WHEN SHOULD PERSONAL DECISIONS BECOME GOVERNMENT DECISIONS
According to many , the harms from cigarette smoke are well known and scientifically documented. Many on both sides of the issue have stated that they purposely avoid restaurants that allow smoking by eating elsewhere.
One might compare bans on smoking to restaurant inspections, bans on leaded paint, or drunk driving laws, all of which are implemented to protect the public from harm.
When should government get involved? One case is when individual decisions harm others without compensating them. This is what economists refer to as a ‘negative externality.’
In some cases, if individuals can come to an agreement on their own through property rights, exchanges, contracting, or some other type of arrangement, government intervention may not be necessary. However, in the case of drunk driving, it is not possible for other drivers to know who is intoxicated and who isn’t. No agreement can be made to avoid harm. In purchasing a home, one may not be able to contract for the effect of lead poisoning if they are unaware about the use of lead paint. When eating at a restaurant, it may not be possible to know if food was handled properly before eating. In these cases when there is both an information and bargaining problem, the theoretical argument for statutory action by government is often accepted.
When it comes to making an argument for implementing a smoking ban, two important questions should be asked. Is there sufficient information available so that when citizens enter a restaurant they can recognize the presence of harmful second hand smoke and understand the danger it poses? If so, does the market provide a way to easily avoid it? If you have trouble answering this, re-read the first paragraph.
Tuesday, July 31, 2007
FARM BILL: WHERE OUR ALLEGIANCES LIE III
A final excerpt from an e-mail I received encouraging me to oppose new farm bill legislation.
“When you think of family farmers, do you picture comedian David Letterman or former NBA star Scottie Pippen? How about billionaires like David Rockefeller and Microsoft co-founder Paul Allen?”
In a previous post I addressed the issue of the family farmer.
“Local governments and fad enthusiasts may be trying to capitalize on the romanciticism of old fashioned agriculture to promote tourism via pork barrel spending. I think this undermines those legitimate producers interested in transitioning from tobacco to produce, and tarnishes the image of the modern producer and the self-reliance that modern technology makes possible.”
‘FARMERS’ MARKETS” March 23, see ‘agricultural economics’ label
Here are some additional key facts regarding farm programs:
1) Total spending on agriculture comprises 1% of the federal budget. Of that amount, less than half is allocated to the producer. The bulk of the rest is spent on aid to the poor and school lunch programs.
2) Despite that the funding is a small proportion of total federal spending, there are still market distortions that result from these programs.
One Iowa State University economist has pointed out that up to 1/3 of the price of farmland can be attributed to government payments. In fact many producers have expressed that government programs have increased the price of land and impeded their ability to expand their operation and remain competitive.
In conclusion, to have a consistent position opposing the farm bill you have to be dedicated to embrace modern science and biotechnology and be opposed to creating market distortions.
“When you think of family farmers, do you picture comedian David Letterman or former NBA star Scottie Pippen? How about billionaires like David Rockefeller and Microsoft co-founder Paul Allen?”
In a previous post I addressed the issue of the family farmer.
“Local governments and fad enthusiasts may be trying to capitalize on the romanciticism of old fashioned agriculture to promote tourism via pork barrel spending. I think this undermines those legitimate producers interested in transitioning from tobacco to produce, and tarnishes the image of the modern producer and the self-reliance that modern technology makes possible.”
‘FARMERS’ MARKETS” March 23, see ‘agricultural economics’ label
Here are some additional key facts regarding farm programs:
1) Total spending on agriculture comprises 1% of the federal budget. Of that amount, less than half is allocated to the producer. The bulk of the rest is spent on aid to the poor and school lunch programs.
2) Despite that the funding is a small proportion of total federal spending, there are still market distortions that result from these programs.
One Iowa State University economist has pointed out that up to 1/3 of the price of farmland can be attributed to government payments. In fact many producers have expressed that government programs have increased the price of land and impeded their ability to expand their operation and remain competitive.
