…wealthy ones, that is.
If there’s one thing Republicans learned from the Great Recession, it’s that wealthy people can reap the rewards from others’ misfortunes. The smart money moved out of the stock market early and that money was available to buy low when the market tanked. With some of that money, people got fantastic bargains on houses that had gone through the foreclosure process. Buy low, sell high – or just jack up rent on those who could no longer afford the American Dream.
That’s the new American Dream, isn’t it? The dream to be so rich, you stress over what to do with all that wealth.
But what’s a poor rich person to do now? The stock market has risen so much and with the wild swings of late, just imagine the stress of gaining or losing tens of millions in a few hours. And the housing market? Real estate prices have risen steadily since the trough in 2012 and are up 60%. There are signs of an upcoming recession. Perhaps now is not the time to invest fresh money in residential real estate.
So, what’s the next big investment? What’s ripe for the picking with all those billions of dollars?
Sadly, the answer may be the family farm.
No matter what side you’re on with respect to Trump’s trade war, all can agree that farmers have been feeling most of the pain so far. Many farmers have lost the majority of their business because so much of their soybeans and pork are purchased by Chinese customers. Farmers have built up those Chinese relationships over years of careful diplomacy and they’re worried that some of those customers will not be returning when Trump’s trade war ends.
That’s the thing about wars of any type; you dehumanize the enemy. In his war against illegal immigration, Trump paints the enemy as an invading hoard of rapists, thieves and murderers who are taking Americans’ jobs.
For the Chinese, Trump uses a different tact. The Chinese government is taking all the good jobs away from the U.S. by cheating. “China is killing us with unfair trade deals.” And from Fox News, “How does China cheat on trade? Let us count the ways.”
Notice the difference? For the war on immigrants, the enemy are people. For the trade war with China, the enemy is the country. But what about the other way around? What do Chinese people and Chinese company administrators think of Americans? They’re probably starting to feel unfairly attacked, that their trading partners are unreliable, and if they suffer under this trade war, it’s likely to be perceived as America’s fault rather than that of the Chinese leadership. The key is whether they blame America or Americans.
It may be very hard to rebuild those relationships between U.S. farmers and their Chinese customers when the trade war ends.
Trump’s solution was to give billions of dollars to farmers to offset their trade losses, but again, it’s the smaller family farms that are being harmed by this program. Larger farms, and those with wealthy investors have the resources to weather this trade storm, but many smaller farmers do not.
With a limit of $125,000 per “actively engaged” person or legal entity in the first round of relief payments, the average payment for the top 1 percent is $183,331, and one Missouri farm has received $2.8 million. With the vague actively engaged criterion, an investor who calls into a board meeting once a year qualifies for the payout.
The bottom 80% of the payments – those largely to family farms – are less than $5,000 each out of the first $8.4 billion paid. That is not going to save them. The loss of customers and drop in crop, dairy and livestock prices from Trump’s trade war are a more significant financial burden than that.
And so, we can expect to see a substantial change in ownership in the coming years. Some of those distressed family farms will be snapped up by developers for building new houses, but many will be purchased by large farming interests and combined into huge factory farming operations.
Once that happens – once a much higher amount of the agricultural output of the U.S. is from big businesses owned by wealthy investors – expect to see the end of Trump’s trade war. The president has always valued the opinions of the rich and powerful much more than that of the weak and replaceable, even if they’re those farmers he claims to love.