Blog 9 April 6, 2014 Farming
is at the heart of our economic problems… and our economic solutions
(apologies this did not get published previously... please refer to Blog 8 and 10 for its placement in sequence).
Scenario: there is an important
strike, some problems are for more money, the government is deep in debt and
has no spare money… so now what?
Conundrum: Approximately 50% of
people work for the Nova Scotia government creating essentially no new wealth.
This leaves 50% of which 25% cannot work due to being either too old or too
young, and the remaining 25% (of which 5% can’t work) leaves only 20% of the
population to create the needed wealth to run Nova Scotia. This 20% is
seemingly diminishing, so what now of the future? A mystery to me! However,
maybe there is a partial solution: Parity. Some years ago a parity Bill 215 was
debated. This Bill would put the economy back on track, get the unemployed and youth to work. It will guarantee farmers cost of production
plus a small profit. It will lead to a
balanced government budget and will not require subsidies or stabilization
spending. Sounds too good to be true?
National prosperity is the dream of
all Canadians. National prosperity is possible. The key is reintroducing the
Parity Bill.
Parity is the truth. It is a fact, not theory. It has been proven in history backed with 40
years of research and a national economic audit. This key to national
prosperity is parity based on Wilken’s law. Wilken’s law states that for any
nation in the world to prosper, new wealth must be created. New wealth comes from our basic resource
industries farming, fishing, forestry
and mining. New wealth represents something new is created, something of
value coming from the soil or the sea.
Example: a farmer plants one bushel of corn and reaps 300 bushels of
corn. That is 299 new bushels of corn that never existed and haves created. That 299 bushels of corn is new
wealth. Still behind the Wilken’s law is this: at the end of the great
depression in the 1903s the US government hired a brilliant mathematician and economist
Carl Wilken. This task was to research
and document what led to and caused the great depression. In the course of his work, Carl Wilken
uncovered an incredible relationship between new wealth and the state of the
overall economy. Wilken discovered that of the four basic industries agriculture
provided 70% of the new wealth into the economy each year. But what is more
fascinating is that he discovered a direct relationship between farm income and
national income. Here is the key: Wilken’s research revealed that whenever farm
income equaled 1/7 of the national income, the entire nation prospered, and
whenever farm income equals less than 1/7 of the national income we slide
into a recession, and if low farm incomes persist, we plummet into a full scale
recession. I believe we are possibly on the brink of that right now, this
certainly applies to Nova Scotia.
That is Wilken’s law. The income of the family farm is the key to
the economic well being of everyone in the entire nation. It is that simple. But
government and society fail to recognize it. Why is it that farm income is so
important for the nation’s people? First of all, farmers create new wealth -
70% of it! Secondly, farmers support all the service industries. Have you ever counted how many service
industries ride on the farmer’s back? Look around you. Everyone receives from
the farmer… the butcher, the baker and candlestick maker. Half a million
Canadians are employed directly by the agriculture industry. If you think
unemployment is high now, you have not seen anything yet. It can get worse,
unless governments get back to basics, and support the agricultural industry.
Why? The income that goes to farmers for producing new wealth turns into income
for the rest of the people in the economy. These people spend it again, jobs
are generated and the whole economy percolates.
Farmers are spenders! Simulators!
And don’t hoard dollars in savings accounts. Every dollar that a farmer spends generates 7 more dollars into the economy ($3.65 stays in the county where the
farmer lives). When farmers receive true value for the food they produce we
call that parity. Parity gives the
farmer the cost of production plus return on his/her investment. That sounds fair and reasonable, doesn't it?
A short while ago it was stated that the average North American farm family
unit feeds themselves and 90 others. Parity gives that farm family adequate
income to buy back the goods and services of 90 people. This is what you call a perfect balance. This
is what gives a nation or a province balanced economy.
We used to have a balanced economy
and this country has known prosperity.
It is a national fact that the years 1942 – 1952 have been recorded as
the most prosperous years ever known in history for entire nations. Do you know
why? Because from 1942 to 1952 the farmers in the US, especially, were
guaranteed parity by law (fair price) positive economic ripple effect was felt
right around the world. Why farmers were guaranteed parity is because of Carl
Wilken. How they lost it is the horror story we are living with today. I
believe this applies now (but let us be positive). We can make changes for the
better.
The next blog will be the history of
Parity and we will continue the story.
Some resources: Carl Wilken
