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10 THE RURAL VOICE
IMPERFECTIONS OF
"FREE" ENTERPRISE
Keith Roulston, a newspaper publisher
and playwright who lives near Blyth,
is the originator and past publisher of
The Rural Voice.
Since the collapse of Communism
in the Soviet Union and across eastern
Europe, western leaders in govern-
ment and business have celebrated the
victory of our capitalist, free enterprise
system — and in doing so, managed to
gloss over its problems.
Although our system has proved
itself more practical than the utopian
attempts at centralized control under
the Communist system, free enterprise
as practised today is still far from
perfect. For that matter, it's far from
"free."
Free enterprise's imperfections are
clearly evident in the book "Storming
the Magic Kingdom" by John Taylor.
The book recounts the attempt in 1984
of corporate raiders to take over Walt
Disney Productions. The takeover
attempt is typical of business in the
1980s where an individual with a lot
of cash and more nerve saw the
Disney stock was undervalued
compared to what could be gained if
new owners could sell off various
parts of the company, piece by piece.
For the corporate raider, it is vir-
tually a no -lose case: if you succeed
in the takeover (using borrowed mo-
ney), you can sell off the company's
various assets (in Disney's case the
studio, the theme parks, the real
estate) and make enough money to
pay back your bank loan and still have
a handsome profit. If you lose out, the
company will gladly reward you with
a handsome profit on the shares you
had accumulated, just to be rid of you.
They call it "greenmail."
The ultimate victim in the whole
battle was Ron Miller, Walt Disney's
son-in-law, who was president of the
company at the time. Critics said they
didn't like the way he was running the
company; Miller argued that he had
taken steps that were in the long-term
good of the company. His opponents
agreed he was probably right, but they
cared more about their stock price
than long term profits, so Miller had to
go.
Stocks were originally conceived
so people with good ideas could raise
the money to start and run a business.
For his risk, the shareholder would
share in the profits of the business.
But somewhere along the way, specu-
lation in the trading of stock became a
faster, more important way of making
money than the dividends paid by the
company. Now executives must
worry more about their next quarterly
report and the effect it may have on
the stock market than about the long-
term goals of their company. Some-
where along the way, we've lost sight
of the goal.
Much the same thing happens in
the futures market for agricultural
commodities. The actual production
of commodities takes a back seat to
the riches that can be made by the
sharp trader of futures. Often, there's
more money to be made in a disaster
for farmers in Kansas, Argentina or
Ontario than there is in a bumper crop
that would feed the world.
The naive person would think that
the purpose of food production was to
feed the people and therefore reward
the person who produces it. Yet, the
food producer is really just the creator
of a raw material on which everyone
else makes money. The truck driver
who hauls the cattle or the crops from
the farm, the guy who works in the
factory, mill or slaughter house, the
owner of the trucking company, the
processing company, the wholesale
company, the supermarket, not to
mention the buyers and sellers on the
commodity market, all make far more
from the farmers' work than the
farmer — without taking the risk.
In fact, about the biggest risk most
take is that one day farmers might get
fed up enough to quit and leave them
nobody to provide the raw materials
that keep them employed.0