From the farm, a populist economic view. Columnist says key to strong economy is higher pay for farmers
When farm columnist Thayne Cozart gets worried about the American economy, he doesn't look at Wall Street. He drives down Main Street. ``That building's empty,'' he says, pointing to a low-slung building in his hometown of Parsons, Kan. Farther up the street, a local bank has closed. The mall downtown has a few vacancies.
What Wall Street became concerned about after last October's collapse, Mr. Cozart has been warning about for a long time: that the United States economy is seriously out of whack. Cozart's economic views are radical, but they reflect a growing rural uneasiness.
``I think this was just the first phase of what's going to happen,'' he says of the Oct. 19 market collapse. ``What happened in history may have some value. But really we're breaking new ground on this and no one really has any idea what's going to happen.''
The basic problem, he says, is debt.
At $8.1 trillion, the total US debt threatens to swamp the nation's economic vitality. Just paying the annual interest at, say, 8 percent would be like taking $2,670 from every American, including children, he says. Cozart, of course, is not alone in wringing his hands over the debt. But his solution is novel: raise the price of farm products.
During the 20th century, he argues, the economy has hummed along with low unemployment and low debt when farm prices were high. When they reached record and near-record lows, the nation endured the Great Depression, the stagflation of the 1970s, and the deep recession of the early '80s.
The way to restore balance in the economy, he adds, is to push farm prices back up toward the levels of the 1910-14 period, when they were in proper relation or ``parity'' with nonfarm goods. This solution would eliminate farm subsidies and welfare payments - what Cozart calls ``the hidden costs of cheap food.''
He concedes there is no theoretical foundation to his program, only a historical one. The record since 1910 partially bears him out. In the 31 years that farm prices reached 90 percent of parity or better, US unemployment averaged only 5 percent. In the 47 years when farm prices were under 90 percent of parity, unemloyment averaged 8.4 percent.
But the correlation between high farm prices and low unemployment has not always held fast. When farm prices slipped slightly from 1938 to 1939, for example, unemployment actually dropped significantly.
And since 1982 farm prices have fallen to record lows on the parity scale, while unemployment has also dropped by one-third. That move would contradict Cozart's thesis, although he believes the current recovery is a mirage built on unsustainable debt.
The idea of parity prices is not new, says Wayne Rasmussen, consulting historian for the US Department of Agriculture. The parity measure was first used to determine farm price supports in the 1930s, but had fallen out of favor by the mid-'50s. Many economists today, even those in agriculture, dismiss the concept.
``It's treated with scorn and disdain - and that's mild,'' says Ross Korves, economist with the American Farm Bureau Federation. While crop prices often rise during good times, there is no evidence that the high prices actually cause that prosperity, he says. In fact, ``if you've got to spend more for corn, you've got to spend less somewhere else.''
The problem with that reasoning, Cozart counters, is that what Americans save through low food prices is spent in other areas.
For example: commodity prices have fallen to such lows that the federal government spent $22.4 billion in farm subsidies last fiscal year. Taxpayers also pick up the cost of welfare payments to and retraining of dislocated farmers. The nation loses the benefits of bankrupt agricultural and rural businesses. And if Cozart is right that low farm prices create debt, the annual interest cost of the debt is part of the hidden cost of food.
Cozart himself is best known for his columns in Farm Talk, an agricultural weekly newspaper that he started in the 1970s. Although he sold the paper four years ago, he continues writing columns, criticizing politicians and bureaucrats and battling what he sees as bankrupt economic policies.
``Thayne puts down on paper . . . what's important in agriculture and what needs analysis,'' says Mark Ritchie, policy analyst for the Minnesota Department of Agriculture.
To bolster the concept of parity and raw material economics, Cozart a year ago was elected president of the National Organization for Raw Materials (NORM). Like parity itself, the group has lost most of the political clout it had in the 1940s and '50s. And along the way, it has come under the influence of some members who espouse fringe conservative ideas. One board member and former president is a follower of political extremist Lyndon LaRouche; another board member claims the Federal Reserve is unconstitutional.
``They're so out of touch with reality,'' says Dan Levitas, research director of a progressive farm group in Iowa. Mr. Levitas has criticized NORM for the company it keeps. ``I perceive Cozart's presidency as a step in the right direction.''
By keeping NORM's focus strictly economic, Cozart hopes to rebuild the group's influence among mainstream Americans.
``I get tickled,'' he says. ``I talk about NORM and they say: `That's radical!' And I say: `Yes, well so is $12 or $15 or whatever trillion dollars worth of debt.' ''
``There are more people that listen closer today than they did before Oct. 19. And there's going to be a lot more people,'' he says. ``They don't know what to do. But they know what we're doing is wrong.''