Nick Shaxson ■ How the Finance Curse hurts U.S. agriculture
An article in the U.S. magazine The Nation, written by today’s blogger (pictured above), highlights how the finance curse strikes U.S. agriculture.
It starts by focusing on the political divides that seem to have opened up between the so-called “coastal elites” which tend to vote for Democrats, and more rural constituencies, which voted more heavily for Donald Trump in the last elections. Voting patterns are obviously more complex than that, but the article highlights that there is great resentment among many people in urban centres about “whining and begging” rural farmers taking handouts.
Once the finance curse analysis comes into the picture, however, the picture changes completely. As the article notes:
both the narrative that subsidies flow from “coastal elites” to farmers and the fatalism about rural economic decline indicate a profound misunderstanding of what’s actually going on.
That’s because of the role of financial players, institutions, mechanisms and techniques, often on behalf of distant shareholders. Several decades ago, much of the wealth that was created from the soils, sun and rains tended to circulate back to local communities, as farmers bought inputs and services from local seeds suppliers, grocery stores, parts suppliers, doctors, restaurants, banks, insurance firms, and so on. Since the 1980s in particular, “financialisation” has happened: the penetration of financial players, techniques, institutions and mechanisms into every step of the agricultural process.
Large firms often based in distant money centres have gobbled up the local players, taken these formerly local services in-house, cut out the local suppliers, and sent the dividends off to shareholders and owners in New York, Chicago, Houston, and overseas and offshore. Those local circulatory systems for wealth have been unrolled and turned into a one-way conveyor belt shipping wealth outwards.
We have already pointed to the same essential geographical story in Britain, as private equity firms and other predatory players based substantially in London extract wealth from other parts of the country, not just redistributing wealth upwards, but harming overall national prosperity too.
This giant extraction machine generates tremendous anger, of course. But the article goes on to say that this extraction isn’t just happening in agriculture: it’s happening all across the economy.
It turns out that rural U.S. farmers and those “coastal elites” are on the same side of the real economic divide, which is between the beneficiaries of the financial extraction, and those being extracted from. In this analysis, of course, lies the seeds of some potentially interesting political alliances.