In conclusion, to have a consistent position opposing the farm bill you have to be dedicated to embrace modern science and biotechnology and be opposed to creating market distortions.
Friday, July 27, 2007
FARM BILL: WHERE OUR ALLEGIANCES LIE II
Another note related the e-mail in opposition to the proposed farm bill.
“Moreover, by disproportionately subsidizing corn, wheat, and soy, the current Farm Bill encourages us to eat cheap, unhealthy, and fattening processed foods instead of fresh fruits and vegetables. As writer Michael Pollan puts it, "the reason the least healthful calories in the supermarket are the cheapest is that those are the ones the Farm Bill encourages farmers to grow."
It is true that many versions of farm programs reduce risk and increase the price farmers receive for their crops. This would have a supply effect making corn, wheat, soy, and meat products less expensive. However, commodity prices make up a very small proportion of the price we pay for food in the grocery store.
Farmers grow corn, wheat, and soybeans because they are food staples, not because congress legislates it via farm programs. Fruits and vegetables, which are not staples but make healthy supplements to our diets, will always be more expensive because they are riskier and more labor intensive among other things. Farm programs that encourage grain crop production have no effect on this.
With advanced genetics corn, wheat, and soybean products are actually becoming healthier and better for the environment. Vestive soybeans have healthier oils, low phytate corn reduces animal waste and groundwater pollution, Bt corn exhibits lower levels of carcinogenic mycotoxins.
SOURCES:
http://www.asas.org/midwestern/press/allee.html
http://www.plantbreeding.iastate.edu/lowlin.html
http://www.whybiotech.com/index.asp?id=1973\
“Moreover, by disproportionately subsidizing corn, wheat, and soy, the current Farm Bill encourages us to eat cheap, unhealthy, and fattening processed foods instead of fresh fruits and vegetables. As writer Michael Pollan puts it, "the reason the least healthful calories in the supermarket are the cheapest is that those are the ones the Farm Bill encourages farmers to grow."
It is true that many versions of farm programs reduce risk and increase the price farmers receive for their crops. This would have a supply effect making corn, wheat, soy, and meat products less expensive. However, commodity prices make up a very small proportion of the price we pay for food in the grocery store.
Farmers grow corn, wheat, and soybeans because they are food staples, not because congress legislates it via farm programs. Fruits and vegetables, which are not staples but make healthy supplements to our diets, will always be more expensive because they are riskier and more labor intensive among other things. Farm programs that encourage grain crop production have no effect on this.
With advanced genetics corn, wheat, and soybean products are actually becoming healthier and better for the environment. Vestive soybeans have healthier oils, low phytate corn reduces animal waste and groundwater pollution, Bt corn exhibits lower levels of carcinogenic mycotoxins.
SOURCES:
http://www.asas.org/midwestern/press/allee.html
http://www.plantbreeding.iastate.edu/lowlin.html
http://www.whybiotech.com/index.asp?id=1973\
Thursday, July 26, 2007
FARM BILL: WHERE OUR ALLEGIANCES LIE
I received an email recently from someone opposed to the farm bill. Part of their critique was as follows:
“Amazingly, they're some of the people receiving your taxpayer dollars in the form of crop subsidies, which overwhelmingly benefit absentee landlords and big agribusiness at the expense of farmers in America and the developing world who are struggling to feed their families.Here’s one example: In West Africa, millions of desperately poor people farm cotton to make a living, often surviving on less than $1 a day. But our cotton subsidies make it more difficult for these farmers to survive by artificially lowering the price of cotton in violation of international agreements…..”
It is true that cotton subsidies may give our producers an advantage over poor farmers in less developed countries. I understand the author’s critique. On the positive side, advances in biotechnology have if not leveled the playing, certainly improved the standards of living, public health, and productivity for poor farmers.
