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The Farm Debt Crisis of the 1980s.

The Farm Debt Crisis of the 1980s is Neil Harl's personal account of the events leading up to and surrounding the recent farm debt problem in the Midwest. Harl's expertise in the fields of agricultural law and finance, along with his excellent understanding of the institutional and political infrastructure of modern agriculture, makes him well qualified to address the topic.

According to Harl, the essence of the farm debt crisis rests with the macroeconomic policies of the early 1980s. These policies basically resulted in high interest rates and a strong dollar which "set up" the agricultural production sector for the fall it took in the mid 1980s. Throughout the book Harl maintains that the macroeconomic forces impacting the sector were the major cause of the problem, not farmers. In part, I agree with Harl and his assessment of the deleterious impacts that national economic policy had on the sector. However, farmers and lenders at the local level should have been aware of the large amounts of debt being incurred. Harl does not shake a bony finger or preach to the victims of the crisis at all. Perhaps he believes the victims of the crisis have suffered enough and feels compelled to point out the importance of the macroeconomic forces which set the stage for the crisis.

Economists with interests in finance, public policy, and applied welfare analysis could all possibly gain from reading Harl's work. From an applied welfare perspective, Harl consistently argues that public sector intervention in the crises was warranted simply because the present value benefits from intervention and debt restructuring outweigh the costs of nonintervention. Harl's case for intervention is perhaps the most compelling feature of the book because it has such broad implications for loss sharing of catastrophic events in other sectors of our economy such as the problems of the savings and loan industry or the potential insolvency of large insurers. When the farm debt crisis is placed into this larger context, the book should generate a higher level of interest than the title suggests.
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Author:Zacharias, Thomas P.
Publication:Southern Economic Journal
Article Type:Book Review
Date:Jul 1, 1992
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