Author - Speaker - teacher


May 4, 2002

 

(This commentary was written as a response to several emails received about the travails of farmers on May 1, 2001.)

Farmers are essential to freedom. Food is essential to life. A fair return on investment of money and physical labor is essential to both.

In this clarifying column I wanted to make sure that no one misunderstood my premise in the most previous column about Sen. Wellstone – more specifically, about the idea of government trying to reduce or eliminate the risk of failure.

Government intervention in farming, just as in all businesses, has dramatically affected the selling price of commodities. Government intervention in all businesses has needlessly driven people out of business.

In 1974, I started a ServiceMaster business with $100 operating capital and built it to be the second largest Minnesota franchise. By 1982, I had grown discouraged under the normal weight of business and crushed by the high level of government involvement in my business decisions.

Every dollar I spent on wages cost me a $1.25, much of it because of government regulation. Every dollar I spent on taxes cost me more than $1.65 when compliance and record-keeping costs were added in. I could not calculate the costs of compliance from hundreds of other regulations that directly and indirectly affected my operation.

When I went into business in 1974 I had no idea that the state and federal government would become my partners.

Every chemical I bought, every gallon of gas, every pencil, note pad and ink cartridge; every desk and chair, cargo van and sales vehicle; every accounting and legal bill; my rent and insurance; every cost of goods and services had enormous additional costs tacked on because of government do-gooders like Sen. Paul Wellstone.

My ability to survive and thrive profitably, and the ability of my customers to pay for my services, was directly and indirectly affected by government-imposed costs of doing business.

I got fed up with it and swore to never again employ people. I sold the business in 1983.

Still, different from farming

One major difference, though, between my ServiceMaster business and that of farmers was that no Washington bureaucrat set my selling price for me. My prices were set by two things: 1) the highly respected reputation of ServiceMaster, and 2) my competition.

Farmers have no such freedom to price. They are at the mercy of a few major commodity companies that are monopolistic in nature. If ADM, Cargil, Tyson or other such companies and their subsidiaries force farmers to operate at or below margin simply by their size and power, market forces are not driving prices. At the same time, if government bureaucrats set artificial prices, they in effect become a floor price for farm products. Again, market forces are not determining prices.

I do not know the solution to this dilemma. I do believe wholeheartedly that socialism will fail farmers just as it fails all businesses.

There are numerous other issues.

Death taxes strip farm children of their chance to continue working the farm once mom and dad are gone; but it is the same for ServiceMaster operators. Confiscatory income and property taxes destroy all businesses.

Regulation of pesticides, herbicides and the like that are written and driven by Tree-huggers and Earthfirsters destroy farm yield and drive up costs. The same earth-worshippers have an equally negative effect on ServiceMaster operators by getting certain chemicals banned that improve results and save time.

The record-keeping and costs associated with tax compliance is shared by every American, whether in business nor not, and it is immoral and terribly destructive to individual liberty.

I could go on.

But here is a root question, and it is one that, frankly, I have not yet fully resolved. I ask you to give me feedback and help me answer it.

Is it more important for government to preserve family farms than it is to preserve other small businesses? More specifically, is it more important for Tom’s brother to have the right to carry on the family farming business once dad and mom have died, than for Dick’s brother to keep operating dad’s cleaning business?

I know that I can live with a dirty house, or clean it myself. But I cannot live without bread.

Maybe it is more important to protect farms than other businesses. Maybe it is more important to work together to reduce government-imposed costs of doing business on all of us.

I am genuinely interested in what you have to say about this. Write to me at dave@daveracer.com.

More on this later.



Clarification