Feb. 14, 2016 SIGN IN | REGISTER

Smith: Shallow-Loss Insurance Assumes an Ignorance

Finally, a typical main street business person or Fortune 500 CEO would love to have a government program that uses taxpayer funds to top up their firms’ revenues when, for any reason whatsoever, their sales shrink by more than 5 percent or 10 percent. They would also know such a program would stultify competition, limit innovation, create barriers to entry for young entrepreneurs, encourage foolish risk taking, remove most incentives for competent management and fairly rapidly undercut their industry’s global competitiveness.

As the American Farm Bureau Federation recently noted in a letter to the House and Senate Agricultural committees, that sort of shallow-loss program will damage productivity, create incentives for farmers to make foolishly risky decisions, make life harder for young people who want to enter farming and (my addition) undercut the farm sector’s ability to compete with countries around the world.

The proposal by Scroll, Niemeyer and Goule does nothing in the way of helping America’s recovery from its debt crisis and economic malaise. Instead, it will only add to the national debt.

Vincent Smith is an agricultural economist at Montana State University and a visiting scholar at the American Enterprise Institute.

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