A Tale of Two Regions

DATELINE: Port Gibson, MS. On our way to Mississippi to visit family we stayed overnight in Dumas, Arkansas, which, according to local claim, is in the heart of the Mississippi Delta region. (This is not the “Mississippi River Delta” as in the “mouth of the river” south of New Orleans; this is “Mississippi Delta” as in the flat, delta-like land stretching either side of the river from Memphis to Vicksburg where “Delta Blues” music came from.)

Thursday morning we drove south from Dumas through the heart of the Mississippi Delta – some of the richest farmland in America. Last summer some of this land was under the waters of a so-called “500 Year Flood” along the Mississippi and Missouri rivers. This year the farmers are getting it back into cultivation. Seeing this recently ravaged, but once again reclaimed and productive land got me thinking about capitalism, mercantilism, and liberty – a topic I haven’t attended to in these essays for quite some time. [Just a note: On the right side of the web page, scroll down to the “Posts by Category” section and click on the “Liberty” category to see the eight previous essays in this series.)

In my essays on liberty I have made a careful distinction between Capitalism and Mercantilism.  Capitalism is an economic system rooted in the free market where market forces determine production, prices, distribution, etc. In political and classroom discourse, Classical Capitalism is most typically contrasted with Classical Socialism, which can be defined as State involvement or control of the means of production, distribution, and prices.

But America is neither capitalistic nor socialistic (although these terms get thrown about a lot, albeit in a rather loose manner). The economic system we have is more properly understood as Mercantilism.  For a detailed technical discussion of mercantilism the article in the Library of Economics and Liberty is very good. For a brief definition, mercantilism is a system of cooperation between government and big business through which big business reaps most of the rewards while much of the risk is born by the taxpayers.

Historically, when money was backed by gold, this arrangement allowed governments build their gold reserves. The trade-off was to give the big businesses with which they were cooperating a competitive advantage. Large multinational businesses were able to increase their profit with little risk while governments built their gold reserves through the resulting trade imbalances, and as long as things were good, everyone in the country benefited. But when things took a turn for the worse, the taxpayer took the brunt of the loss, leaving big business with their profits intact and the government with gold.

Since the demise of hard currency back in the 70s mercantilism has a slightly different character, but the basic structure remains the same. There is close cooperation between big business and government (and today we would have to add the big banks and their currency manipulation which have replaced the hard currency of gold as the third leg to this stool). But it is still true that when there is a downturn, the taxpayer remains responsible for most of the risk.

Wednesday afternoon, on our trip from Kansas City to Dumas, we drove through some of the prettiest country in the U.S. The Ozarks, from Springfield, Missouri down to Little Rock, Arkansas, besides boasting great beauty, also lay claim to very thin, rocky soil which results in poor farmland. the effect is a poverty-stricken region where the farmers barely survive on their farms and the surrounding communities that support the farms are equally poor because so little profit is made on the farms.

In contrast, some of America’s richest agricultural land is found in the Mississippi Delta region a couple hundred miles to the southeast. Historically, the people who were lucky enough to settle in that region made huge fortunes through farming. Even today it is valuable farm land where huge profits can be made.

Of course the reason the Mississippi Delta soil is so rich is that the whole region is river bottomland that, without human intervention, is prone to flooding and periodic changes in the path of the river. The very wealth of the land is built on the destructiveness of the river. In modern times we’ve channelized the river and turned this bottomland into seemingly permanent farmland. The farmers who own it now get the benefit of the once erratic river while the taxpayers pay the cost of the levee system that controls the river. (And only the occasional 500 year flood belies the myth that we control the river.)

And in the event of a 500 year flood, these bottomland farmers also receive payments from the government taxpayers for the destruction of crops and property. The poverty stricken farmers up in the Ozarks have none of the advantages of the farmers in the Delta. Yet when that 500 year flood comes along or a levee needs to be rebuilt, the Ozark farmer’s taxes go to pay for the Delta farmers’ success. In other words, the reward goes to the Delta farmers with the risk passed off to the taxpayers … the very essence of mercantilism.

This illustrates the great extent to which mercantilism has infiltrated our economic system. It is no longer just cooperation between big business and government for the sake of successful foreign trade and a positive trade balance (the classic definition of mercantilism); it is now a cooperative effort between even small businesses and government at the expense of all the taxpayers.

Liberty could be described as “the conditions which allow people to govern themselves.” Our contemporary system of mercantilism, where some people are able to make large profits while passing off the high risk to the taxpayer, undermines liberty because mercantilism is necessarily rooted in coercion. (Those poor Ozark farmers do not willingly nor gladly pay the cost of the risk while the Delta farmers get to keep the majority of the reward.) And once a system of coercion is in place, we become accustomed to government coercion and allow it in other facets of our life together. Coercion – any coercion – is an acid which eats away at the foundation of liberty, creating a culture of dependence.

Sing those Delta blues, my friend, but don’t sing for those Delta farmers, sing it for the Ozark mountain folk eeking out a living in the rocky hardpan hills. That lonesome music may be the only reward they’ll get. for risking their future to the vagaries of mountain farming.

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