New levels of economic transparency have provoked earnest questions about the structure of our economy. It is now hard not to know that the bulk of the economic gains of the past 50 years have accrued to a small number of Americans.
One response has been that even with skewed income growth, life at all levels is pretty good. But do the top 25 hedge fund managers really add sufficient value to warrant more pay than all of the Fortune 500 CEOs combined?
We see more sectors with huge gaps between a highly paid elite and the lowest levels. From major league sports and publishing to law and academia, it’s good to be at the top—but only the top.
Agriculture may be about to join these sectors. The underlying drivers for winner-take-all (WTA) markets seem to be in place. The first is technology that allows small numbers to control vast resources. These tools show up at our farm gates every day.
Another factor is the positive feedback that encourages entrants to sacrifice for years. Like Double-A ballplayers, they hang tough for their shot at the "bigs." Many literally work for nothing, misled by our inability to accurately judge the odds. As lottery managers know, a bigger jackpot entices more players. The richer those at the top become, the more willing producers are to spend years attaining that life, even as their chances decrease with added competition.
Assuming (generously) that the top layer of earners does not generate a wildly disproportionate amount of social and environmental costs that are shifted to the public, they can buy legal expertise and political horsepower to avoid being held accountable—another WTA accelerator.
Finally, simple luck favors WTA agriculture. No amount of skill or hard work will allow you to inherit land, for instance. Acknowledging randomness is not part of the American dream, however, so we promote ambitions that require miracles. Meanwhile, we stack the deck in favor of WTA economics.
Any attempt to address inequality is anathema in farm country. While some might grudgingly accept lower direct payments for better revenue insurance, most abhor means-testing as a "leveling" strategy. Smaller producers paradoxically spend their political capital to protect those at the top. Ditto for environmental regulations, land ownership restrictions and farm-size limits.
Blinded by the unfounded conviction that we will (eventually) be among the winners, we cheer policies that concentrate income and wealth. Estate taxes are despised even though they affect only a handful of farms. Capital gains taxes and marginal income taxes are targets for complaint even when growers are not paying them. Social acceptance of an agricultural plutocracy is growing. In short, farmers apparently want WTA agriculture.
A Biased System. WTA industries can be criticized on many levels, but it is hard to justify intervention when the losers defend a system that favors the winners.
What we struggle to grasp is that while capitalism efficiently delivers many economic benefits, without constraint it often subverts cultural values. Free markets cannot operate without effective elements of infrastructure such as property rights and contract law. These are social and cultural agreements, not economic axioms. Modifying them to guide market results toward what we say we desire is thus a degree of intervention, not the introduction of an either-or choice.
Clearly, by rejecting any mitigating regulation that might possibly encumber us if and when we do get to "take all," we actively choose economic rigidity and exclusivity within agriculture. Just as predicted by minds as disparate as St. Matthew and Karl Marx, the ensuing wealth condensation will likely continue to offend our instinctive sense of justice and frustrate our search for abiding happiness.
- Spring 2011