Oink

Martin Harris

Martin Harris is an architect and former farmer.

For reasons I’ve never fully understood, the pig is the symbol of greed. Maybe so, but I’ve known pigs, and Jeffrey Immelt is no pig. He is, however, the current Chairman and CEO of General Electric, in which role he managed to secure for himself an annual salary and bonus of $6.9 million for last year. Not that GE and its shareholders (of which I’m one: a little full disclosure there) have done quite as well: the stock is down from the high 50s to the low 20s and earnings are growing a lot slower these days than they were in the heady years of his predecessor, John Welch, who also pulled down about $7 mil per year. At least Welch created added value for others in the GE “family.” About Immelt’s remarkably successful pursuit of self-enrichment while employees were laid off, pension agreements were “adjusted,” and stockholders took losses, it’s hard to say much besides “oink .”

Not that he’s alone, or even the most successful oinker: at last report, the annual “take” of each of the nation’s Fortune 500 chief executive officers was a cool $33 million in salary and options, and that at a time when corporate earnings have declined, not grown, and the list of corporate miscreants (Enron, Tyco, WorldCom, Adelphia, HealthSouth) has grown, not shrunk. Not in the annals of American business history has the ratio of CEO reward to worker pay been as high as it is now; never before have the top corporate players amassed as much in pay, options, perquisites, golden parachutes, even beach homes, as their boards of directors are now willing to give them.

At least Immelt’s behavior (and that of his complicitous Board members, who rubber-stamped his porcine monetary appetites) wasn’t as flagrant as that of his fellow oinkers at the above enterprises, all of whom made off with more than a rational old Yankee would probably even want. But it was flagrant enough to raise my populist hackles, because I’ve studied this nation’s history enough to see a repetitive pattern: when skillful (and ethically challenged) three-piece-suit folks game our free-enterprise system to their own excessive advantage, it makes a lot of our normally pro-free-enterprise friends and neighbors yearn for a lot more government regulation. The fairly crass behavior of the Federalists brought about the Jacksonian Democrats; the late 19th century robber barons led to the progressive reaction; the roaring twenties preceded the near-socialism of the Roosevelt years; and now the peasants-with-pitchforks (Pat Buchanan’s phrase, not mine) are being urged by leftist rhetoricians to vote for enlarged government control of business, as a punitive clampdown to prevent future Immelt behavior, or worse, in American executive suites.

The original populists, a century ago, did just that and for the same reasons: misbehavior in the executive suites. Most of their regulatory desires became reality, from the Interstate Commerce Commission (recently disbanded, remarkably) to commodity price management and a sub-treasury concept that emerged into reality as the Federal Reserve system in 1913. Other items on their wish list, like government takeover and ownership of the railroads (it was called nationalization in England, when it was tried there during socialist dominance) didn’t.

Most of the populist political platform involved an enlargement of government, and most of it hasn’t worked very well. For example, there’s been far more deterioration of the value of the national currency—inflation—during the last 90 years of the Federal Reserve’s “management” of such matters (94 percent loss of value) than during the preceding 124 years, 1789 to 1913 (11 percent loss) when there was no Fed. In 2002, it would have taken $18.08 to buy what $1 would have bought in 1913; it would have taken $1.12, in 1913 to buy what $1 would have bought in 1789.

As a result, the populists have become identified as just another bunch of leftists out to aggrandize government and get themselves jobs and power in it. The Wall Street Journal, typically, uses the label of “populist” as something of a pejorative. But there were conservative populists as well, advocates for private enterprise and property rights, private ownership of farms and businesses and a minimum amount of government intrusion. And while they’ve been pretty well forgotten by the academic historians, most of whom, their voting patterns indicate, have a somewhat gentrified-leftist view of economic issues, the one-time presence of the conservatives comes out in the footnotes to history. Consider, for example, Kansas newspaper publisher Mary Lease, who urged farmers to raise less corn and more hell. As I read it, a century later, that wasn’t a plea for a new government program to support grain prices; it was a harangue for farmers themselves to manage crop quantities and market them aggressively.

History is written by the side that wins, Vladimir Lenin is supposed to have said, and certainly the conservative side of populism has been edited out of the history books, if not the footnotes. There’s been a lot of editing of ag history over the years; I’m reminded of the op-ed page of American Agriculturist, which used to declare with great certainty that there had never been a successful milk strike, and, therefore, it was an idea not worth trying. There will be more such revisionist history in the future, no doubt, as people jockeying for jobs and power will make the argument, as former UVM Agronomist Win Way once did, that agriculture never was, never will be and never should be, anything other than a government-run public service, with themselves, of course, in charge. In the present dire straits of the dairy industry, particularly in the Northeast, look for that sort of leftist-populist sentiment in increasing decibels as one sort of new “dairy compact” after another is proposed. Unfortunately, there’s no Mary Lease around these days to present, as the NFO’s Kenton Bailey once did, not too many years ago, the conservative populist argument with equal verve.

Here’s the difference: in William Jennings Bryan’s day, farmers were equal in numbers (and voting power) to the urban population; now, they’re less than 2 percent of the whole. That’s why almost the entire populist platform was taken up by one or both of the major parties, then, and why it couldn’t happen now. The USDA’s Yearbooks of Agriculture illustrate the shift: when farmers were a dominant political force, the Yearbooks spoke of seeking greater farm prosperity; since 1920 (the Census which first reported urban dominance) the Yearbooks have spoken of abundant, healthful, cheap food for consumers. The Washington designers of a new “dairy compact” will be interested in just enough price enhancement to prevent milk shortages through farmers quitting, not in farm “prosperity” through parity with urban earnings, for that would mean—horrors—an increase in the consumer price of food.

And that, in turn, is why the oinkers of the recent market bubble shouldn’t be used as examples of a problem only more government can cure; in fact, the market itself has punished these companies and their executive suites quite well and reminded people that what is unethical and illegal isn’t usually profitable for long. The parallel lesson: government should be more concerned about pursuing its legitimate regulatory role (fraud prevention, in these cases) before it fantasizes about taking over whole new swaths of the private sector.

As for extending the command economy notion into agriculture because of current commodity prices, ask yourself whether the Mary Lease solution isn’t better than the Win Way solution. After all, lots of governments have tried to “manage” agriculture, without noticeable success; whereas the Mary Lease solution has worked on those infrequent occasions when it was actually tried: yes, there were successful milk strikes, as one can read in the history of what used to be called Dairyman’s League. Supplier “job actions” work in every other sector of this economy when prudently used. I would respectfully suggest that farmers read up on all this history as a counterweight to the misinformation they’re so often fed by folks who have their own best interests, and not the industry’s, as top priority. Ω