If we are to believe that the farm bill will be detrimental to small farmers and the developing world, and oppose it on those grounds, then should we not favor a technology that benefits the 3rd world?
Ironically, I would bet that those opposed to the farm bill are also opposed to the promotion of GM (genetically modified) food crops in developing countries. Even people in developing countries that may complain about unfair trade often have their own ironic opinions related to this issue. Zambian President Levy Mwanawasa has been quoted making the statement that he "would rather let his people starve than eat anything 'toxic" - referring to biotech foods vs. conventional and organic. His, and other government’s antitrade policies are often cloaked in concern for ‘food safety’ and other rhetoric.
SOURCES:
"Acreage Under Bt Cotton Set to Increase: Study," Indo-Asian News Service
http://allafrica.com/stories/200706051019.html?viewall=1
“Amazingly, they're some of the people receiving your taxpayer dollars in the form of crop subsidies, which overwhelmingly benefit absentee landlords and big agribusiness at the expense of farmers in America and the developing world who are struggling to feed their families.Here’s one example: In West Africa, millions of desperately poor people farm cotton to make a living, often surviving on less than $1 a day. But our cotton subsidies make it more difficult for these farmers to survive by artificially lowering the price of cotton in violation of international agreements…..”
It is true that cotton subsidies may give our producers an advantage over poor farmers in less developed countries. I understand the author’s critique. On the positive side, advances in biotechnology have if not leveled the playing, certainly improved the standards of living, public health, and productivity for poor farmers.
If we are to believe that the farm bill will be detrimental to small farmers and the developing world, and oppose it on those grounds, then should we not favor a technology that benefits the 3rd world?
Ironically, I would bet that those opposed to the farm bill are also opposed to the promotion of GM (genetically modified) food crops in developing countries. Even people in developing countries that may complain about unfair trade often have their own ironic opinions related to this issue. Zambian President Levy Mwanawasa has been quoted making the statement that he "would rather let his people starve than eat anything 'toxic" - referring to biotech foods vs. conventional and organic. His, and other government’s antitrade policies are often cloaked in concern for ‘food safety’ and other rhetoric.
SOURCES:
"Acreage Under Bt Cotton Set to Increase: Study," Indo-Asian News Service
http://allafrica.com/stories/200706051019.html?viewall=1
Monday, July 23, 2007
SILENT SPRING, OR SILENT HERO?
Not only did Norman Borlaug won the Nobel Peace Prize, but now he has been awarded the Congressional Gold Medal.
Read more:
http://online.wsj.com/article/SB118461857225767963.html?mod=googlenews_wsj
Friday, July 20, 2007
TELEGRAM: BEEF, IT'S WHAT'S FOR DINNER
According to a recent article on the Telegraph (U.K.) eating beef produces more pollution than driving. It is stated that producing 2.2 lbs of beef generates as much greenhouse gas as a car traveling 50 mph for 155 miles. The article ends with a quote stating:
"Everybody is trying to come up with different ways to reduce carbon footprints, but one of the easiest things you can do is to stop eating meat."
link:
http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2007/07/19/nbeef119.xml
Should we really stop eating beef? It is a very nutritional part of many people’s diets and difficult to match. On average 20 of the 29 lean beef cuts have only 1 more gram of saturated fat than a skinless chicken breast per 3-ounce serving. In additon beef is not only low fat, but also very nutrient-rich. Compared to a skinless chicken breast, beef has eight times more vitamin B12, six times more zinc and two and a half times more iron.
Cars are very necessary for transportation, and we know that they produce greenhouse gases, but we don’t stop driving altogether. We continue to produce more and more fuel efficient cars instead. The same can be said for beef production.
Beef production per cow has increased about 185 pounds since the mid-1960s to 585 pounds per cow in 2005. According to the data in the telegraph, for every cow that goes to slaugheter today vs. 30 years ago, increased efficiency in beef production is equivelant to removing from the highway 84 cars traveling 50 miles per hour for 155 miles. ( 185/ 2.2= 84)
Improvements in nutrition, genetics, and management will only improve the ‘environmental footprint’ of beef production. Beef production has never been greener.
