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