The EDA Center | at the University of Minnesota  
Commentaries on Greater Minnesota

Periodically we will present commentaries on topics of interest to community and economic developers across rural Minnesota. Below is a list of all commentaries with the most recent listed first.

 

Commentaries
The Agrarian Dilemma and the Budget Deficit
March 2009
Jack M. Geller, Ph.D.
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My late father-in-law loved farming. Even growing up on a farm in southwestern Nebraska during the Great Depression did not temper his enthusiasm for what he was sure to be his future occupation. Unfortunately, World War II put a major crimp in his career plan, and upon his return from the war, he found himself serving the farming communities in his region as the representative of the local gas company. But he never stopped thinking like a farmer.

Growing up on a farm connects you to the cyclical nature of life. As a city kid I was certainly smart enough to understand that there were four seasons and that each one was unique. But I never understood the seasons the way my father-in-law did. For him, each turn of the seasons brought new hope, new risk, new chores, new anxieties and new wonderment. He also had imprinted in him the idea that all of life is cyclical - you know, what goes around, comes around. And therein lies what I have come to call the "agrarian dilemma."

When you believe that life is cyclical it often gives you a straightforward strategy to addressing many of life's challenges. After all, no matter how long the drought lasts, you just know that sooner or later it's going to rain. And conversely, no matter how hard or long it rains, sooner or later you will see the sunshine again. With such a cyclical orientation, a reasonable strategy to is to hunker down and wait it out; after all, sooner or later it will change for the better. And there, in fact, lies the dilemma.

Hunkering down and waiting it out works for those challenges that are cyclical. If I only had a nickel for every time I heard my father-in-law state, "It's nothing that an increase in the price of corn couldn't fix!" Clearly, such statements reflected his belief that regardless of how low the price of corn dropped, sooner or later it would rebound. Accordingly, the trick was to reduce expenses, hunker down, and wait for corn prices to rebound. But what if the challenges that we are collectively facing today are not cyclical? In fact, I would suggest that many of today's economic challenges for both our state and our rural communities are not cyclical at all, but linear. In other words, what if what goes around doesn't necessarily come back around?

Thirty years ago when I was in college many of my friends opted out of college and went straight into the workforce. Looking back now, most of them were able to find well-paying jobs, enabling them to build a secure future for themselves and their families. But today with just a high school diploma such a successful outcome is much less likely. Clearly, education commands much more of a premium in the workplace than it used to, and all the hunkering down and waiting it out won't change that. Another linear pattern is the continuing replacement of labor with capital; and few industries exemplify this better than farming. Continuing advances in agricultural technology has in effect squeezed the majority of labor out of farming over the past 60 years. These are linear trends that are simply are not going to turn around.

So why do I bring up this concept now? Well I just returned from the Minnesota State Capitol where legislators are trying their hardest to grapple with a rapidly ballooning budget deficit that could reach $7 billion (unfortunately the February forecast had not been released at the time of this writing). And to be honest, all I heard were the same recycled remarks and strategies from 2003; the last time Minnesota faced a significant budget deficit.

In 2003 legislators made significant cuts to our state's education system (both K-12 and higher education); made cuts to aid our local cities and towns; and to our nonprofit sector. That, along accounting shifts; payment delays; the use of one-time dollars such as the state's tobacco endowment; and raising some money through increased "fees" made the budget appear balanced. But in fact the plan was simply: push the problem further out; hope that the economy comes around in a few years and voila - all is well again. But what didn't happen was that legislators never had that serious discussion and debate about how we Minnesotans collect our tax dollars and spend our revenue. They never addressed the question, "So how do we make sure this doesn't happen again?" So in a world of what goes around, comes around; here we are again a few years later grappling with the same challenges and hearing the same solutions: spending cuts; accounting shifts; use of one-time dollars; etc...etc...etc...

So here's an idea: recognize that our Minnesota economy has changed and these changes have an impact on how Minnesota can and should raise its revenue and how we should effectively spend it. Simply put, the missing ingredient in 2003 was our inability to enact any meaningful tax and expenditure reforms. Yes ... we can't cut our way out of this deficit, nor can we tax our way out. But if we again fail to implement serious tax and expenditure reforms this time around we will certainly continue to revisit this issue time and time again.

Geller is professor & head of the Arts, Humanities & Social Sciences at the University of Minnesota, Crookston. He also serves as the director of the federally-funded EDA Center at UMC. He can be reached at gelle045@umn.edu

This document was prepared by the University of Minnesota, Crookston under award number 06-66-05709 from the Economic Development Administration, U.S. Department of Commerce. The statements, findings, conclusions, and recommendations are those of the author(s) and do not necessarily reflect the views of the Economic Development Administration or the U.S. Department of Commerce.

The University of Minnesota is an equal opportunity educator and employer.

 
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