Out To Pasture

January 10, 2009 11:27 AM
 

 

Steve Cornett

When I was young, I got into an argument with a libertarian. His opinion was that there is virtually no use for government beyond police and armies.

"What about rural electrification?" I asked. That was one good thing the government did. There was no way private enterprise would willingly run all those lines to serve the few farm families needing lights.

This guy had done some reading, though. And he reminded me that before rural electrification there was a budding wind generator business, and a few rich ruralists had already electrified.

Had the government kept its elephantine nose out of it, he suggested, private enterprise would have continued to develop those generators and the batteries needed to make them work well.

But there were more rural voters then and they didn't want to wait until the technology was affordable. So President Roosevelt created the Rural Electrification Administration (REA). One of the rationales was that it would slow rural emigration. But one of the results was that the use of wind chargers virtually ceased.

Now, more than seven decades after REA was established, we elect a President who promises to have the government develop alternative energy.

Granted, we need the leavening power of regulation—but the logic of the libertarian's argument has stuck with me, and I'm inclined to believe the free market is much wiser than the folks we send to our capitols. Not wiser, maybe, but more adaptable and focused on results rather than appearances.

That's why we should be willing to give JBS the benefit of a long leash. Of course, I worry about a company that large and the power it can wield. I worry about any entity that is viewed as "too big to fail" by the politicians who seem ready to bail out every company that can afford a lobbyist. I trust the greed of free enterprise more than the good intentions of those who govern. We need both, but not too much of either.

If a JBS or a Tyson gets too big and greedy, it will spawn competition. In fact, there is already a "buy local" movement in this country. If it provides producers and consumers a better deal, it will grow.

In an earlier column, I said I'd rather have one good bid than five bad ones. Judging by reader reaction, I guess I oversimplified and left the impression that I think one packer is all the country needs.

What I should have said was that I'd rather have competitive bids from three packers who are cost-efficient processors, equipped with marketing arms capable of pushing wholesale prices higher, than from 100 packers who make a profit by driving cattle prices lower.

Regulation is fine. But if it impacts the ability of packers to compete with other proteins or countries, it is too much. Should we allow JBS to buy every packer it can afford? Probably not. But three solid packers will serve the industry better than a half dozen weak ones. 

Steve Cornett, Editor Emeritus, writes from Canyon, Texas scornett@farmjournal.com

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