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June
12, 2001
Editor,
Jefferson
Review
Louisville,
Ky
I
write today in response to the Editorial of June 11, 2001 entitled
“Kentuckians Forced To Pony Up”. It touched a nerve close to my heart.
This
article is a classic example of taking a snippet of “news” and
applying textbook Libertarian and free market principles to it without
really understanding the realities of the industry and its historical
relationship with government. There is no better example of pure free
market dynamics than the racehorse industry, except for government
intervention.
I
will wager that there is not a more state taxed and regulated industry in
Kentucky than the thoroughbred industry (possibly coal and/or tobacco, but
I doubt it.) It is unbelievable that the industry continues to thrive
given the parasitic state burden it operates under. The only reason it
does survive is that there are still enough people in the world who will
pay their hard earned cash to delight in the majesty of the running horse.
The
horse industry in Kentucky, as elsewhere, is composed of a free market
triumvirate of breeders, owners, and racetracks (there are owners who
breed to race, but that is the exception.)
These groups engage in a symbiotic economic relationship - they all
need each other. Money comes into this industry through a number of
outside sources, namely owners who earn money from other endeavors and
invest it in racing and breeding stock, the betting public at race tracks
that provide the main influx through the betting window
(handle)
which finances racetrack revenue and purses for owners, marketing revenue
as from television rights, etc., etc. In almost all of these transactions,
the state reaches in with its greedy paws and extracts (maybe extorts
would be a better word) a percentage. The state shows up at the racetrack
where the handle is taxed, sales taxes on horses sold at auction, payroll
taxes on the workers of the industry, taxes on stud fees, sales taxes on
hay, feed, veterinarians, horseshoes, jockeys fees, trainers fees, ad
nauseum!
Then
there is the Kentucky State Racing Commission, which regulates almost
every facet of the enterprise. It is supported of course by the industry
itself through trainers, jockeys, and owner’s license fees, along with
exorbitant racetrack licensing fees. Get the picture? This industry, which
by the way, is the largest agricultural industry in the state and brings
in more out-of-state dollars than any other, has been and is being raped
by the same state and its taxpayers that your article defends.
Let
us look at the reality of the latest industry problem and Patton’s dumb
proposal. The actual people who will be hurt by mare reproductive loss
syndrome are the little operators who board mares in foal, stallion owners
who operate at the lower end of the stud fee chain where stud fees are
payable “only if the foal stands and nurses”, and some mare owners who
will not have the mating they planned and may end up with a barren mare or
one covered by an unplanned stallion. The big, politically connected,
“landed gentry” of the industry are in a better position to weather
the storm. However, hardly in any case, will anyone who understands this
business be dumb enough to borrow money from anyone at any interest rate
to reinvest in such a risky business (look at what happened in the late
1980”s to this industry when they did), except maybe those who would not
have the asset base to qualify for the loan in the first place. Also, what
we are talking about is loss of revenue, not investment capital for assets
from which to derive income. Who would ever borrow money (which we assume
is to be paid back) to replace income? Income to pay farm workers to take
care of mares that are gone? Income to replace stud fees that were not
earned? You want to be bankrupt? Breed or buy horses on borrowed money.
Murphy will move in and live in your barn!
What
would a small boarding operation that employs maybe six to eight people at
the most do with the money anyway? Bribe mare owners to bring their mares
back to Kentucky? Not likely. What would a stallion owner do with the
money? If the mares are
pregnant and gone, it’s not a problem for them. If the mare is not
pregnant or lost the foal, they have until July at the latest to re-cover
the mare. If the mare owner decides to go elsewhere for a stallion cover,
then the loss of opportunity of a stud fee cannot be replaced by a loan,
which is unearned.
Your
article mentions insurance as the proper answer for this industry. Have
you ever got a quote on “live foal” insurance? Or mortality insurance
for any horse? Now for that you may need a loan. The only people who can
afford “live foal” insurance are those who shop at Tiffany’s where
they pay six figure stud fees with no live foal guarantee. Maybe if the
parasitic state was not smiling at the industry on the one hand while
stuffing their hands into its pockets more mare owners could afford to be
insured against catastrophic loss. The state will also lose millions in
tax revenue from this tragedy. But then they don’t need insurance - they
have us citizens to fall back on.
In
conclusion, if there are a few breeders or lay up operations who see
Patton’s dumb idea as a remedy for their problem, then good for them, I
hope they get it - after all, it’s a miniscule part of the money the
industry earned anyway. However, the real reality is that Patton is just
blowing political smoke to get points from the majority populace who think
anything that smells of a government giveaway is good old American
altruism (like FEMA, student loan subsidies, etc.) while misleading the
horse industry uninformed minority Libertarians to rise up in indignation
at something that is a lark at best. Your article should focus on the real
continuous problem - “Kentucky Taxpayers have been Feeding off the
Entrepreneurial Kentucky Horse Industry for Decades”.
Hal
Burge
Crestwood,
Ky.
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