"Everybody is trying to come up with different ways to reduce carbon footprints, but one of the easiest things you can do is to stop eating meat."
link:
http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2007/07/19/nbeef119.xml
Should we really stop eating beef? It is a very nutritional part of many people’s diets and difficult to match. On average 20 of the 29 lean beef cuts have only 1 more gram of saturated fat than a skinless chicken breast per 3-ounce serving. In additon beef is not only low fat, but also very nutrient-rich. Compared to a skinless chicken breast, beef has eight times more vitamin B12, six times more zinc and two and a half times more iron.
Cars are very necessary for transportation, and we know that they produce greenhouse gases, but we don’t stop driving altogether. We continue to produce more and more fuel efficient cars instead. The same can be said for beef production.
Beef production per cow has increased about 185 pounds since the mid-1960s to 585 pounds per cow in 2005. According to the data in the telegraph, for every cow that goes to slaugheter today vs. 30 years ago, increased efficiency in beef production is equivelant to removing from the highway 84 cars traveling 50 miles per hour for 155 miles. ( 185/ 2.2= 84)
Improvements in nutrition, genetics, and management will only improve the ‘environmental footprint’ of beef production. Beef production has never been greener.
Tuesday, July 17, 2007
Corn, Ethanol, Markets, and Diversity
http://www.csmonitor.com/2007/0521/p09s02-coop.html?page=1
I’ve recently commented on the above article from the CS monitor. It also contained an additional statement that I take issue with, at least theoretically.
"Any sort of shock to corn yields, such as drought, unseasonably hot weather, pests, or disease could send food prices into the stratosphere. Such concerns are more than theoretical. In 1970, an outbreak of a fungus destroyed 15 percent of the US corn crop.”
I think they want to make the point of how tight supply and demand conditions are and how easily we could see price spikes to ration shortages in case of a drought or some other disaster. (as a result of corn diverted to ethanol production)
But the point is that the corn blight of the 70's was the result of common male sterile inbreds being used to produce most of the hybrids grown then. This common genetic background made almost the entire corn crop susceptible. Most companies have learned their lesson and genetic diversity among corn hybrids has proliferated to meet diverse grower needs since then anyway. Between diversification in crops planted and the risk management tools available in the market, disasters like the corn blight in the 70’s are really much more theoretical than the CS Monitor implies.
I’ve recently commented on the above article from the CS monitor. It also contained an additional statement that I take issue with, at least theoretically.
"Any sort of shock to corn yields, such as drought, unseasonably hot weather, pests, or disease could send food prices into the stratosphere. Such concerns are more than theoretical. In 1970, an outbreak of a fungus destroyed 15 percent of the US corn crop.”
I think they want to make the point of how tight supply and demand conditions are and how easily we could see price spikes to ration shortages in case of a drought or some other disaster. (as a result of corn diverted to ethanol production)
But the point is that the corn blight of the 70's was the result of common male sterile inbreds being used to produce most of the hybrids grown then. This common genetic background made almost the entire corn crop susceptible. Most companies have learned their lesson and genetic diversity among corn hybrids has proliferated to meet diverse grower needs since then anyway. Between diversification in crops planted and the risk management tools available in the market, disasters like the corn blight in the 70’s are really much more theoretical than the CS Monitor implies.
Wednesday, July 04, 2007
OUR COMMONS, OUR CHOICE
“People like the freedom to choose their lifestyles, what they consume and when they consume it,” observes Attari. “However, the environment is a ‘commons’ that we share with other citizens of the world, and when individual choices start negatively impacting others, we need to understand how to change or alter those behaviors.” http://www.prism-magazine.org/apr07/tt_01.cfm
Whenever the cost of one’s behavior is not factored into a price at which a choice can be valued, a commons problem exists. This is in essence what we get from Hardin ( ‘The Tragedy of the Commons’) after applying a little basic economics to his reasoning.
