Capitalism and Cows

“America is the greatest engine of innovation that has ever existed, and it can’t be duplicated anytime soon, because it is the product of a multitude of factors: extreme freedom of thought, an emphasis on independent thinking, a steady immigration of new minds, a risk-taking culture with no stigma attached to trying and failing, a noncorrupt bureaucracy, and financial markets and a venture capital system that are unrivaled at taking new ideas and turning them into global products.”

“The historical debate is over. The answer is free-market capitalism.”

– Thomas Friedman – Syndicated Columnist and Best-Selling Author

“Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.”

– John Maynard Keynes – Economist – Considered to be the Father of Macro-Economics

“I’m a capitalist. I believe in capitalism. But capitalism only works if you have safety nets to deal with people who are naturally left behind and brutalized by it.”

– Thomas Friedman – The Same Thomas Friedman Quoted Above

There was an article in our local newspaper this week that talked about a Facebook post from a young man in Southeast Minnesota. He is twenty-six years old and works with his parents on their family-farm dairy. The video is not for the easily-offended. There are some F-Bombs and a showing of raw emotion. The video was occasioned by an argument  between the young man and his father regarding the discouraging outlook for the future of their farm and what they need to do about it. This farm family works very hard, every day, seven days per week – the bane of all dairy farmers – and has for many years. But they are now at a point where it appears that their dream of a future working together on their family-owned dairy farm is about to be destroyed. As someone who was born and raised on a family farm, I find this video hard to watch. It is hard to watch because I have seen the destruction of dreams like his up close and personal. I saw the dreams of many in my family destroyed. The number of family farms has been plummeting for decades. I want to reach out and comfort this guy and somehow to make things better for him. He is so exhausted (physically and emotionally) and so discouraged.

Who is the despicable ogre that has done this to him and his loved ones? Who should we be angry with and what law needs to be changed to correct this injustice? The young farmer struggles with those issues himself. He notes that consumers blithely go to the supermarket and purchase milk for an affordable price without ever thinking about what needs to happen to make that possible. That is true. I buy milk and I never ask to pay more because I think the price is too low. Maybe I am the problem.

I have talked in previous posts about our failed business venture. In our exhaustion and discouragement, we asked the same questions. Who is to blame? We worked really hard; we should have succeeded. At least that is what we thought. Except that is not how things really work in our system, this for-the-most-part capitalistic system that we live in. I think we need to be balanced here. As Friedman notes, we live in a country of huge riches, arguably mostly the result of our capitalistic system. I certainly don’t want to substitute ANY other system in the world for ours. Of course, there is the issue of WHO is reaping the wealth being produced by our system and who is being cut out of those riches. But that is another debate.

In America we admire success and we aspire to it. We admire “self-made” men. (Probably a lot of those that we admire weren’t really TOTALLY self-made men. They may have had some advantages that we are unaware of.) But in any event, we want to be like them. So, we analyze things, we work hard and we invest our resources trying to succeed. Why isn’t our young farmer succeeding? Certainly, they are in an industry that we all depend on – we all like to eat. And by all accounts they are working very hard and have invested everything they have in their business. The cold hard truth is that someone else is doing it “better”. Someone else can deliver that milk to our supermarkets for less money per gallon. That could very well be some huge enterprise that milks 10,000 cows instead of the 200 cows that they do. THAT is capitalism and competition. We all benefit from it because we buy the cheapest milk that is possible.

Well maybe not ALL of us. What do we tell this young guy? He probably identifies with John Maynard Keynes more than Thomas Freidman right now. I think we all need to remember that while capitalism is the greatest wealth making system in the world, that rings a little hollow to a guy like this who may well need to end the way of life that is all he knows. He will NOT be able to do the work that he loves. He will see what little wealth he has lost to bankers and other creditors. He may well need to move from the family farm and start an entirely new life that is NOT the one that he wants. He may not have warm feelings about our wonderful system of capitalism.

Capitalism doesn’t care about his Mom who gets up at 5:00 AM and works until 10:00 PM or his Dad who has been doing the same for forty years. Capitalism doesn’t care that they couldn’t access enough capital to expand their operations to gain some of the efficiencies associated with bigger operations. Capitalism didn’t care that despite our best efforts, the technology of our family business needed more investment to make it work than we could access. And let’s be truthful here, capitalism doesn’t really care WHERE products get made. If we can buy a component that we need for our product in China cheaper than we can get it here, that is what we do. Capitalism may be the greatest wealth-producing system in the world but we should never pretend that there aren’t casualties. Capitalism is efficient – ruthlessly efficient. When there are winners, there are losers. I have been both.

I have read several of Friedman’s books over the years. I found it interesting that his view of capitalism seems to have become a bit more nuanced over time. Now he talks about “safety nets” for those who are brutalized by the efficiency of capitalism. I’m there. We need to make sure that we get the best from capitalism and humanely deal with the destruction that is sometimes left in the wake of its success. In the case of our distraught young farmer, perhaps he can find a way to refinance and make it work. More likely he may find work somewhere else in the dairy industry. He made need some training – I think that is part of our capitalistic society’s responsibility. We can’t make coal burning power plants more efficient and cleaner than natural gas or renewable energy plants. We can’t MAKE coal mining jobs when coal is not going to be mined. But we CAN work with coal miners or displaced farmers or others displaced by off-shoring. We CAN retrain and capture the value in these human resources. There will need to be a time of grieving for them. Coal miners are coal miners because that is what they WANT to do. Our young farmer from Southeast Minnesota LOVES cows. But we can’t totally pick and choose what we want from capitalism. If we try to do that and to REQUIRE capitalism to do inefficient, non-market things, in the end we will all lose. Wealth will not be generated to the extent that it could be. But we need to recognize and attend to the destruction and disruption that this efficiency engenders.