06/21/2024
"What about wealthy farmers?" Someone asks on the thread where I found this image.
Fundamentally, most Americans fail to understand the difference between wealth and being wealthy.
Wealth is stored value, assets, etc. You can have a little wealth, or a lot. A person with shoes may appear wealthy to a person without.
This is the problem with the "tax the billionaires" crowd: Musk is filthy rich, ok. But he has millions available to use, not billions. If Musk were taxed as if his *net worth* were *income*, it would destroy thousands of jobs, hundreds of businesses, and a great deal of it would evaporate never to be recovered. Not hidden, but destroyed as surely as if it had been burned up. Because a great deal of the value in things is perception of their value. Dump millions of shares of Ford stock, EVERYONE's Ford stock takes a hit. Cashing out Musk's wealth means liquidating assets, selling equipment, facilities, foregoing investment in development. It's killing and eating (consuming) the goose rather than collecting the eggs.
Farmers sometimes have high dollar value assets such as land and capital equipment. These are not readily convertible to cash, and definitely cannot (say in the case of a multimillion dollar harvester) have their purchase value recaptured by sale; only by using them over the course of years can one *eventually* recoup the cost of depreciating equipment. Think of it like buying. Anew car. A day after you buy that car off the lot, it's a used car. It has lost the "new car" portion of its value. The older it gets, the less it's worth. Maybe it was a $50k car when you bought it. A year later it is worth nowhere near that. Farm equipment depreciates to a certain level and then has a low minimal value as long as it still works. Like a car that runs has a certain minimum value, but if you sell it you can't get to work, and if you try to sell it quickly you won't even realize the nominal blue book value.
Land can't be immediately sold for full value. It either takes time or it goes at a discount. In either case, selling these things eliminates the farmer as a going concern. The capacity to produce value is destroyed or at best transferred to someone else. Usually such a transfer also results in at least temporarily diminished production capacity.
But the popular narrative has no understanding of effects, much less of second and third order effects.