However, according to Coase (‘The Problem of Social Cost’) with the establishment of property rights and markets (bargaining) the externality of the commons can be internalized. Behavior is changed or altered to account for the negative impact our choices impose on others. Demsetz (Towards a Theory of Property Rights) goes on to say that property rights often evolve as a means to internalize externalities. Sometimes given the current state of technology, the costs of developing property rights and markets are greater than the benefits that would arise. However, with technological development, these cost structures change and new options become available. Today we can see how technology has allowed for many externalities (or commons problems) in agriculture to be internalized with examples such as biotechnology and GPS. The article linked above focuses on how engineering can contribute to this end.
The literature referenced above may be broad, but it opens the door for many applications. It is certainly not as narrow and limited as the much older line of reasoning developed by Pigou, which advocates changing and altering behavior based on taxes or command and control governement regulations.
REFRENCES:
Towards a Theory of Property Rights.
Harold Demsetz
The American Economic Review. Volume 57, Issue 2. May, 1967
The Problem of Social Cost
R. H. Coase
Journal of Law and Economics, Vol. 3, Oct., 1960 (Oct., 1960), pp. 1-44
The Tragedy of the Commons
Garret Hardin
Science, Vol 162 no 3859 Dec 13, 1968 p. 1243-1248
The Economics of Welfare
Arthur C. Pigou Macmillan and Co. London, Fourth edition, 1932. First published: 1920.
http://www.econlib.org/Library/NPDBooks/Pigou/pgEW.html
A Meta-Analysis of Effects of Bt Cotton and Maize on Nontarget Invertebrates
Michelle Marvier, Chanel McCreedy, James Regetz, Peter Kareiva
Science 8 June 2007:Vol. 316. no. 5830, pp. 1475 - 1477
Whenever the cost of one’s behavior is not factored into a price at which a choice can be valued, a commons problem exists. This is in essence what we get from Hardin ( ‘The Tragedy of the Commons’) after applying a little basic economics to his reasoning.
However, according to Coase (‘The Problem of Social Cost’) with the establishment of property rights and markets (bargaining) the externality of the commons can be internalized. Behavior is changed or altered to account for the negative impact our choices impose on others. Demsetz (Towards a Theory of Property Rights) goes on to say that property rights often evolve as a means to internalize externalities. Sometimes given the current state of technology, the costs of developing property rights and markets are greater than the benefits that would arise. However, with technological development, these cost structures change and new options become available. Today we can see how technology has allowed for many externalities (or commons problems) in agriculture to be internalized with examples such as biotechnology and GPS. The article linked above focuses on how engineering can contribute to this end.
The literature referenced above may be broad, but it opens the door for many applications. It is certainly not as narrow and limited as the much older line of reasoning developed by Pigou, which advocates changing and altering behavior based on taxes or command and control governement regulations.
REFRENCES:
Towards a Theory of Property Rights.
Harold Demsetz
The American Economic Review. Volume 57, Issue 2. May, 1967
The Problem of Social Cost
R. H. Coase
Journal of Law and Economics, Vol. 3, Oct., 1960 (Oct., 1960), pp. 1-44
The Tragedy of the Commons
Garret Hardin
Science, Vol 162 no 3859 Dec 13, 1968 p. 1243-1248
The Economics of Welfare
Arthur C. Pigou Macmillan and Co. London, Fourth edition, 1932. First published: 1920.
http://www.econlib.org/Library/NPDBooks/Pigou/pgEW.html
A Meta-Analysis of Effects of Bt Cotton and Maize on Nontarget Invertebrates
Michelle Marvier, Chanel McCreedy, James Regetz, Peter Kareiva
Science 8 June 2007:Vol. 316. no. 5830, pp. 1475 - 1477
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