government does so, then what other industries and businesses must come under its control to keep the economy afloat? I don't think everyone in the financial sector is an idiot. I do think that our unfettered capitalism of the last 25 years has caused some to scheme to take advantage of it and anticipate that their failures would not be punished. It appears they were right but it is very unclear how those who played by the rules will be impacted in the short and long term. It is also unclear to me what signal this sends to our youth. Should anyone risk anything or should they require that their failures will be forgiven? Agriculture may be in a better position than most industries, due to its real products and the worldwide demand for food, but an inflationary spiral ends with a sharp correction and history shows that good decisions in the inflationary times often become bad decisions in the following decade. I've always hoped that those who run our financial institutions are smarter than those who run our government. Now I'm not at all sure they are and that scares me. Working together, they may have found a way to escape accountability in the marketplace and the voting booth...we'll see. Editor's Note: This is Ken Root's 34th year as an agricultural reporter. He grew up on a small farm in central Oklahoma and started his career as a vocational agriculture teacher. He worked in Oklahoma, Kansas and Missouri as a broadcaster and was the original host of AgriTalk. He has also been the executive director of the National AgriChemical Retailers Association in Washington, D.C. and the National Association of Farm Broadcasters in Kansas City. Ken is now the lead farm broadcaster at WHO and WMT Radio based in Des Moines, Iowa. He has been a columnist for HPJ and Midwest Ag Journal for seven years. 9/29/08 Date: 9/25/08
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