Last year at this time, skyrocketing commodity prices, driven by surging costs for energy and grains, had much of the world in a lather. Oil had surpassed $125/barrel, with speculation that crude could reach $200. Corn prices lingered around $6, wheat was just over $8 and Iowa soybeans were a shade off $13.
Despite that volatility, one of the biggest wild cards looming was what November would produce regarding the makeup of Congress and the identity of the new White House occupant. In the end, the enigmatic Sen. Barack Obama, running on a platform of change, catapulted into the presidency by capturing 56% of the popular vote. Meanwhile, Democrats added to their majority in the House and fell just one seat shy of a commanding 60th seat in the Senate.
Spending bills galore
A Democrat-controlled Washington quickly went to work, passing a $700-billion Troubled Assets Relief Program designed to rescue teetering financial institutions, a $787-billion stimulus bill in February, and $410 billion in additional spending just weeks later. In mid-May, the White House estimated a $1.8-trillion budget deficit in 2009, but the spending programs show no hint of slowing.
To economist Bill Helming of Olathe, KS, Obama's ascendency and the current makeup of Congress is telling about the mindset of the voting public.
“These election results tell us that, as a nation, more than half of voters today believe government is the solution,” Helming says. “There's more reliance on government and less reliance on free and competitive capitalistic-oriented markets today. And that means more regulation of all different kinds, including policies still on the backburner, such as nationalizing health care, cap-and-trade legislation, etc. These are all clear examples of very intrusive and controlling bigger government, bigger debt and more taxes.
Picking up steam
This isn't a new phenomenon, he says. “We've been heading in this direction for awhile now; it didn't start yesterday, but it is accelerating now.”
While some would say current economic conditions call for such measures, Helming isn't among them. “Massive bailout and economic stimulus programs won't work as advertised. They will, however, end up making things worse, prolonging the time it takes for our economy to finally bottom out and begin the recovery process.
“Remember, government can't give to any person, bank or business anything that the same government doesn't first take away from somebody else. There is no free lunch. Socialism hasn't and doesn't work.”
Helming says evidence shows a dollar spent by the federal government will, at best, generate about 50¢ to $1.50 of new economic activity and growth. But, a dollar invested by the private sector generates $5-8 of new economic activity and growth.
“It also results in significant increases in new job creation. Government by itself never creates one new dollar of wealth or one new job even though governments employ very large numbers of people,” Helming says.
Helming adds that he has “very real and deep concerns about the overall ignorance” of the general population in three areas:
Where their food comes from and how the U.S. and global agricultural and food production, processing and distribution system works.
How the U.S. banking, financial, economic and capitalistic system works and how it benefits all Americans.
And the serious economic, standard of living, political and other implications of an entitlement mentality and a growing dependency on larger and more expensive government.
“The concept and policy of ‘too big to fail’ is badly flawed. In a true capitalistic system, there are always winners and losers.”
He foresees an eventual rejection of these policies. “People will demand better than what they're getting, but I don't see that remotely becoming a possibility until things get a lot worse,” Helming says.
He recommends producers of all stripes get involved. “The future of our country is dramatically at stake. Concerned Americans need to get proactive, and support officeholders who believe that more government isn't the answer.”