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Farmer's Market 

Published July 31, 2002 at 4:00 a.m.

Those moans you’re hearing from the hills of Vermont aren’t necessarily from the dwindling number of farmers trying to get their hay in. It’s more likely coming from the estimated 70 percent of Vermonters who’ve got money parked in a stock market that’s caught in a downward spiral.

Contrary to the image we like to portray as some kind of “socialist republic” (thanks, Bernie), the reality is that Vermonters are deeply in love with capitalism (thanks, Ben & Jerry). According to the Vermont Economy Newsletter, about 20 cents out of every dollar earned by Vermonters was derived from the stock market, a figure that has ranked us as high as third in the nation for our portfolio prowess.

The state’s heavy reliance on stock-market income allowed Vermont’s tax coffers to bloat into record budget surpluses during the dot-com market mania. In fact, the state had so much extra money, it created a “rainy day” fund of tens of millions of dollars.

Well, as Bob Dylan sings, the hard rain is falling — and the days of budget surpluses are long gone.

Ironically, Governor Howard Dean is using the state’s former fiscal health as a launching pad for his fledgling run for the presidency. But according to the state’s leading economists, it was not Dean’s fiscal policies that led to the state’s economic boom.

“Governor Dean is a very lucky man,” says economist Art Woolf, a professor at the University of Vermont and a director of Northern Economic Consulting. “But the truth is that governors have nothing to do with the economy and nothing to do with the market — and that’s where much of the surplus came from.”

The facts speak for themselves. In 1997, 62,500 Vermonters collectively reported about $767 million in capital gains from the stock market. By 2000, those figures had swelled to 80,000 Vermonters reporting $1.3 billion in stock-market revenues. And when the state takes 3 percent of it — presto! — you’ve got a rainy day fund.

Now, with the stock market taking a dive and the crimes of CEOs making the headlines, Vermonters and the rest of the nation are taking a more critical look at Wall Street. Even noted MIT economist Lester Thurow had these words of caution to investors in a recent New York Times op-ed piece: “The first and best solution is to warn all small investors that the game is rigged. No individual investor, no matter how well informed, can play on the same level as the major institutional investors, Wall Street firms and corporate executives.”

Then there are those folks at the top of the economic ladder who smugly counsel those at the bottom to “hang in there” during tough economic times. But losing 30 percent of millions of dollars is a lot different from losing 30 percent of a small retirement fund. Let’s just say that the landing is a lot softer for the former.

Nowhere is the smugness regarding the recent economic downturn more apparent than among the Bush administration’s economic advisors. Like foxes guarding the chicken coop, they’ve proved themselves unwilling to step in and offer more than pompous platitudes to soothe investors’ growing anxieties.

One need look no further than Bush’s top economic advisor, Treasury Secretary Paul O’Neill, when considering the blue-blooded response to this latest economic downturn. When confronted recently about his apparent lack of action, O’Neill barked this in response: “If people don’t like what I’m doing, I don’t give a damn. I could be sailing around on a yacht or driving around the country.”

So while millions of U.S. citizens are sweating bullets over how to fund their quickly approaching retirement years, O’Neill is laughing in their faces and threatening to do what any rich boy would do in times of trouble: go yachting. If the Democrats weren’t so complicit in the two-party thirst for corporate cash, O’Neill’s statement would be all they’d need to show Bush the door in 2004.

Perhaps the worst response to the recent market plunge would be to blame it on innocuous accounting failures or a few unethical CEOs. Congress and the Bush administration are rushing to pass legislation that amounts to rearranging the deck furniture on the Titanic. While it might make them look busy, it does nothing to fundamentally change the rules of the stock-market game.

“The American people have a much better understanding than members of the Bush administration or Congress that this is not just about a few bad rules or a few bad apples,” says Congressman Bernie Sanders. “This is about how corporations do business in America today, and about what members of Congress who take immense amounts of corporate money to finance their campaigns allow those corporations to get away with. If all that comes out of this are a few accounting reforms — necessary as they may be — most Americans are going to say, rightly, that the corporations were let off the hook again.”

And what are those rules of Wall Street? As Gordon Gecko of the now infamous hit movie, Wall Street, said: “It’s all about greed.” And nothing is more laughable than the current catcalls to make this game “more fair.” Fairness is the furthest thing from the minds of the greedy. Don’t forget, for the stock market to produce winners, it must also produce losers. So if fairness were really what this system was aiming for, we’d be dividing up the loot — fairly.

But the market downturn isn’t all bad. Think, for example, how delightful it is to not have to read about all those thirtysomething dot-commers retiring to buy up expensive, ocean-front properties. There’s nothing like a good market fallout for quieting the economic braggarts.

It’s just too bad the whole state has to suffer with them.

Michael Colby can be reached at mcolby@

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