Friday, May 20, 2016

What's That About Bill Clinton's Fantastic Economic Performance? Tell It To South Dakota's Ag Industry, Hillary.

     Hillary Clinton last week told a crowd of Kentucky primary voters that she'd put her husband and former President Bill Clinton in charge of the economy if she wins in
Financial De-reg Happens, 2000
Hillary Touts Him Now For The Economy?
(photo from democratic
She said Bill will be "in charge of revitalizing the economy because, you know, he knows how to do it."  Though, honestly, I'm likely to vote for Hillary in a two-way match-up against Trump (I've already noted here why I think his trade-war rhetoric would be a disaster for South Dakota's ag economy), I wish she'd lighten up on the over-hype about Bill Clinton and his economic performance. He didn't set off the information technology boom nor create the sharp drop in oil prices that kept the '90s economy perking. And as far as the grain and livestock markets--the lifeblood of South Dakota's rural economy--are concerned, Clinton's administration was a disaster.  Prices stagnated during the 90s, falling in real terms as SD producers had to pay continually higher prices for their operating supplies.  

     President Clinton's main farm policy "achievement" was signing the notorious Farm Bill of 1996.  It was a ham-handed effort at eliminating subsidies. Dubbed the Freedom To Farm Act in Washington, it was known as the Freedom to Fail Act in the local ag community.  Subsidies gradually had to be reinstated to prop up farmers who couldn't otherwise survive the selloff in ag prices that occurred by the end of Clinton's tenure in the White House.  Clinton simply did not understand that price volatility is such an inherent component of agricultural markets that the government always has to stand ready to help out ag producers when plunging prices, often caused by global and natural events beyond their control, threaten to put them out of business.  Free marketeers might say so what?, but a productive rural economy guarantees the food supply to this nation of 300 million people.  President Clinton expressed some concern about the bill's lack of a safety net, but went ahead
De-regulated Markets, 2008
Who Knew?  Not Clinton, For Sure
(photo from
and signed it just the same, going along with the GOP congress and leaving a lot of American farmers in pretty tough shape during the next few years, when prices did indeed collapse.

    Further kow-towing to the financial libertarians in Congress, Clinton closed out  his last term by signing a couple of the most disastrous financial deregulation bills in history.  The most well-known is the Financial Services Modernization Act, which disintegrated the firewall between brokers and bankers, making easy money lending to unqualified borrowers a way of life that blew up in 2008. The second is more commodity-connected and less well known, but just as insidious in effect.  It was the Commodity Futures Modernization Act of 1999, which allowed the derivatives market to trade independently of oversight and regulation of the Commodity Futures Trading Commission.  I was a broker registered with the CFTC at the time, used to lots of regulation.  Although it seemed odd and a bit uncharacteristic for the regulatory reins to loosen, loosen they did, and Clinton's handiwork turned into a near-apocalypse eight years later.
     I don't think Bill Clinton understood the implications of what he was doing, either on farm policy or financial deregulation.  Using him and his track record as a prop for her economic platform is predictably political, but Hillary should know that doing so runs the risk of sudden exposure.


  1. Shirley Harrington-MooreMay 20, 2016 at 3:11 PM

    The Governor of Puerto Rico just rescinded her endorsement of Hillary. She's had several talks with the Clinton people but Bernie was the one who came, listened and asked questions. It's like President Obama said in 2008: She will say she'll do things but won't. Sad.

  2. With Trump as the alternative, I'll take HRC any day.

  3. Albeit my memory banks are subject to error, but I recall many an approving voice from neighbors when the 'Freedom to Farm' legislation was passed. I am quite certain, however, that I observed to my late wife that those who were cheering the result would surely rue the day. With all due apologies to Monty Python and Company, in the United States, a totally free market is akin to the Spanish Inquisition: both are unexpected and unpleasant. I would also avow that the free market vanished with the passage of the first tariff legislation.

    1. That's about the way I remember the evolution of the '96 Farm Bill too, Jerry. Here's a 2002 recap of the way it went. You'll have to C & P the url as I can't link in the comment section: