The politics of green: (link)
"This movement realizes that when governments and politicians refuse to act to protect the planet, it is up to all of us to step in and protect our home. And the only logic way that this protection may occur is to understand the primary force driving environmental destruction. That force is economic; it is the financial incentive that corporations and governments have when they clear-cut old growth forests, when they pump out gas-guzzling vehicles, when they destroy mountain tops and communities for coal, when they lay gas and oil pipelines across landscapes and ecosystems, when they genetically alter the natural world, when they pump toxins into the air, into the water and soil. It is the profit motive that is driving environmental destruction. So it only makes logical sense to work to directly remove that profit motive from these entities so they either are persuaded to stop their harmful practices or go out of business."
"This is a corrupt government, one that has been corrupt since its inception in 1776. The most unreasonable, potent, and damaging lie ever told to the people of the United States is that this is a democracy. The United States has never been a democracy nor will it ever be one without a significant change in the way the government is structured and the way it operates. This plutocracy or oligarchy is going to do what is in the best interest of the wealthy, of the corporations, and even to this day of the white male. Anything that stands to challenge the power the government and corporations hold over the people will be met with extreme force and violence."
More to come....but these ideas are scary, and represent a gross misunderstanding of freedom, capitalism, democracy, and our constitutional republic. A common thread among the ani-agricultural activists.
Saturday, November 07, 2009
Sunday, November 01, 2009
Buy 100% Biotech Cotton to Reduce Pesticides!
The Center For Consumer Freedom picked up on my AgWeb post.
See Here
Think organic cotton saves on pesticide use? Take a look at biotech cotton http://is.gd/4IaXA #gmo #biotech9:32 AM Oct 30th from web
See Here
Think organic cotton saves on pesticide use? Take a look at biotech cotton http://is.gd/4IaXA #gmo #biotech9:32 AM Oct 30th from web
Tuesday, October 27, 2009
10 Principles Rap
Hear the 10 Principles of Macroeconomics- Rap Version
Source :
Demand, Supply - Rhythm, Rhyme, Results ( Click for full version including all 10 Principles below)
10 Principles of Economics: Gregory Mankiw, Brief Principles of Macroeconomics 5th edition
1. People Face Tradeoffs. To get one thing, you have to give up something else. Making decisions requires trading off one goal against another.
2. The Cost of Something is What You Give Up to Get It. Decision-makers have to consider both the obvious and implicit costs of their actions.
3. Rational People Think at the Margin. A rational decision-maker takes action if and only if the marginal benefit of the action exceeds the marginal cost.
4. People Respond to Incentives. Behavior changes when costs or benefits change.
5. Trade Can Make Everyone Better Off. Trade allows each person to specialize in the activities he or she does best. By trading with others, people can buy a greater variety of goods or services.
6. Markets Are Usually a Good Way to Organize Economic Activity. Households and firms that interact in market economies act as if they are guided by an "invisible hand" that leads the market to allocate resources efficiently. The opposite of this is economic activity that is organized by a central planner within the government.
7. Governments Can Sometimes Improve Market Outcomes. When a market fails to allocate resources efficiently, the government can change the outcome through public policy. Examples are regulations against monopolies and pollution.
8. A Country's Standard of Living Depends on Its Ability to Produce Goods and Services. Countries whose workers produce a large quantity of goods and services per unit of time enjoy a high standard of living. Similarly, as a nation's productivity grows, so does its average income.
9. Prices Rise When the Government Prints Too Much Money. When a government creates large quantities of the nation's money, the value of the money falls. As a result, prices increase, requiring more of the same money to buy goods and services.
10. Society Faces a Short-Run Tradeoff Between Inflation and Unemployment. Reducing inflation often causes a temporary rise in unemployment. This tradeoff is crucial for understanding the short-run effects of changes in taxes,government spending and monetary policy.
Source :
Demand, Supply - Rhythm, Rhyme, Results ( Click for full version including all 10 Principles below)
10 Principles of Economics: Gregory Mankiw, Brief Principles of Macroeconomics 5th edition
1. People Face Tradeoffs. To get one thing, you have to give up something else. Making decisions requires trading off one goal against another.
2. The Cost of Something is What You Give Up to Get It. Decision-makers have to consider both the obvious and implicit costs of their actions.
3. Rational People Think at the Margin. A rational decision-maker takes action if and only if the marginal benefit of the action exceeds the marginal cost.
4. People Respond to Incentives. Behavior changes when costs or benefits change.
5. Trade Can Make Everyone Better Off. Trade allows each person to specialize in the activities he or she does best. By trading with others, people can buy a greater variety of goods or services.
6. Markets Are Usually a Good Way to Organize Economic Activity. Households and firms that interact in market economies act as if they are guided by an "invisible hand" that leads the market to allocate resources efficiently. The opposite of this is economic activity that is organized by a central planner within the government.
7. Governments Can Sometimes Improve Market Outcomes. When a market fails to allocate resources efficiently, the government can change the outcome through public policy. Examples are regulations against monopolies and pollution.
8. A Country's Standard of Living Depends on Its Ability to Produce Goods and Services. Countries whose workers produce a large quantity of goods and services per unit of time enjoy a high standard of living. Similarly, as a nation's productivity grows, so does its average income.
9. Prices Rise When the Government Prints Too Much Money. When a government creates large quantities of the nation's money, the value of the money falls. As a result, prices increase, requiring more of the same money to buy goods and services.
10. Society Faces a Short-Run Tradeoff Between Inflation and Unemployment. Reducing inflation often causes a temporary rise in unemployment. This tradeoff is crucial for understanding the short-run effects of changes in taxes,government spending and monetary policy.
Monday, October 26, 2009
Mankiw: H1N1 and the Spontaneous Order?
This post by Mankiw raises some questions I'm not sure I can answer.This involves allocating scarce resources(vaccine) given the constraints imposed by population genetics and epidemeology as they relate to the virus.
The following example ( although unrelated pathology) shows how markets work in the livestock industry in this regard. With beef cattle, a producer has every incentive to optimize vaccination of his calves prior to shipping ( to prevent shipping fever). Markets work. Typically calves preconditioned for health prior to shipping do better, and can often earn a price premium.
In crop production, there have historically been requirements for Bt biotech crops not to exceed 90% of total corn acreage. That implies leaving a 10% refuge. ( although there are some products out there that now meet the standards for a 5% refuge). This regulatory constraint was imposed to prevent selecting for Bt resistant pests.Without the constraint, enough producers might plant 100% Bt, selecting for resistant insects, leading to a population of resistent pests. This would create a negative externality imposed on producers in that area. Some literature has indicated that 10% could be to strict, or perhaps even a market based permit or quota system would work but the principle still holds. Would a producer have incentives without the regulatory constraint to plant the optimal acreage of Bt corn?
But what about controlling H1N1 in the human population? Would market prices ensure that people at the greatest risk ( determined by epidemiological evidence) get treated? For every low risk person that takes the vaccine, would the market price reflect the opportunity cost of a high risk person not getting it? Would the price rationed distribution of vaccine across the population also be the epidemiologically optimal distribution- would it result in minimizing the effects of H1N1 across the population?
I would say yes if A) those that were high risk were aware of the fact that they were high risk and they were able to outbid all low risk consumers. Eventually the price would reach a level that only informed high risk consumers would be willing to pay. High risk individuals would be identified via the price mechanism, and resources would be allocated accordingly.
Would it matter if people were poorly informed about their risk status and everyone assumed that they were high risk ( regardless of Media and public service announcements) and they bid for the vaccine accordingly? Wouldn't these people bid just as intensely as those that were truly high risk?
How would markets work in this instance?
The following example ( although unrelated pathology) shows how markets work in the livestock industry in this regard. With beef cattle, a producer has every incentive to optimize vaccination of his calves prior to shipping ( to prevent shipping fever). Markets work. Typically calves preconditioned for health prior to shipping do better, and can often earn a price premium.
In crop production, there have historically been requirements for Bt biotech crops not to exceed 90% of total corn acreage. That implies leaving a 10% refuge. ( although there are some products out there that now meet the standards for a 5% refuge). This regulatory constraint was imposed to prevent selecting for Bt resistant pests.Without the constraint, enough producers might plant 100% Bt, selecting for resistant insects, leading to a population of resistent pests. This would create a negative externality imposed on producers in that area. Some literature has indicated that 10% could be to strict, or perhaps even a market based permit or quota system would work but the principle still holds. Would a producer have incentives without the regulatory constraint to plant the optimal acreage of Bt corn?
But what about controlling H1N1 in the human population? Would market prices ensure that people at the greatest risk ( determined by epidemiological evidence) get treated? For every low risk person that takes the vaccine, would the market price reflect the opportunity cost of a high risk person not getting it? Would the price rationed distribution of vaccine across the population also be the epidemiologically optimal distribution- would it result in minimizing the effects of H1N1 across the population?
I would say yes if A) those that were high risk were aware of the fact that they were high risk and they were able to outbid all low risk consumers. Eventually the price would reach a level that only informed high risk consumers would be willing to pay. High risk individuals would be identified via the price mechanism, and resources would be allocated accordingly.
Would it matter if people were poorly informed about their risk status and everyone assumed that they were high risk ( regardless of Media and public service announcements) and they bid for the vaccine accordingly? Wouldn't these people bid just as intensely as those that were truly high risk?
How would markets work in this instance?
Tuesday, October 20, 2009
(Sustainable) Food For Thought
When we think of sustainable food production, we may often think about niche markets like local or organic, although there is some bickering among producers about which is more sustainable. See the Marginal Revolution: for a look at this in terms of food miles, or here from Environmental Science and Technology, with more discussion about this research here in National Geographic.
While niche markets are emerging as one way to address the general public's concerns about sustainable food choices, we often forget about the technological improvements that family farmers depend upon for their livelihood, but also make our foods more sustainable. We often get the idea from the media that our food industry has been taken over by industrial farms, but the numbers just don't support those notions. Family farms make up 98% of all farms in the U.S. and according to the USDA ERS (2007) non family corporations make up less than 1% of the total number of farms in the U.S. and have accounted for only 6-7% of farm product sales in every census since 1978.
Family farms probably rely most heavily on products like biotech Bt corn and glyphosate resistant corn and soybeans. A good review of the environmental benefits of biotechnology in crop production can be found here. Many niche local and organic producers are catching on and are pushing for adoption of exceptions for biotechnology to be included in organic production ( See Science and the Boston Globe for more)
We've also seen great strides in the improved sustainability of milk ( video) and beef ( video). With a little better understanding at the farm gate level,I think many people will be surprised just how many sustainable food choices we really have!
Additional Information:
Structure and Finances of U.S. Farms: Family Farm Report, 2007 USDA ERS
The Environmental Safety and Benefits of Growth Enhancing Pharmaceutical Technologies in Beef Production
By Alex Avery and Dennis Avery, Hudson Institute, Centre for Global Food Issues.
Capper, J. L., Cady, R. A., Bauman, D. E. The environmental impact of dairy production: 1944 compared with 2007. Journal of Animal Science, 2009; 87 (6): 2160 DOI: 10.2527/jas.2009-1781
New York Times Don't Cry Over rBST Milk June 29, 2007
MSN Health and Fitness Bovine Growth Hormone
Dr. Harlan Ritchie, Michigan State University. How safe is our product Beef?
Doyle et al., Institute of Food Technologists, “Antimicrobial Resistance: Implications for the Food System” Comprehensive Reviews in Food Science and Food Safety, Vol.5, Issue 3, 2006
Sandiego Center for Molecular Agriculture Foods from Genetically Modified Crops ( pdf)
While niche markets are emerging as one way to address the general public's concerns about sustainable food choices, we often forget about the technological improvements that family farmers depend upon for their livelihood, but also make our foods more sustainable. We often get the idea from the media that our food industry has been taken over by industrial farms, but the numbers just don't support those notions. Family farms make up 98% of all farms in the U.S. and according to the USDA ERS (2007) non family corporations make up less than 1% of the total number of farms in the U.S. and have accounted for only 6-7% of farm product sales in every census since 1978.
Family farms probably rely most heavily on products like biotech Bt corn and glyphosate resistant corn and soybeans. A good review of the environmental benefits of biotechnology in crop production can be found here. Many niche local and organic producers are catching on and are pushing for adoption of exceptions for biotechnology to be included in organic production ( See Science and the Boston Globe for more)
We've also seen great strides in the improved sustainability of milk ( video) and beef ( video). With a little better understanding at the farm gate level,I think many people will be surprised just how many sustainable food choices we really have!
Additional Information:
Structure and Finances of U.S. Farms: Family Farm Report, 2007 USDA ERS
The Environmental Safety and Benefits of Growth Enhancing Pharmaceutical Technologies in Beef Production
By Alex Avery and Dennis Avery, Hudson Institute, Centre for Global Food Issues.
Capper, J. L., Cady, R. A., Bauman, D. E. The environmental impact of dairy production: 1944 compared with 2007. Journal of Animal Science, 2009; 87 (6): 2160 DOI: 10.2527/jas.2009-1781
New York Times Don't Cry Over rBST Milk June 29, 2007
MSN Health and Fitness Bovine Growth Hormone
Dr. Harlan Ritchie, Michigan State University. How safe is our product Beef?
Doyle et al., Institute of Food Technologists, “Antimicrobial Resistance: Implications for the Food System” Comprehensive Reviews in Food Science and Food Safety, Vol.5, Issue 3, 2006
Sandiego Center for Molecular Agriculture Foods from Genetically Modified Crops ( pdf)
Saturday, October 17, 2009
Sustainable Milk
In a nutshell, buy your milk from Kroger and kill 25 trees, but buy your milk from Wal-Mart and that's like planting 25 trees!
Why is it that Kroger is OK with adopting modern technology like automated checkouts, but they deny their milk producers similar technological advancements?
References:
Capper, J. L., Cady, R. A., Bauman, D. E. The environmental impact of dairy production: 1944 compared with 2007. Journal of Animal Science, 2009; 87 (6): 2160 DOI: 10.2527/jas.2009-1781
Why is it that Kroger is OK with adopting modern technology like automated checkouts, but they deny their milk producers similar technological advancements?
References:
Capper, J. L., Cady, R. A., Bauman, D. E. The environmental impact of dairy production: 1944 compared with 2007. Journal of Animal Science, 2009; 87 (6): 2160 DOI: 10.2527/jas.2009-1781
Saturday, October 10, 2009
Politics and Science
In a past post I made note of the following quote from an issue of Nature Biotechnology:
"Obama is clearly a science buff, and is really, honestly, into knowing the facts, having them laid out, and then making the best choices that can be mustered," says a policy watcher who was close to the transition team but is outside the federal government. "It is a whole different approach compared to the 'How can we spin this information?' approach of the [Bush administration]. Back to 'honest-to-goodness' curiosity, which is, yes, incredibly refreshing."
Farmers, other business owners, and entrepreneurs, acting in their own self interest often promote the interests of society. Just think of the adoption of biotech crops as an example. This is often referred to as the 'invisible hand' or a 'spontaneous order' by economists. ( or often in the case of agriculture the 'invisible green hand') As a result, market decision makers are the one's that truly embrace science and make the best decisions based on an earnest effort to obtain all of the facts.
Most public choice economists will agree that like farmers, politicians also make decisions in their own self interest, typically maximizing their power and the influence of their ideology. The difference is that farmers have a vested interest in science. Yields and costs depend on it. Corn hybrids either yield or they don't.
Politicians on the other hand have a strong incentive to pick and choose their science. If embracing evidence tends to increase their power and serve to further their political ideology then they take an 'honest to goodness curious' approach. If their policies and ideology flies in the face of decades of evidence, then they shift gears to 'how can we spin this information.'
Public choice economists will hold that this is not a matter of being a republican or democrat, or a conservative or liberal, moderate, or independent. It is inherently a funcion of government. It is naive to think that democracy, or an election that replaces one set of politicians and bureaucrats with another will usher in a new age of enlightenment.
We have seen this most recently with the bailouts and stimulus policies that rejected over 60 years of macroeconomic research. Further examples in agriculture involve the infatuation politicians have with 'fat taxes' on soda, despite little scientific evidence connecting soft drinks with obesity, and the research that indicates that to be effective, these taxes would have to be in the range of 1200%.
Most recently we have heard that despite having any evidence to support their case, our current politicians are wanting to restrict antibiotic use in livestock. It's politics not science.
"Obama is clearly a science buff, and is really, honestly, into knowing the facts, having them laid out, and then making the best choices that can be mustered," says a policy watcher who was close to the transition team but is outside the federal government. "It is a whole different approach compared to the 'How can we spin this information?' approach of the [Bush administration]. Back to 'honest-to-goodness' curiosity, which is, yes, incredibly refreshing."
Farmers, other business owners, and entrepreneurs, acting in their own self interest often promote the interests of society. Just think of the adoption of biotech crops as an example. This is often referred to as the 'invisible hand' or a 'spontaneous order' by economists. ( or often in the case of agriculture the 'invisible green hand') As a result, market decision makers are the one's that truly embrace science and make the best decisions based on an earnest effort to obtain all of the facts.
Most public choice economists will agree that like farmers, politicians also make decisions in their own self interest, typically maximizing their power and the influence of their ideology. The difference is that farmers have a vested interest in science. Yields and costs depend on it. Corn hybrids either yield or they don't.
Politicians on the other hand have a strong incentive to pick and choose their science. If embracing evidence tends to increase their power and serve to further their political ideology then they take an 'honest to goodness curious' approach. If their policies and ideology flies in the face of decades of evidence, then they shift gears to 'how can we spin this information.'
Public choice economists will hold that this is not a matter of being a republican or democrat, or a conservative or liberal, moderate, or independent. It is inherently a funcion of government. It is naive to think that democracy, or an election that replaces one set of politicians and bureaucrats with another will usher in a new age of enlightenment.
We have seen this most recently with the bailouts and stimulus policies that rejected over 60 years of macroeconomic research. Further examples in agriculture involve the infatuation politicians have with 'fat taxes' on soda, despite little scientific evidence connecting soft drinks with obesity, and the research that indicates that to be effective, these taxes would have to be in the range of 1200%.
Most recently we have heard that despite having any evidence to support their case, our current politicians are wanting to restrict antibiotic use in livestock. It's politics not science.
Thursday, September 17, 2009
Constitution Day
It is Constitution Day, and considering the massive amount of spending we have seen in Washington, the confiscation of private enterprises, as well as the increasing amount of regulation and loss of personal liberty ( including our freedom to produce and consume the foods we want or drive the kinds of cars that we prefer) that seems to be on the horizon, we should consider the role and the importance of the Constitution.
Democracy is a very arbitrary form of government ( see The Public Choice Revolution- from the Cato Magazine Regulation here for more) , and is the perfect vehicle for tyranny and collectivism. That is why our founders rejected such a flawed form of government and proposed a Constitutional Republic, ‘if we can keep it.’
In Judicial Activism Reconsidered, Economist Thomas Sowell describes our Constitution:
“The federal Constitution is "the supreme law of the land," not because it is more moral than state constitutions or state or federal legislative enactments, but because it represents a larger and more enduring majority.107 Minorities receive their constitutional rights from that enduring majority to which transient majorities bow, not from whatever abstract moral rights are imagined to exist as a brooding omnipresence in the sky.”
Once we start making heroic ‘modern’ interpretations of words in the constitution like ‘general welfare’ or ‘regulate commerce,’ the constitution is weakened, and minorities are forced to give up their liberties to whatever transient majority takes power. The short term gain from being able to bypass the amendment process ( which requires obtaining the consent of the governed) in order to expand the power of the federal government in order to pass some much needed legislation to help some worthy cause comes at a long term cost to our liberty and national well being. Every step we take away from the limited role of government defined by the specifically enumerated powers of the Constitution, we concentrate more power and wealth in our central government. This increased the incentives for large corporations and special interests to influence our lawmakers, and provides the means for ever more concentration of power and the entrenchment of elites. As stated in the public choice article I have linked to above
“The entire federal budget,” writes Mueller, “can be viewed as a gigantic rent up for grabs for those who can exert the most political muscle.”
As a result, problems of an overbearing government ( which results in the much maligned concentration of wealth and power) are mistakenly attributed to free markets and capitalism. What is seen is businesses lobbying for special regulatory protections (like bailouts, cap and trade or the minimum wage) but what is not seen or often overlooked is the role of an intrusive, expansive, unconstitutional government.
What did our founders have to say about the role of government and the constitution?
An interesting thing I found just today, comes from Federalist # 10. Madison states:
“In the extent and proper structure of the Union, therefore, we behold a republican remedy for the diseases most incident to republican government.”
What are these diseases? Again from #10:
“A rage for paper money, for an abolition of debts, for an equal division of property, or for any other improper or wicked project”
Wow! Even in the 1700’s our founders had the foresight to set up constitutional protections against an overbearing democracy and the evil it can bring. Think about the connection between paper money and the current financial crisis ( also blamed on capitalism), the abolition of debts and the bailouts, the equal division of property and our housing ( Fannie and Freddie) and our tax policies. Virtually all of the problems we are experiencing in today’s economy are related to our departure from constitutional principles.
More quotes from our founders:
“We have the right, as individuals, to give away as much of our own money as we please in charity; but as members of Congress we have no right so to appropriate a dollar of the public money.” – Davy Crockett
"I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on the objects of benevolence, the money of their constituents." – James Madison
"With respect to the two words "general welfare," I have always regarded them as qualified by the detail of powers connected with them. To take them in a literal and unlimited sense would be a metamorphosis of the Constitution into a character which there is a host of proofs was not contemplated by its creators." - letter to James Robertson from James Madison
Also by Madison in Federalist # 41:
"Nothing is more natural nor common than first to use a general phrase ( like common welfare) and then to explain it and qualify it by a recital of particulars."
In Federalist # 45:
"The powers delegated by the proposed constitution to the federal government are few and defined. Those which are to remain in the state governments are numerous and indefinite."
Thomas Jefferson also was an advocate of this position as he states in a letter to Albert Gallatin in 1817:
"Congress has not unlimited powers to provide for the general welfare, but only those specifically enumerated."
“in questions of power then, let no more be heard of confidence in man, but bind him down from mischief by the chains of the constitution”
—Thomas Jefferson
Happy Constitution Day!
Democracy is a very arbitrary form of government ( see The Public Choice Revolution- from the Cato Magazine Regulation here for more) , and is the perfect vehicle for tyranny and collectivism. That is why our founders rejected such a flawed form of government and proposed a Constitutional Republic, ‘if we can keep it.’
In Judicial Activism Reconsidered, Economist Thomas Sowell describes our Constitution:
“The federal Constitution is "the supreme law of the land," not because it is more moral than state constitutions or state or federal legislative enactments, but because it represents a larger and more enduring majority.107 Minorities receive their constitutional rights from that enduring majority to which transient majorities bow, not from whatever abstract moral rights are imagined to exist as a brooding omnipresence in the sky.”
Once we start making heroic ‘modern’ interpretations of words in the constitution like ‘general welfare’ or ‘regulate commerce,’ the constitution is weakened, and minorities are forced to give up their liberties to whatever transient majority takes power. The short term gain from being able to bypass the amendment process ( which requires obtaining the consent of the governed) in order to expand the power of the federal government in order to pass some much needed legislation to help some worthy cause comes at a long term cost to our liberty and national well being. Every step we take away from the limited role of government defined by the specifically enumerated powers of the Constitution, we concentrate more power and wealth in our central government. This increased the incentives for large corporations and special interests to influence our lawmakers, and provides the means for ever more concentration of power and the entrenchment of elites. As stated in the public choice article I have linked to above
“The entire federal budget,” writes Mueller, “can be viewed as a gigantic rent up for grabs for those who can exert the most political muscle.”
As a result, problems of an overbearing government ( which results in the much maligned concentration of wealth and power) are mistakenly attributed to free markets and capitalism. What is seen is businesses lobbying for special regulatory protections (like bailouts, cap and trade or the minimum wage) but what is not seen or often overlooked is the role of an intrusive, expansive, unconstitutional government.
What did our founders have to say about the role of government and the constitution?
An interesting thing I found just today, comes from Federalist # 10. Madison states:
“In the extent and proper structure of the Union, therefore, we behold a republican remedy for the diseases most incident to republican government.”
What are these diseases? Again from #10:
“A rage for paper money, for an abolition of debts, for an equal division of property, or for any other improper or wicked project”
Wow! Even in the 1700’s our founders had the foresight to set up constitutional protections against an overbearing democracy and the evil it can bring. Think about the connection between paper money and the current financial crisis ( also blamed on capitalism), the abolition of debts and the bailouts, the equal division of property and our housing ( Fannie and Freddie) and our tax policies. Virtually all of the problems we are experiencing in today’s economy are related to our departure from constitutional principles.
More quotes from our founders:
“We have the right, as individuals, to give away as much of our own money as we please in charity; but as members of Congress we have no right so to appropriate a dollar of the public money.” – Davy Crockett
"I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on the objects of benevolence, the money of their constituents." – James Madison
"With respect to the two words "general welfare," I have always regarded them as qualified by the detail of powers connected with them. To take them in a literal and unlimited sense would be a metamorphosis of the Constitution into a character which there is a host of proofs was not contemplated by its creators." - letter to James Robertson from James Madison
Also by Madison in Federalist # 41:
"Nothing is more natural nor common than first to use a general phrase ( like common welfare) and then to explain it and qualify it by a recital of particulars."
In Federalist # 45:
"The powers delegated by the proposed constitution to the federal government are few and defined. Those which are to remain in the state governments are numerous and indefinite."
Thomas Jefferson also was an advocate of this position as he states in a letter to Albert Gallatin in 1817:
"Congress has not unlimited powers to provide for the general welfare, but only those specifically enumerated."
“in questions of power then, let no more be heard of confidence in man, but bind him down from mischief by the chains of the constitution”
—Thomas Jefferson
Happy Constitution Day!
Friday, September 11, 2009
Interview with TIME's Brian Walsh
The author ( Brain Walsh) of the highly scrutinized TIME magazine article "Getting Real About the High Price of Cheap Food" was recently interviewed on the radio program Agritalk ( audio) . The host of the program expressed concern that many readers might have had difficulty recognizing that the TIME article was an opinion piece. Walsh provides clarification that the article was never intended to represent an evidence based balanced assessment of the food industry. Instead he maintains that the purpose was only to start a conversation about food, starting with an article written solely from his one-sided perspective and intentionally excluding evidence to the contrary. He does state that after looking at more evidence, he favors a more sustainable model that combines both 'industrial' biotech and organic practices. ( an idea that seems to be catching on- see this from Science and this from the Boston Globe). He stands firm in his views regarding the use of growth enhancing pharmaceuticals.
He does write a follow up piece in TIME highlighting the benefits of a type of biotech cotton currently in the pipeline. It seems he could have written more about the environmental benefits of already proven technologies like Bt and Roundup Ready biotech crops.
It appears ( at least for now) that the 'invisible green hand' in production agriculture will remain unseen by readers of TIME.
He does write a follow up piece in TIME highlighting the benefits of a type of biotech cotton currently in the pipeline. It seems he could have written more about the environmental benefits of already proven technologies like Bt and Roundup Ready biotech crops.
It appears ( at least for now) that the 'invisible green hand' in production agriculture will remain unseen by readers of TIME.
Thursday, September 10, 2009
Pollan's Big Ideas about Big Food
Pollan, in a lot of his writings tries to make connection between corn syrup and obesity and the connection between farm 'subsidies' and corn syrup. I would like to know exactly which 'subsidies' he is talking about. I'm not sure that countercyclical payment or loan deficiency payment type programs at the farm gate level really have an impact at the retail level great enough to create super savings and increased consumption of these 'bad' foods.
Even with these 'subsidies' in the past couple of years, we have seen some record high corn prices, having much to do with ethanol requirements and increased demand for corn, increased purchases by hedge funds, and increased world demand. We did see a rise in retail food prices, but much of those increases were likely due to increased fuel and processing costs. i.e. even large changes in commodity prices ( vs. other factors) had little effect on retail consumers, so eliminating subsidies probably would not elicit large changes in consumption. Or stated differently the connection between corn prices and retail prices ( subsidized or not) is weak. ( see here for an analysis from LECG).
'Increases in energy prices for example exert a greater impact on food prices than does the price of corn. A 33 percent increase in crude oil prices –
which translates into a $1.00 per gallon increase in the price of conventional regular gasoline – results in a 0.6 percent to 0.9 percent increase in the CPI for food while an equivalent increase in corn prices ($1.00 per bushel) would cause the CPI for food to increase only 0.3 percent.'
Additional research taking the claim of a connection between obesity and farm policy in a more direct fashion can be found here( from UC Davis).
"Given that consumers generally show limited responses to retail food price changes, eliminating the corn subsidy would reduce corn-based food consumption by
at most 0.2 percent."
Pollan also proposes a food tax to curb consumption. Again, research ( from the Mercatus Center at George Mason University) indicates that the taxes required to have any real affect on obesity would be in the 1200 percent range, and even if taxes eliminated ( in this case soda) consumption, the impact on obesity would be very small. The study concludes that "the sensitivity of individuals to changes in relative food prices is not sufficient to make “fat taxes” a viable tool to lower obesity."
To coin a phrase 'what's obesity got to do with the price of corn in Iowa'?- not much
Even with these 'subsidies' in the past couple of years, we have seen some record high corn prices, having much to do with ethanol requirements and increased demand for corn, increased purchases by hedge funds, and increased world demand. We did see a rise in retail food prices, but much of those increases were likely due to increased fuel and processing costs. i.e. even large changes in commodity prices ( vs. other factors) had little effect on retail consumers, so eliminating subsidies probably would not elicit large changes in consumption. Or stated differently the connection between corn prices and retail prices ( subsidized or not) is weak. ( see here for an analysis from LECG).
'Increases in energy prices for example exert a greater impact on food prices than does the price of corn. A 33 percent increase in crude oil prices –
which translates into a $1.00 per gallon increase in the price of conventional regular gasoline – results in a 0.6 percent to 0.9 percent increase in the CPI for food while an equivalent increase in corn prices ($1.00 per bushel) would cause the CPI for food to increase only 0.3 percent.'
Additional research taking the claim of a connection between obesity and farm policy in a more direct fashion can be found here( from UC Davis).
"Given that consumers generally show limited responses to retail food price changes, eliminating the corn subsidy would reduce corn-based food consumption by
at most 0.2 percent."
Pollan also proposes a food tax to curb consumption. Again, research ( from the Mercatus Center at George Mason University) indicates that the taxes required to have any real affect on obesity would be in the 1200 percent range, and even if taxes eliminated ( in this case soda) consumption, the impact on obesity would be very small. The study concludes that "the sensitivity of individuals to changes in relative food prices is not sufficient to make “fat taxes” a viable tool to lower obesity."
To coin a phrase 'what's obesity got to do with the price of corn in Iowa'?- not much
Sunday, September 06, 2009
Clean Water Restoration Act: A Paradigm for Regulatory Burdens
Back in 2002 Economist Walter Williams wrote a review (link) of a book entitled 'The Mystery of Capital.
The following is an excerpt from that review:
"It takes 168 steps and 13 to 25 years to gain a formal title to urban property inthe Philippines; 77 steps and 6 to 14 years to do the same in the desert lands in Egypt; and 111 steps and 19 years in Haiti. If you wanted to open a one-worker garment shop legally in Lima, Peru, it would take you 289
days, working 6 hours a day, to obtain the business license."
The main point of the book 'The Mystery of Capital' by Hernando de Soto is that one reason many countries have not prospered from capitalism is not because they were exploited by Europeans, or because they are currently being exploited by multinational Western corporations. The reasons have more to do with institutional arrangements that fail to recognize or protect property rights and a burdensome regulatory environment.
Compare this to some information reported in a recent AgWeb News post entitled 'Producers Testify on Burdensome Implications of Clean Water Restoration Act':
"The federal government is already struggling to handle a backlog of 15,000 to 20,000 existing section 404 permit requests. According to the U.S. Supreme Court, the average applicant for an individual Clean Water Act permit spends 788 days and $271,596 in complying with the current process, and the average applicant for a nationwide permit currently spends 313 days and $28,915 - not counting the substantial costs of mitigation or design changes (Rapanos, 447 U.S. at 719, plurality opinion). Considering U.S. farmers and ranchers own and manage approximately 666.4 million acres of the 1.938 billion acres of the contiguous U.S. land mass, the massive new permitting requirements under this Act would be an unmanageable burden for the government, and could literally bring farming operations to a standstill."
"Chilton shared from personal experience about a time his family ranch had to apply for a 404 permit to construct a road across a dry wash on their private property. The regulatory approval process took over a year and cost his family nearly $40,000."
In past posts I have expressed a lot of concern about the effects of the regulatory environment on stifling innovation and production in agriculture. This is just another illustration of the impact of government controls on individuals. Often the results could lead to worse environmental consequences than those the regulations intend to prevent, and also could lead to producer losses. We don't want our industry to end up like the financial or auto industry, and worse, we don't want to operate in a regulatory environment edging closer and closer to the standards of developing countries. Unfortunately many policy makers have more to gain from special interests and ideological victories than sound policies.
The following is an excerpt from that review:
"It takes 168 steps and 13 to 25 years to gain a formal title to urban property inthe Philippines; 77 steps and 6 to 14 years to do the same in the desert lands in Egypt; and 111 steps and 19 years in Haiti. If you wanted to open a one-worker garment shop legally in Lima, Peru, it would take you 289
days, working 6 hours a day, to obtain the business license."
The main point of the book 'The Mystery of Capital' by Hernando de Soto is that one reason many countries have not prospered from capitalism is not because they were exploited by Europeans, or because they are currently being exploited by multinational Western corporations. The reasons have more to do with institutional arrangements that fail to recognize or protect property rights and a burdensome regulatory environment.
Compare this to some information reported in a recent AgWeb News post entitled 'Producers Testify on Burdensome Implications of Clean Water Restoration Act':
"The federal government is already struggling to handle a backlog of 15,000 to 20,000 existing section 404 permit requests. According to the U.S. Supreme Court, the average applicant for an individual Clean Water Act permit spends 788 days and $271,596 in complying with the current process, and the average applicant for a nationwide permit currently spends 313 days and $28,915 - not counting the substantial costs of mitigation or design changes (Rapanos, 447 U.S. at 719, plurality opinion). Considering U.S. farmers and ranchers own and manage approximately 666.4 million acres of the 1.938 billion acres of the contiguous U.S. land mass, the massive new permitting requirements under this Act would be an unmanageable burden for the government, and could literally bring farming operations to a standstill."
"Chilton shared from personal experience about a time his family ranch had to apply for a 404 permit to construct a road across a dry wash on their private property. The regulatory approval process took over a year and cost his family nearly $40,000."
In past posts I have expressed a lot of concern about the effects of the regulatory environment on stifling innovation and production in agriculture. This is just another illustration of the impact of government controls on individuals. Often the results could lead to worse environmental consequences than those the regulations intend to prevent, and also could lead to producer losses. We don't want our industry to end up like the financial or auto industry, and worse, we don't want to operate in a regulatory environment edging closer and closer to the standards of developing countries. Unfortunately many policy makers have more to gain from special interests and ideological victories than sound policies.
Tuesday, August 25, 2009
Time : Get Real
In a recent article in Time Magazine, ( Getting Real About the High Price of Cheap Food) I think that I have witnessed one of the worst pieces of pseudo science I've seen in a long time.
Isn't obesity the result of diet, genetics, and exercise? Personal choice and genetics are the drivers, not agricultural production practices as the author seems to claim. There are some other 'unbalanced' assertions made in the article as well:
'He's fed on American corn that was grown with the help of government subsidies and millions of tons of chemical fertilizer. '
>From this statement one might thing that 'subsidies' are leading farmers to produce corn instead of healthy apples and spinach. The reason we produce so much corn is not due to the subsidies, the reason we have the subsidies is that we produce so much corn ( and thus have strong lobbying arms for production and processing industries). Grains are a worldwide food staple. They would be produced with or without government programs.
A main assertion made in the article is that modern science based agriculture ( or 'industrial agriculture' if you prefer the more negative connotation) is leading to ever more use of ever more toxic chemicals and environmental degradation. On the contrary modern agriculture is becoming more sustainable every day. Biotechnology, a key factor in modern agriculture, is not mentioned at all in the entire article. The adoption of biotechnology has led to decreased levels of chemical applications and in some cases the elimination of certain pesticides completely. 1.04 million fewer pounds of insecticide are applied each year as a result of biotech Bt cotton alone. With Bt cotton, 4 million gallons of fuel and 93.7 million gallons of water are saved on the farm each year from fewer insecticide applications.In addition, Bt corn also has reduced levels of carcinogenic toxins produced by fumonisin . Last year, in Britain, two organic corn meal products were recalled because testing showed that they had unacceptably high levels of fumonisin. Roundup Ready technology has allowed for glyphosate herbicide to substitute for 7.2 million pounds of other chemicals that are more toxic and persistent in the environment.There are also economies of scope or synergies between sustainable production practices such as crop rotation and reduced or no tillage farming and biotech plantings. As a result biotechnology has also contributed to increased biodiversity among pest populations while maintaining yield gains. Further, with fewer chemical applications and less tillage, energy inputs to grain production are down, while yields continue to increase, reducing the overall environmental impact and carbon foot print. Between 1987 and 2007 energy use per unit of output is down in corn, soybeans and cotton production by nearly 40 . Irrigated water use per unit of output decreased by 20 percent while carbon emissions per unit of output have dropped by about one-third in the three crops. In addition to the lower carbon and water foot print, these practices have decreased groundwater pollution as well. The use of biotechnology in the livestock industry has demonstrated similar environmental gains.
( see here, here, here for more examples. )
'The UCS estimates that about 70% of antimicrobial drugs used in America are given not to people but to animals, which means we're breeding more of those deadly organisms every day.'
This is meaningless. What matters is of the antimicrobials given to animals, what % actually target pathogens that affect humans. Resistance requires selection pressure, and if the majority of antimicrobials used in livestock production are not selecting against deadly pathogens, then the risks are overblown. What we have observed is that in countries where food grade antimicrobials used in livestock production have been more heavily regulated or banned, the resulting increase in livestock illness has lead to an increased use of antibiotics actually used in human medicine. This policy results in increased selection pressure for antibiotic resistance among pathogens dangerous to humans and should be avoided. The article also avoids to mention the environmental benefits of antimicrobials as well as the benefits of other pharmaceutical products such as growth enhancing hormones. Pound-for-pound, beef produced with grains and growth hormones produces 40% less greenhouse gas emissions and saves two-thirds more land for nature compared to organic grass-fed beef.
'Worldwide, organic food — a sometimes slippery term but on the whole a practice more sustainable than conventional food '
There is little scientific consensus on this conclusion. There is certainly evidence to the contrary, and while there are very desirable qualities associated with organic food ( some of my favorite frozen foods are Amy's brand of organics) organic should not be sold as a panacea in contrast to modern agriculture. The fact that many organic producers are now ( see here) considering adopting biotech options indicates that organic alone as it stands today is not a solution. Reduced yields as a result of organic practices imply a larger carbon footprint and decreased biodiversity compared to biotech crops. No where in the article did I find the author mention any of the downsides of organic production such as toxic biological controls used in organic production including nicotine* sulfur, pyrethrum, neem, sabadilla, and rotenone* that government regulators don’t even track data for.These can be just as persistent in the environment and detrimental to biological diversity as some conventional products. Nor does the author mention increased risks of E coli contamination ( which the author of the Time piece attributes to conventional agriculture).
Notes and References:
*Nicotine, one of the more toxic organic insecticides, has a rat LD50 (lethal dose in 50% of animals tested)of 55mg/kg. The newest synthetic insecticide, imidacloprid, has a rat LD50 of 425mg/kg, making imidacloprid nearly 10 times less toxic than nicotine. Rotenone has an LD50 of 60-1500 mg/kg and is more acutely toxic than Malathion or Sevin. Cats are highly susceptible to pyrethrum.
Science 31 May 2002:
Vol. 296. no. 5573, pp. 1694 - 1697
DOI: 10.1126/science.1071148
Munkvold, G.P. et al . Plant Disease 83, 130-138 1999.
Dowd, p.J. Economic Entomology. 93 1669-1679 2000.
Miller, Henry I, Conko, Gregory, & Drew L. Kershe. Nature Biotechnology Volume 24 Number 9 September 2006.
Agricultural Outlook ERS/USDA Aug 2006.
Science 8 June 2007:
Vol. 316. no. 5830, pp. 1475 - 1477
DOI: 10.1126/science.1139208
Capper, J. L., Cady, R. A., Bauman, D. E. The environmental impact of dairy production: 1944 compared with 2007. Journal of Animal Science, 2009; 87 (6): 2160 DOI: 10.2527/jas.2009-1781
Smith, J.S.C.; Smith, O.S.; Wright, S.; Wall, S.J.; and Walton, M. (1992)
‘‘Diversity of United States Hybrid Maize Germplasm as Revealed by
Restriction Fragment Length Polymorphisms.’’ Crop Science 32: 598–604
International Journal of Food Microbiology
Volume 120, Issue 3, 15 December 2007, Pages 296-302
The Environmental Safety and Benefits of Growth Enhancing Pharmaceutical Technologies in Beef Production
By Alex Avery and Dennis Avery, Hudson Institute, Centre for Global Food Issues.
Isn't obesity the result of diet, genetics, and exercise? Personal choice and genetics are the drivers, not agricultural production practices as the author seems to claim. There are some other 'unbalanced' assertions made in the article as well:
'He's fed on American corn that was grown with the help of government subsidies and millions of tons of chemical fertilizer. '
>From this statement one might thing that 'subsidies' are leading farmers to produce corn instead of healthy apples and spinach. The reason we produce so much corn is not due to the subsidies, the reason we have the subsidies is that we produce so much corn ( and thus have strong lobbying arms for production and processing industries). Grains are a worldwide food staple. They would be produced with or without government programs.
A main assertion made in the article is that modern science based agriculture ( or 'industrial agriculture' if you prefer the more negative connotation) is leading to ever more use of ever more toxic chemicals and environmental degradation. On the contrary modern agriculture is becoming more sustainable every day. Biotechnology, a key factor in modern agriculture, is not mentioned at all in the entire article. The adoption of biotechnology has led to decreased levels of chemical applications and in some cases the elimination of certain pesticides completely. 1.04 million fewer pounds of insecticide are applied each year as a result of biotech Bt cotton alone. With Bt cotton, 4 million gallons of fuel and 93.7 million gallons of water are saved on the farm each year from fewer insecticide applications.In addition, Bt corn also has reduced levels of carcinogenic toxins produced by fumonisin . Last year, in Britain, two organic corn meal products were recalled because testing showed that they had unacceptably high levels of fumonisin. Roundup Ready technology has allowed for glyphosate herbicide to substitute for 7.2 million pounds of other chemicals that are more toxic and persistent in the environment.There are also economies of scope or synergies between sustainable production practices such as crop rotation and reduced or no tillage farming and biotech plantings. As a result biotechnology has also contributed to increased biodiversity among pest populations while maintaining yield gains. Further, with fewer chemical applications and less tillage, energy inputs to grain production are down, while yields continue to increase, reducing the overall environmental impact and carbon foot print. Between 1987 and 2007 energy use per unit of output is down in corn, soybeans and cotton production by nearly 40 . Irrigated water use per unit of output decreased by 20 percent while carbon emissions per unit of output have dropped by about one-third in the three crops. In addition to the lower carbon and water foot print, these practices have decreased groundwater pollution as well. The use of biotechnology in the livestock industry has demonstrated similar environmental gains.
( see here, here, here for more examples. )
'The UCS estimates that about 70% of antimicrobial drugs used in America are given not to people but to animals, which means we're breeding more of those deadly organisms every day.'
This is meaningless. What matters is of the antimicrobials given to animals, what % actually target pathogens that affect humans. Resistance requires selection pressure, and if the majority of antimicrobials used in livestock production are not selecting against deadly pathogens, then the risks are overblown. What we have observed is that in countries where food grade antimicrobials used in livestock production have been more heavily regulated or banned, the resulting increase in livestock illness has lead to an increased use of antibiotics actually used in human medicine. This policy results in increased selection pressure for antibiotic resistance among pathogens dangerous to humans and should be avoided. The article also avoids to mention the environmental benefits of antimicrobials as well as the benefits of other pharmaceutical products such as growth enhancing hormones. Pound-for-pound, beef produced with grains and growth hormones produces 40% less greenhouse gas emissions and saves two-thirds more land for nature compared to organic grass-fed beef.
'Worldwide, organic food — a sometimes slippery term but on the whole a practice more sustainable than conventional food '
There is little scientific consensus on this conclusion. There is certainly evidence to the contrary, and while there are very desirable qualities associated with organic food ( some of my favorite frozen foods are Amy's brand of organics) organic should not be sold as a panacea in contrast to modern agriculture. The fact that many organic producers are now ( see here) considering adopting biotech options indicates that organic alone as it stands today is not a solution. Reduced yields as a result of organic practices imply a larger carbon footprint and decreased biodiversity compared to biotech crops. No where in the article did I find the author mention any of the downsides of organic production such as toxic biological controls used in organic production including nicotine* sulfur, pyrethrum, neem, sabadilla, and rotenone* that government regulators don’t even track data for.These can be just as persistent in the environment and detrimental to biological diversity as some conventional products. Nor does the author mention increased risks of E coli contamination ( which the author of the Time piece attributes to conventional agriculture).
Notes and References:
*Nicotine, one of the more toxic organic insecticides, has a rat LD50 (lethal dose in 50% of animals tested)of 55mg/kg. The newest synthetic insecticide, imidacloprid, has a rat LD50 of 425mg/kg, making imidacloprid nearly 10 times less toxic than nicotine. Rotenone has an LD50 of 60-1500 mg/kg and is more acutely toxic than Malathion or Sevin. Cats are highly susceptible to pyrethrum.
Science 31 May 2002:
Vol. 296. no. 5573, pp. 1694 - 1697
DOI: 10.1126/science.1071148
Munkvold, G.P. et al . Plant Disease 83, 130-138 1999.
Dowd, p.J. Economic Entomology. 93 1669-1679 2000.
Miller, Henry I, Conko, Gregory, & Drew L. Kershe. Nature Biotechnology Volume 24 Number 9 September 2006.
Agricultural Outlook ERS/USDA Aug 2006.
Science 8 June 2007:
Vol. 316. no. 5830, pp. 1475 - 1477
DOI: 10.1126/science.1139208
Capper, J. L., Cady, R. A., Bauman, D. E. The environmental impact of dairy production: 1944 compared with 2007. Journal of Animal Science, 2009; 87 (6): 2160 DOI: 10.2527/jas.2009-1781
Smith, J.S.C.; Smith, O.S.; Wright, S.; Wall, S.J.; and Walton, M. (1992)
‘‘Diversity of United States Hybrid Maize Germplasm as Revealed by
Restriction Fragment Length Polymorphisms.’’ Crop Science 32: 598–604
International Journal of Food Microbiology
Volume 120, Issue 3, 15 December 2007, Pages 296-302
The Environmental Safety and Benefits of Growth Enhancing Pharmaceutical Technologies in Beef Production
By Alex Avery and Dennis Avery, Hudson Institute, Centre for Global Food Issues.
Tuesday, August 18, 2009
Government and Public Choice
Our founders certainly had a good idea of the things that Government may be more effective at, as indicated in the specifically enumerated powers of A1S8 of the constitution.
There are cases, in general where, government may have a role ( when goods are non rival and nonexclusive- education, national defense). Or when there are external effects, example: you and I engage in voluntary exchange and harm a 3rd party. However, the existence of 'public goods' or 'externalities' alone does not guarantee that government will offer any improvement.
Past posts related to the function of government:
Type I and Type II Errors
Type II Error Bias -the FDA
Type II Error Bias and Hurricane Katrina
The Tragedy of The Commons
Our Commons Our Choice
Public Choice
Public Choice Theory
Voting Paradoxes
The Median Voter Theorem
The Coase Theorem
Knowledge Problem
Tragedy of the Anticommons
Public Choice Recapitulation
Public Choice and the Constitution
There are cases, in general where, government may have a role ( when goods are non rival and nonexclusive- education, national defense). Or when there are external effects, example: you and I engage in voluntary exchange and harm a 3rd party. However, the existence of 'public goods' or 'externalities' alone does not guarantee that government will offer any improvement.
Past posts related to the function of government:
Type I and Type II Errors
Type II Error Bias -the FDA
Type II Error Bias and Hurricane Katrina
The Tragedy of The Commons
Our Commons Our Choice
Public Choice
Public Choice Theory
Voting Paradoxes
The Median Voter Theorem
The Coase Theorem
Knowledge Problem
Tragedy of the Anticommons
Public Choice Recapitulation
Public Choice and the Constitution
Saturday, August 15, 2009
Government and Capitalism
Governments allocate resources in a fundamentally different way than free individuals behaving cooperatively in voluntary exchange via market capitalism. Individuals acting in their own interest results in a spontanous order guided by prices which reflect tradeoffs based on the knowledge and preferences of millions of individuals. Governments allocate resources based on the limited knowledge and preferences of a few voters, elected officials, or appointed bureaucrats. The fundamental problem facing government is that it never has enough information ( or incentives) to carry out plans effectively. As Economist F.A. Hayek (1945) said:
'the knowledge of the circumstances of which we must make use never exists in concentrated or integrated form, but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all separate individuals possess'
We must also recognize that there is a moral difference between the two processes as well. With government, resources are coercively taken from one individual and given to another. Through the voting and legislative process, government picks winners and losers ( this would not be so bad if we limited government to a few basic functions but becomes problematic with greater intrusion into our lives). Markets do not pick winners and losers. For voluntary exchange to take place, all parties must gain ( although some may gain more than others). Again, as F.A. Hayek (1973)noted :
'the particulars of a spontaneous order cannot be just or unjust'
Certainly there are situations where government has a role in our lives. Our founders outlined many of these in the constitution and explained them well in the federalist papers. While government may provide a necessary mechanism to achieve certain societal goals, we must also be aware of it's weaknesses and its threats.
We should especially be on guard when we hear political leaders justifying some policy or condemning capitalism because the current system has 'benefited the wealthy and well-connected at the expense of the vast majority of Americans.' They are likely staking the deck to take what you have and give it to someone else, or pass some law that benefits a corporate competitor over your small business in the name of some lofty social goal. Ironically, the effect of their policy will likely be to benefit the wealthy and well connected and will likely be at the expense of the majority of Americans.
Instead of just changing who the government picks as winners and losers, it is time that we inform our leaders that we want a change from these collectivist polices, because 'those theories have been tested, and they have failed.'
References:
F.A. Hayek.The Use of Knowledge in Society. American Economic Review (1945)
F.A. Hayek. The Mirage of Social Justice (1973)
'the knowledge of the circumstances of which we must make use never exists in concentrated or integrated form, but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all separate individuals possess'
We must also recognize that there is a moral difference between the two processes as well. With government, resources are coercively taken from one individual and given to another. Through the voting and legislative process, government picks winners and losers ( this would not be so bad if we limited government to a few basic functions but becomes problematic with greater intrusion into our lives). Markets do not pick winners and losers. For voluntary exchange to take place, all parties must gain ( although some may gain more than others). Again, as F.A. Hayek (1973)noted :
'the particulars of a spontaneous order cannot be just or unjust'
Certainly there are situations where government has a role in our lives. Our founders outlined many of these in the constitution and explained them well in the federalist papers. While government may provide a necessary mechanism to achieve certain societal goals, we must also be aware of it's weaknesses and its threats.
We should especially be on guard when we hear political leaders justifying some policy or condemning capitalism because the current system has 'benefited the wealthy and well-connected at the expense of the vast majority of Americans.' They are likely staking the deck to take what you have and give it to someone else, or pass some law that benefits a corporate competitor over your small business in the name of some lofty social goal. Ironically, the effect of their policy will likely be to benefit the wealthy and well connected and will likely be at the expense of the majority of Americans.
Instead of just changing who the government picks as winners and losers, it is time that we inform our leaders that we want a change from these collectivist polices, because 'those theories have been tested, and they have failed.'
References:
F.A. Hayek.The Use of Knowledge in Society. American Economic Review (1945)
F.A. Hayek. The Mirage of Social Justice (1973)
Sunday, August 09, 2009
The Dairy Crisis
I'm still looking into the economics of this issue, but here are various related links I've looked at so far:
From the New York Times :
Of course, I should have known, government intervention in the financial markets via the federal reserve fixing interest rates led to malinvestment and a boom in the dairy industry. Because of fixed resources ( it takes years to develop the genetics necessary for an optimal operation) there continues to be a glut of production on the market. Culling poor performing cows isn't enough, and high end dairy genetics don't translate into high quality beef. It would be like trading in your i-phone for a telegraph.
From: The Food Renegade Blog
"MPCs are basically a cheaper, foreign alternative to non-fat dry milk (NFDM) usually coming from water buffalos or yaks in places like China, India, Poland, and Ukraine. MPCs are created when milk is ultra-filtered through a process which drains out the lactose and keeps the milk proteins and other large molecules intact. Unbelievably (or believably, depending on the level of your lack of trust in the FDA), MPCs are not in the FDA’s Generally Recognized As Safe category and are therefore not approved as a food ingredient in the US. (source) - and it's in everything"
"In one interesting turn of events after the National Family Farm Coalition’s press conference of March 4th, State Senator Darrel J. Aubertine of NY introduced legislation requiring a product to be made with milk — not MPCs — if it wants to be labled a “dairy product.”
I may be able to go along with that. I don't like too much government, and oppose mandatory labeling on fast food and GM foods, but I don't even like 2% milk. I want the real thing whole milk. If it's dairy it better be milk in my opinion- truth in labeling. Let consumer's choose at what level of purity they want to consume.
A final quote:
"Once again, our insistence on finding the absolutely cheapest way to manufacture “food,” coupled with a healthy dose of government interference in the market, is causing farmers everywhere to watch their already meager incomes fall a dramatic 50% in the last quarter alone!"
I'm all for cheap food, but again let's be honest about what we are marketing, and get the government out of the way from there.
From the New York Times :
Of course, I should have known, government intervention in the financial markets via the federal reserve fixing interest rates led to malinvestment and a boom in the dairy industry. Because of fixed resources ( it takes years to develop the genetics necessary for an optimal operation) there continues to be a glut of production on the market. Culling poor performing cows isn't enough, and high end dairy genetics don't translate into high quality beef. It would be like trading in your i-phone for a telegraph.
From: The Food Renegade Blog
"MPCs are basically a cheaper, foreign alternative to non-fat dry milk (NFDM) usually coming from water buffalos or yaks in places like China, India, Poland, and Ukraine. MPCs are created when milk is ultra-filtered through a process which drains out the lactose and keeps the milk proteins and other large molecules intact. Unbelievably (or believably, depending on the level of your lack of trust in the FDA), MPCs are not in the FDA’s Generally Recognized As Safe category and are therefore not approved as a food ingredient in the US. (source) - and it's in everything"
"In one interesting turn of events after the National Family Farm Coalition’s press conference of March 4th, State Senator Darrel J. Aubertine of NY introduced legislation requiring a product to be made with milk — not MPCs — if it wants to be labled a “dairy product.”
I may be able to go along with that. I don't like too much government, and oppose mandatory labeling on fast food and GM foods, but I don't even like 2% milk. I want the real thing whole milk. If it's dairy it better be milk in my opinion- truth in labeling. Let consumer's choose at what level of purity they want to consume.
A final quote:
"Once again, our insistence on finding the absolutely cheapest way to manufacture “food,” coupled with a healthy dose of government interference in the market, is causing farmers everywhere to watch their already meager incomes fall a dramatic 50% in the last quarter alone!"
I'm all for cheap food, but again let's be honest about what we are marketing, and get the government out of the way from there.
Saturday, August 08, 2009
Can Somone Tell Me What Duck's Unlimited is All About
On the Duck's Unlimited Web page I found the following information about their support of the Clean Water Restoration Act.
See related stories & Opinions :
From cattlenetwork here and the National Cattleman's Beef Association here.
The Heritage Foundation Blog
The Ohio Environmental Law Blog
This is the letter I wrote questioning their support and asking for clarification about their principles. I may have just had the wrong impression about what this organization stands for. I thought they were a free market conservation group.
************
Although I can see how this legislation may benefit Wetlands, I must have gotten the wrong impression about Ducks Unlimited. I thought this was an organization based on private efforts by private citizens, landowners, and hunters exercising free choice to donate and contribute to conservation efforts while respecting private property rights.
I thought that the name 'Ducks Unlimited' implied that with private property, markets, and caring support from members we could maintain a sustainable and unlimited waterfowl population.
Is it the philosophy of Duck's Unlimited to take a 2 pronged approach of a regulatory and a private market solution? If so, what does the organization value most, private property rights, markets, and constitutional government, or expansion of federal government. If a government power grab helps wetlands ( which I am skeptical) at the expense of private property and individual liberty it appears by supporting the CWRA Ducks's Unlimited has come down on the side of more government.
Shouldn't this organization favor cooperative solutions over the use of force?
See related stories & Opinions :
From cattlenetwork here and the National Cattleman's Beef Association here.
The Heritage Foundation Blog
The Ohio Environmental Law Blog
This is the letter I wrote questioning their support and asking for clarification about their principles. I may have just had the wrong impression about what this organization stands for. I thought they were a free market conservation group.
************
Although I can see how this legislation may benefit Wetlands, I must have gotten the wrong impression about Ducks Unlimited. I thought this was an organization based on private efforts by private citizens, landowners, and hunters exercising free choice to donate and contribute to conservation efforts while respecting private property rights.
I thought that the name 'Ducks Unlimited' implied that with private property, markets, and caring support from members we could maintain a sustainable and unlimited waterfowl population.
Is it the philosophy of Duck's Unlimited to take a 2 pronged approach of a regulatory and a private market solution? If so, what does the organization value most, private property rights, markets, and constitutional government, or expansion of federal government. If a government power grab helps wetlands ( which I am skeptical) at the expense of private property and individual liberty it appears by supporting the CWRA Ducks's Unlimited has come down on the side of more government.
Shouldn't this organization favor cooperative solutions over the use of force?
Thursday, July 09, 2009
A Second Stimulus
I have yet to hear a discussion from our leaders about how a fiscal (spending) stimulus will work now when similar policies failed during the great depression under Roosevelt and Hoover. The first $787 stimulus was passed despite numerous warnings from some of the worlds best and most prominent economists, including Cole & Ohanion, Prescott, Barro, Becker, Rizzo, Mankiw, Sargent, and almost 200 more. When the Michael Jordans and Tiger Woods of the field are stating that the stimulus package flies in the face of over 60 years of macroeconomic research, the supporters of the policy, or the media, or someone needs to be discussing this as a debatable idea.
Current evidence indicates that the first stimulus has not worked as it appears to have had no influence on unemployment - see graph below or link here.
Source here via Greg Mankiw
So now, supporters of a second stimulus have to explain, after the New Deal stimulus spending failed in the 30's, and the first $787 stimulus failed , why do we expect a 2nd stimulus will work? I aknowledge that there is a lag time for stimulus spending, but that only strengthens the argument AGAINST a second stimulus. If we have not had enough time for this to work, then we don't know if we truly need a second stimulus or not. If we need more spending now on infrastructure to create more jobs as Pennsylvania Governor Rendell says ( from TheHill.com) , then why didn't we spend more of the $787 billion on things that would create jobs the first time. Why not reallocate what we have already committed in the $787 billion to these ends?
Instead of ‘returning to the failed policies that got us where we are today’ perhaps we should consider other policies that have shown success in the past. I’m referring to lowering marginal tax rates and reducing the corporate tax rate.
The basic argument for cuts in marginal taxes is that lower tax rates provide an incentive for increased economic activity. In addition, lower taxes reduce the incentive for the wealthiest Americans to engage in activities to avoid paying taxes . Why pay high management fees, and risk lower returns if a reduction in taxes will lead to higher after tax returns than what you will get in a tax shelter?
Is there any evidence for these supply side effects? Do we actually see increases in economic activity and increases in revenue in the face of cuts in marginal tax rates?
In his book 'Vision of the Annointed,' Thomas Sowell provides data from the US Budget Historical tables ( I checked these ) indicating that with the Regan tax cuts, we saw revenue increases.
This is corroborated by Lawrence Lindsey ( 1987) who found that for those earning > $200K per year, we saw the following increases in collections:
1982 – 3%
1983 – 9%
1984 – 23%
( see Lindsey, Lawrence B. 1987. “Individual Taxpayer Response to Taxcuts, 1982-1984.” J. of Public Economics 33 (July) 173-206 , also noted in: Robert Barrow. Macroeconomics- 5th Edition MIT Press 1997 )
And for the recent Bush tax cuts: ( see this from the Wall Street Journal )
"Taxes paid by millionaire households more than doubled to $274 billion in 2006 from $136 billion in 2003. No President has ever plied more money from the rich than George W. Bush did with his 2003 tax cuts. These tax payments from the rich explain the very rapid reduction in the budget deficit to 1.9% of GDP in 2006 from 3.5% in 2003." ( see historical tables link above )
Also, straight from the historical tables provided by the office of management and budget you will see that from 2004-2007 there was a 25% surge in tax revenues, ( in face of tax cuts) which was the largest 3 yr surge since 1966.
Further evidence is given by President Obama's chief of the council of economic advisers, Christina Romer. She finds that a dollar of tax cuts raises the G.D.P. by about $3. According to this research the benefit from tax cuts is more than twice what other researchers say we get from spending increases.
Current evidence indicates that the first stimulus has not worked as it appears to have had no influence on unemployment - see graph below or link here.
Source here via Greg Mankiw
So now, supporters of a second stimulus have to explain, after the New Deal stimulus spending failed in the 30's, and the first $787 stimulus failed , why do we expect a 2nd stimulus will work? I aknowledge that there is a lag time for stimulus spending, but that only strengthens the argument AGAINST a second stimulus. If we have not had enough time for this to work, then we don't know if we truly need a second stimulus or not. If we need more spending now on infrastructure to create more jobs as Pennsylvania Governor Rendell says ( from TheHill.com) , then why didn't we spend more of the $787 billion on things that would create jobs the first time. Why not reallocate what we have already committed in the $787 billion to these ends?
Instead of ‘returning to the failed policies that got us where we are today’ perhaps we should consider other policies that have shown success in the past. I’m referring to lowering marginal tax rates and reducing the corporate tax rate.
The basic argument for cuts in marginal taxes is that lower tax rates provide an incentive for increased economic activity. In addition, lower taxes reduce the incentive for the wealthiest Americans to engage in activities to avoid paying taxes . Why pay high management fees, and risk lower returns if a reduction in taxes will lead to higher after tax returns than what you will get in a tax shelter?
Is there any evidence for these supply side effects? Do we actually see increases in economic activity and increases in revenue in the face of cuts in marginal tax rates?
In his book 'Vision of the Annointed,' Thomas Sowell provides data from the US Budget Historical tables ( I checked these ) indicating that with the Regan tax cuts, we saw revenue increases.
This is corroborated by Lawrence Lindsey ( 1987) who found that for those earning > $200K per year, we saw the following increases in collections:
1982 – 3%
1983 – 9%
1984 – 23%
( see Lindsey, Lawrence B. 1987. “Individual Taxpayer Response to Taxcuts, 1982-1984.” J. of Public Economics 33 (July) 173-206 , also noted in: Robert Barrow. Macroeconomics- 5th Edition MIT Press 1997 )
And for the recent Bush tax cuts: ( see this from the Wall Street Journal )
"Taxes paid by millionaire households more than doubled to $274 billion in 2006 from $136 billion in 2003. No President has ever plied more money from the rich than George W. Bush did with his 2003 tax cuts. These tax payments from the rich explain the very rapid reduction in the budget deficit to 1.9% of GDP in 2006 from 3.5% in 2003." ( see historical tables link above )
Also, straight from the historical tables provided by the office of management and budget you will see that from 2004-2007 there was a 25% surge in tax revenues, ( in face of tax cuts) which was the largest 3 yr surge since 1966.
Further evidence is given by President Obama's chief of the council of economic advisers, Christina Romer. She finds that a dollar of tax cuts raises the G.D.P. by about $3. According to this research the benefit from tax cuts is more than twice what other researchers say we get from spending increases.
Wednesday, July 08, 2009
Sarah Palin Inarticulate?
Is Sarah Palin inarticulate? On what basis of comparison? Would this be an issue if she were to actually run for president?
Maybe not. Despite both President Obama's confusion about basic economics, gaffs, and inarticulate mishaps, he was quite successful in his campaign.
For example see here, here, and here. This is not to bash or disrespect the POTUS, but to illustrate how unfair or biased this criticism of Sarah Palin has been.
As far as Palin- what happened to all of the interviews like this( On Larry Kudlow)- where are the gaffs? This is inarticulate? ( this is prior to Governor Palin joining the ticket- so no tricks)
If all you saw of the campaign were the above videos of President Obama and the above video of Governor Palin, who would you judge as being 'inarticulate'? This is exactly the flavor of the campaign coverage provided by the national media, and illustrates exactly why so many Americans have such a poor perception of who is or isn't 'articulate.'
To continue with this criticism of Sarah Palin, while dodging the issues like taxes, spending,the stimulus, regulation, inflation, and natural resources is intellectually dishonest on the part of all of her critics, political opponents, and anyone in the media that continues to play this game.
Maybe not. Despite both President Obama's confusion about basic economics, gaffs, and inarticulate mishaps, he was quite successful in his campaign.
For example see here, here, and here. This is not to bash or disrespect the POTUS, but to illustrate how unfair or biased this criticism of Sarah Palin has been.
As far as Palin- what happened to all of the interviews like this( On Larry Kudlow)- where are the gaffs? This is inarticulate? ( this is prior to Governor Palin joining the ticket- so no tricks)
If all you saw of the campaign were the above videos of President Obama and the above video of Governor Palin, who would you judge as being 'inarticulate'? This is exactly the flavor of the campaign coverage provided by the national media, and illustrates exactly why so many Americans have such a poor perception of who is or isn't 'articulate.'
To continue with this criticism of Sarah Palin, while dodging the issues like taxes, spending,the stimulus, regulation, inflation, and natural resources is intellectually dishonest on the part of all of her critics, political opponents, and anyone in the media that continues to play this game.
The Road to Serfdom And The Car That Will Take Us There
See The Environmental Motor Company Making Detroit a subsidiary of the Sierra Club ( Wall Street Journal)
Saturday, July 04, 2009
Freedom Rallies: What are they about?
Freedom rallies, also known as tea parties by some, have been proliferate these past few months. What are they all about?
One of the first criticisms that comes to mind is 'where were all of these protesters under Bush'? No one was happy about the expansion of medicare and entitlement spending under Bush, and who can deny that the 1st round of lump sum tax cuts were poorly structured- although the the later cut in marginal taxes did work well- nor were very many of the tea party protesters likely very happy about the tariffs that came and went under Bush. Bush was not successful in reforming social security, and he should have vetoed the job and opportunity crushing minimum wage increases- if only to take a symbolic stance against poorly designed policies. For many of the protesters, I assume that president Bush left a lot to be desired. We too often forget the outrage over Bush starting the bailouts.
Unfortunately, I think many of them came to accept this brand of 'compassionate conservatism' or 'bipartisanship' to be a reality under the two party system. Electing John McCain would have meant more of these bipartisan ('maverick' as he called it) policies - like McCain- Feingold, cap and trade, and taxing our healthcare benefits. Sarah Palin was popular only because she was truly a Washington outsider, and seemed to bring balance to the ticket as someone willing to stand up to business as usual in DC. Unfortunately (or maybe fortunately) for her, McCain lost.
I think these parties represent a referendum on all parties, they are sending the message to everyone that many Americans are tired of bailouts, and hearing that the financial crisis is the result of deregulation under Bush ( even though they have not cited a single act of deregulation by congress since Gramm-Leach-Bliley in the 90's) or that it is a crisis of capitalism (basically our own fault).The participants are outraged to be punished for it with higher taxes, bigger government, inflation, and unprecedented deficits.
I think many of the participants are tired of having their intelligence insulted in this manner. They are looking for leadership- from whatever party- that is willing to look at the facts, and provide a solution as the result of carefully weighing and considering all of the evidence. They are sick of the big government ideology and bipartisanship that has brought us to where we are today.
I think the last straw may have been with the passage of the $787 billion stimulus package. We were told that it was necessary, as we faced the greatest financial crisis since the great depression. It may have been more accepted if those favoring this massive increase in spending could have offered some reasoning as to why this would work today, even though similar policies failed us during the great depression under Roosevelt and Hoover. This was passed despite numerous warnings from some of the worlds best and most prominent economists, including Cole & Ohanion, Prescott, Barro, Becker, Rizzo, Mankiw, Sargent, and almost 200 more. When the Michael Jordans and Tiger Woods of the field are stating that the stimulus package flies in the face of over 60 years of macroeconomic research, the supporters of the policy, or the media,or someone needs to be discussing this as a debatable idea. It is the burden of the supporters and the media to explain why this will work, and while all of the other evidence is flawed. I don't recall any of the supporters of the legislation having a discussion like this- I don't remember seeing or hearing mention of any of these economists' research being discussed or debated on the news in relation to the stimulus. In short, I think the protesters probably feel like they have been lied to to a great extent about the stimulus and current budget deficits, or greatly insulted by the arrogance of its supporters. Not only are they likely upset with the republicans and democrats that have supported these policies, but they are also growing more and more impatient with a national media that has failed to ask tough questions.
To add insult to injury, evidence indicates that the projections of how much better off we would be under passage of the stimulus have turned out to be wrong. Unemployment has surpassed what it was projected to have been without passing a $787 billion stimulus package.
Source here.
The excuse seems to be 'we didn't know how bad it really was.' This excuse might be acceptable, were it not for the big I told you so coming from the hundreds of economists listed above. And the original projections did account for the lag we would expect from fiscal policy, so the excuse of 'giving it more time' isn't really much more acceptable.
Given what we have experienced through the bailouts and the stimulus package, many of the participants in the freedom rallies are even more skeptical of the policies to come such as national healthcare and cap and trade.
Those participating in the freedom rallies across the country this past independence day weekend have a lot grievances on their plate, and a lot of questions they want answered. Will they get answers, or will they be arrogantly dismissed as fringe radicals, closed minded, anti-progressive sore losers? Will they be answered by an offer to have a serious discussion? Will they be offered evidence, or cowboy style ideological shots from the hip?
One of the first criticisms that comes to mind is 'where were all of these protesters under Bush'? No one was happy about the expansion of medicare and entitlement spending under Bush, and who can deny that the 1st round of lump sum tax cuts were poorly structured- although the the later cut in marginal taxes did work well- nor were very many of the tea party protesters likely very happy about the tariffs that came and went under Bush. Bush was not successful in reforming social security, and he should have vetoed the job and opportunity crushing minimum wage increases- if only to take a symbolic stance against poorly designed policies. For many of the protesters, I assume that president Bush left a lot to be desired. We too often forget the outrage over Bush starting the bailouts.
Unfortunately, I think many of them came to accept this brand of 'compassionate conservatism' or 'bipartisanship' to be a reality under the two party system. Electing John McCain would have meant more of these bipartisan ('maverick' as he called it) policies - like McCain- Feingold, cap and trade, and taxing our healthcare benefits. Sarah Palin was popular only because she was truly a Washington outsider, and seemed to bring balance to the ticket as someone willing to stand up to business as usual in DC. Unfortunately (or maybe fortunately) for her, McCain lost.
I think these parties represent a referendum on all parties, they are sending the message to everyone that many Americans are tired of bailouts, and hearing that the financial crisis is the result of deregulation under Bush ( even though they have not cited a single act of deregulation by congress since Gramm-Leach-Bliley in the 90's) or that it is a crisis of capitalism (basically our own fault).The participants are outraged to be punished for it with higher taxes, bigger government, inflation, and unprecedented deficits.
I think many of the participants are tired of having their intelligence insulted in this manner. They are looking for leadership- from whatever party- that is willing to look at the facts, and provide a solution as the result of carefully weighing and considering all of the evidence. They are sick of the big government ideology and bipartisanship that has brought us to where we are today.
I think the last straw may have been with the passage of the $787 billion stimulus package. We were told that it was necessary, as we faced the greatest financial crisis since the great depression. It may have been more accepted if those favoring this massive increase in spending could have offered some reasoning as to why this would work today, even though similar policies failed us during the great depression under Roosevelt and Hoover. This was passed despite numerous warnings from some of the worlds best and most prominent economists, including Cole & Ohanion, Prescott, Barro, Becker, Rizzo, Mankiw, Sargent, and almost 200 more. When the Michael Jordans and Tiger Woods of the field are stating that the stimulus package flies in the face of over 60 years of macroeconomic research, the supporters of the policy, or the media,or someone needs to be discussing this as a debatable idea. It is the burden of the supporters and the media to explain why this will work, and while all of the other evidence is flawed. I don't recall any of the supporters of the legislation having a discussion like this- I don't remember seeing or hearing mention of any of these economists' research being discussed or debated on the news in relation to the stimulus. In short, I think the protesters probably feel like they have been lied to to a great extent about the stimulus and current budget deficits, or greatly insulted by the arrogance of its supporters. Not only are they likely upset with the republicans and democrats that have supported these policies, but they are also growing more and more impatient with a national media that has failed to ask tough questions.
To add insult to injury, evidence indicates that the projections of how much better off we would be under passage of the stimulus have turned out to be wrong. Unemployment has surpassed what it was projected to have been without passing a $787 billion stimulus package.
Source here.
The excuse seems to be 'we didn't know how bad it really was.' This excuse might be acceptable, were it not for the big I told you so coming from the hundreds of economists listed above. And the original projections did account for the lag we would expect from fiscal policy, so the excuse of 'giving it more time' isn't really much more acceptable.
Given what we have experienced through the bailouts and the stimulus package, many of the participants in the freedom rallies are even more skeptical of the policies to come such as national healthcare and cap and trade.
Those participating in the freedom rallies across the country this past independence day weekend have a lot grievances on their plate, and a lot of questions they want answered. Will they get answers, or will they be arrogantly dismissed as fringe radicals, closed minded, anti-progressive sore losers? Will they be answered by an offer to have a serious discussion? Will they be offered evidence, or cowboy style ideological shots from the hip?
Thursday, July 02, 2009
Agriculture, Obesity, and Poverty
The agriculture industry has and will continue to come under attach for contributing to obesity. These attacks are based on narrow special interests and ideology, but they will be used to justify more regulation and an attack on the personal liberties of millions of Americans. It will be done in the name of protecting the poor from themselves and the greed of agribusiness.
Back in 2007 in the New York Times Micahel Pollan makes the following comment:
"So how is it that today the people with the least amount of money to spend on food are the ones most likely to be overweight?
This perverse state of affairs is not, as you might think, the inevitable result of the free market.
Like most processed foods, the Twinkie is basically a clever arrangement of carbohydrates and fats teased out of corn, soybeans and wheat — three of the five commodity crops that the farm bill supports, to the tune of some $25 billion a year. (Rice and cotton are the others.) For the last several decades — indeed, for about as long as the American waistline has been ballooning — U.S. agricultural policy has been designed in such a way as to promote the overproduction of these five commodities, especially corn and soy."
Mr. Pollan has it all wrong on a number of accounts. I'm not here to argue about the distortions created by this or that component of any particular farm bill, but the farm bills are structured around these crops because that is what we grow, they are the staples that feed the world. We don't grow these crops because they are included in the farm bill, they are included in the farm bill because we grow these crops. Eliminate the farm bill, and yes the free market will still call for American farmers to grow the staples that feed the world.
Mr. Pollan and many of his adherents are not interested in what foods free markets ( or lets be more precise- the foods that free people) dictate. Most of these food activists would love to see a farm bill or other legislation that penalizes our efforts to feed the world with the environmentally superior technologies and science based techniques we are using today, and subsidize the production of fruits and vegetables and politically correct foods.
Also is the concern that the 'poor' are choosing to eat these unhealthy fast foods and processed foods. That may certainly be the case, but we should really be concerned with overall health, not just obesity. While the poor may be dealing with some issues of obesity, research ( from the national bureau of economic research) indicates that the relationship between socioeconomic status and health is weak. Still, if we are going to be concerned with obesity, we should be concerned with all factors contribute to obesity, not just the hand that feeds us. As indicated in a recent piece in the Rocky Mountain News, a study from the 2007 International Journal of Obesity concludes, “The obesity epidemic is often speculatively blamed on fast food, when the actual evidence shows very little, if any, association of fast food with weight gain.”
To concentrate on diet alone, and omit exercise will lead to perverse results, but it can justify a lot of government intrusion on our valued freedoms.
One approach is to inadvertandly tax small businesses and consumers with labeling requirements as done recently in Tennessee. ( See the Tennessean)
"Providing consumers with accurate, easy to understand nutritional information about the content of the food they are purchasing is a common-sense measure that could help Tennessee address its obesity epidemic" Bredesen wrote.
Governor Bredessen, common sense tells us that the gravy and fried chicken at the local diner or national franchise probably is loaded with calories and fat, labeled or not. Will this change the habits of a marginal number of people? Maybe, but at great costs with minimal benefit.
The case is similar with fat taxes. Research from the Mercatus Center at George Mason University indicates that the taxes required to have any real affect on obesity would be in the 1200 percent range, and even if taxes eliminated ( in this case soda) consumption, the impact on obesity would be very small. The study concludes that "the sensitivity of individuals to changes in relative food prices is
not sufficient to make “fat taxes” a viable tool to lower obesity."
Taking on the challenge of 'fighting obesity' in the name of helping the poor ( or reducing climate change) is likely misguided, or for some activists maybe even disingenuous. In the words of economist Thomas Sowell, many of the arguments for these policies 'invoke the name and mystique of science in order to override other people's choices."
We should be thankful that we live in a country were people of modest means have access affordable energy dense foods. We can't forget that fast food provides jobs and opportunities for advancement for millions! In producing staples like corn, soybeans, wheat, beef, pork, and chicken our farmers are utilizing modern science and technology ( like biotech) to improve nutritional quality and minimize our impact on the environment.
Many of the ideas being proposed by food activists and righteous eaters if ever implemented will truly bite the hand that feeds us.
The best approach is to maintain policies that support rather than hinder the spontaneous order of the market that allocates resources and provides incentives to produce the necessary technologies for better food, a better environment, and the economic growth that reduces poverty.
Back in 2007 in the New York Times Micahel Pollan makes the following comment:
"So how is it that today the people with the least amount of money to spend on food are the ones most likely to be overweight?
This perverse state of affairs is not, as you might think, the inevitable result of the free market.
Like most processed foods, the Twinkie is basically a clever arrangement of carbohydrates and fats teased out of corn, soybeans and wheat — three of the five commodity crops that the farm bill supports, to the tune of some $25 billion a year. (Rice and cotton are the others.) For the last several decades — indeed, for about as long as the American waistline has been ballooning — U.S. agricultural policy has been designed in such a way as to promote the overproduction of these five commodities, especially corn and soy."
Mr. Pollan has it all wrong on a number of accounts. I'm not here to argue about the distortions created by this or that component of any particular farm bill, but the farm bills are structured around these crops because that is what we grow, they are the staples that feed the world. We don't grow these crops because they are included in the farm bill, they are included in the farm bill because we grow these crops. Eliminate the farm bill, and yes the free market will still call for American farmers to grow the staples that feed the world.
Mr. Pollan and many of his adherents are not interested in what foods free markets ( or lets be more precise- the foods that free people) dictate. Most of these food activists would love to see a farm bill or other legislation that penalizes our efforts to feed the world with the environmentally superior technologies and science based techniques we are using today, and subsidize the production of fruits and vegetables and politically correct foods.
Also is the concern that the 'poor' are choosing to eat these unhealthy fast foods and processed foods. That may certainly be the case, but we should really be concerned with overall health, not just obesity. While the poor may be dealing with some issues of obesity, research ( from the national bureau of economic research) indicates that the relationship between socioeconomic status and health is weak. Still, if we are going to be concerned with obesity, we should be concerned with all factors contribute to obesity, not just the hand that feeds us. As indicated in a recent piece in the Rocky Mountain News, a study from the 2007 International Journal of Obesity concludes, “The obesity epidemic is often speculatively blamed on fast food, when the actual evidence shows very little, if any, association of fast food with weight gain.”
To concentrate on diet alone, and omit exercise will lead to perverse results, but it can justify a lot of government intrusion on our valued freedoms.
One approach is to inadvertandly tax small businesses and consumers with labeling requirements as done recently in Tennessee. ( See the Tennessean)
"Providing consumers with accurate, easy to understand nutritional information about the content of the food they are purchasing is a common-sense measure that could help Tennessee address its obesity epidemic" Bredesen wrote.
Governor Bredessen, common sense tells us that the gravy and fried chicken at the local diner or national franchise probably is loaded with calories and fat, labeled or not. Will this change the habits of a marginal number of people? Maybe, but at great costs with minimal benefit.
The case is similar with fat taxes. Research from the Mercatus Center at George Mason University indicates that the taxes required to have any real affect on obesity would be in the 1200 percent range, and even if taxes eliminated ( in this case soda) consumption, the impact on obesity would be very small. The study concludes that "the sensitivity of individuals to changes in relative food prices is
not sufficient to make “fat taxes” a viable tool to lower obesity."
Taking on the challenge of 'fighting obesity' in the name of helping the poor ( or reducing climate change) is likely misguided, or for some activists maybe even disingenuous. In the words of economist Thomas Sowell, many of the arguments for these policies 'invoke the name and mystique of science in order to override other people's choices."
We should be thankful that we live in a country were people of modest means have access affordable energy dense foods. We can't forget that fast food provides jobs and opportunities for advancement for millions! In producing staples like corn, soybeans, wheat, beef, pork, and chicken our farmers are utilizing modern science and technology ( like biotech) to improve nutritional quality and minimize our impact on the environment.
Many of the ideas being proposed by food activists and righteous eaters if ever implemented will truly bite the hand that feeds us.
The best approach is to maintain policies that support rather than hinder the spontaneous order of the market that allocates resources and provides incentives to produce the necessary technologies for better food, a better environment, and the economic growth that reduces poverty.
Thursday, June 18, 2009
Green Jobs
Recently there has been a lot of hype created regarding the creation of 'green jobs' and even excitement that the creation of green jobs may help stimulate the economy. This may be counter to what we would expect given basic economic theory.
Recent research by Gabriel Calzada Álvarez (link) indicates that job losses may result from what economists refer to as the broken window fallacy.
'we find that for every renewable energy job that the State manages to finance...that the U.S. should expect a loss of at least 2.2 jobs on average, or about 9 jobs lost for every 4 created, to which we have to add those jobs that non-subsidized investments with the same resources would have created.'
'Each “green” megawatt installed destroys 5.28 jobs on average elsewhere in the economy: 8.99 by photovoltaics, 4.27 by wind energy, 5.05 by mini-hydro.'
With the broken window fallacy, as the analogy goes, breaking the baker's window leads to jobs for glass repair workers, and thus acts like a stimulus to the economy. It is a fallacy in that it does not consider the jobs that other wise would have been created had the baker not had to fix his window, but expanded his business or invested the funds. Jobs may be created on both accounts, but who is to say which jobs create the most value for the economy.
If green jobs are created by taking money and resources away from other businesses to subsidize green enterprises (breaking windows) then they are not created without consequence.
Green jobs created by government are not equivalent to those created by the free market. A recent story from the Charlotte Observer points out that according to a study by Pew Charitable Trusts "Green-jobs growth has occurred without consistent regulatory support... "All the states that grew were responding directly to consumer demand."
A prime example of green job creation via the free market can be found when we look at modern agriculture. As pointed out in a recent AgWeb blog post 'Biotechnology: An Agriculture Success Story' recent research from PG Economics indicates that biotech crops have greatly reduced agriculture's carbon footprint and reduced pesticide applications. For additional peer reviewed research related to the 'greening' of the ag industry see the references below.
Green jobs created by the biotech industry are created voluntarily. Investors and entrepreneurs recognized that the money they invested in biotech would yield more benefits to society than any alternative at the margin. Otherwise they would have invested their money elsewhere.
When government tries to create green jobs, it has to arbitrarily take money from one place and put it somewhere else. Because they base their decision on the limited knowledge and preferences of at most a few voters, politicians, and bureaucrats instead of market returns, they have no way of knowing whether the additional benefits to society from their program are greater than the costs. ( and they risk destroying more jobs than they create).
If we truly want increased growth, decreased poverty, and improved environmental quality, our best chance is going to be to leverage the power of the 'invisible green hand' and let the market create green jobs where they are needed most. The ag industry has already set the example.
Enterprise and Biodiversity: Do Market Forces Yield Diversity of Life?
David Schap and Andrew T. Young Cato Journal, Vol. 19, No. 1 (Spring/Summer 1999)
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
Smith, J.S.C.; Smith, O.S.; Wright, S.; Wall, S.J.; and Walton, M. (1992)
‘‘Diversity of United States Hybrid Maize Germplasm as Revealed by
Restriction Fragment Length Polymorphisms.’’ Crop Science 32: 598–604
Munkvold, G.P. et al . Plant Disease 83, 130-138 1999.
Dowd, p.J. Economic Entomology. 93 1669-1679 2000.
Miller, Henry I, Conko, Gregory, & Drew L. Kershe. Nature Biotechnology Volume 24 Number 9 September 2006.
Agricultural Outlook ERS/USDA Aug 2006.
Dr. Roger Leonard, LSU Agricultural Center and Dr. Ronald Smith, Auburn University. Research in Bt Cotton
http://www.beefusa.org/uDocs/cattlenumbersandbeefproduction347.pdf
Gregory Conko “The Benefits of Biotech” Regulation. Spring 2003
San Diego Center for Molecular Agriculture: Foods from Genetically Modified Organisms
Recent research by Gabriel Calzada Álvarez (link) indicates that job losses may result from what economists refer to as the broken window fallacy.
'we find that for every renewable energy job that the State manages to finance...that the U.S. should expect a loss of at least 2.2 jobs on average, or about 9 jobs lost for every 4 created, to which we have to add those jobs that non-subsidized investments with the same resources would have created.'
'Each “green” megawatt installed destroys 5.28 jobs on average elsewhere in the economy: 8.99 by photovoltaics, 4.27 by wind energy, 5.05 by mini-hydro.'
With the broken window fallacy, as the analogy goes, breaking the baker's window leads to jobs for glass repair workers, and thus acts like a stimulus to the economy. It is a fallacy in that it does not consider the jobs that other wise would have been created had the baker not had to fix his window, but expanded his business or invested the funds. Jobs may be created on both accounts, but who is to say which jobs create the most value for the economy.
If green jobs are created by taking money and resources away from other businesses to subsidize green enterprises (breaking windows) then they are not created without consequence.
Green jobs created by government are not equivalent to those created by the free market. A recent story from the Charlotte Observer points out that according to a study by Pew Charitable Trusts "Green-jobs growth has occurred without consistent regulatory support... "All the states that grew were responding directly to consumer demand."
A prime example of green job creation via the free market can be found when we look at modern agriculture. As pointed out in a recent AgWeb blog post 'Biotechnology: An Agriculture Success Story' recent research from PG Economics indicates that biotech crops have greatly reduced agriculture's carbon footprint and reduced pesticide applications. For additional peer reviewed research related to the 'greening' of the ag industry see the references below.
Green jobs created by the biotech industry are created voluntarily. Investors and entrepreneurs recognized that the money they invested in biotech would yield more benefits to society than any alternative at the margin. Otherwise they would have invested their money elsewhere.
When government tries to create green jobs, it has to arbitrarily take money from one place and put it somewhere else. Because they base their decision on the limited knowledge and preferences of at most a few voters, politicians, and bureaucrats instead of market returns, they have no way of knowing whether the additional benefits to society from their program are greater than the costs. ( and they risk destroying more jobs than they create).
If we truly want increased growth, decreased poverty, and improved environmental quality, our best chance is going to be to leverage the power of the 'invisible green hand' and let the market create green jobs where they are needed most. The ag industry has already set the example.
Enterprise and Biodiversity: Do Market Forces Yield Diversity of Life?
David Schap and Andrew T. Young Cato Journal, Vol. 19, No. 1 (Spring/Summer 1999)
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
Smith, J.S.C.; Smith, O.S.; Wright, S.; Wall, S.J.; and Walton, M. (1992)
‘‘Diversity of United States Hybrid Maize Germplasm as Revealed by
Restriction Fragment Length Polymorphisms.’’ Crop Science 32: 598–604
Munkvold, G.P. et al . Plant Disease 83, 130-138 1999.
Dowd, p.J. Economic Entomology. 93 1669-1679 2000.
Miller, Henry I, Conko, Gregory, & Drew L. Kershe. Nature Biotechnology Volume 24 Number 9 September 2006.
Agricultural Outlook ERS/USDA Aug 2006.
Dr. Roger Leonard, LSU Agricultural Center and Dr. Ronald Smith, Auburn University. Research in Bt Cotton
http://www.beefusa.org/uDocs/cattlenumbersandbeefproduction347.pdf
Gregory Conko “The Benefits of Biotech” Regulation. Spring 2003
San Diego Center for Molecular Agriculture: Foods from Genetically Modified Organisms
Wednesday, June 17, 2009
Food Inc
Steve Cornett of AgWeb sums it up pretty well. My response to his post and commentors:
Thanks for sharing this.These sentiments reflect a basic unbiased, common sense science based response to Food Inc. which from what I gather is turning out to be using the prestige of science as a facade to override other people's choices. As far as where I get my news, I would say, as someone else very well known has said, ALL OF THEM. Fox, NPR, ABC, CBS Bloomberg, CNN, CSPAN, NYT, WSJ, WP, etc. Isn't it kind of silly to list all of these sources this day in age. ALL OF THEM.
Thanks for sharing this.These sentiments reflect a basic unbiased, common sense science based response to Food Inc. which from what I gather is turning out to be using the prestige of science as a facade to override other people's choices. As far as where I get my news, I would say, as someone else very well known has said, ALL OF THEM. Fox, NPR, ABC, CBS Bloomberg, CNN, CSPAN, NYT, WSJ, WP, etc. Isn't it kind of silly to list all of these sources this day in age. ALL OF THEM.
Monday, June 15, 2009
Taking Up for Monsanto
Several Points:
1) Bringing up DDT isn't the best grounds to stand on from a humanitarian standpoint. More lives have been lost as a result of the DDT ban than saved.
2) Increased use of Roundup is a bad thing? Roundup Ready technology has allowed for glyphosate herbicide to substitute for 7.2 million pounds of other chemicals that are more toxic and persistent in the environment.
According to a recent study,biotech crops have decreased the environmental impact associated with herbicide and insecticide use on the area planted to biotech crops by 17.2%
3) The number of farmers that don't use biotech seeds is diminishing. That is true and it is a worldwide phenomena. The largest increases are actually among subsistence farmers in the developing world. They are able to produce safer, more vigorous and resource efficient crops all while saving costs. The idea that this technology is being forced upon them is specious at best.
As far as 'contamination' is concerned, the technology to prevent it exists. The idea of a 'terminator' gene that would prevent environmental contamination has been trumped by the groups opposed science based agriculture, and the technology has never been used as a result.
4) For peer reviewed research regarding biotech foods, see this link.
Another exhaustive look at this issue can be found here.
The research is actually proliferate.
Sunday, June 14, 2009
Got (Green) Milk?
Another example of the 'Invisible Green Hand' at work. This time in the dairy industry. See link here.
Excerpt:
"The study shows that the carbon footprint for a gallon of milk produced in 2007 was only 37 percent of that produced in 1944. Improved efficiency has enabled the U.S. dairy industry to produce 186 billion pounds of milk from 9.2 million cows in 2007, compared to only 117 billion pounds of milk from 25.6 million cows in 1944. This has resulted in a 41 percent decrease in the total carbon footprint for U.S. milk production."
Excerpt:
"The study shows that the carbon footprint for a gallon of milk produced in 2007 was only 37 percent of that produced in 1944. Improved efficiency has enabled the U.S. dairy industry to produce 186 billion pounds of milk from 9.2 million cows in 2007, compared to only 117 billion pounds of milk from 25.6 million cows in 1944. This has resulted in a 41 percent decrease in the total carbon footprint for U.S. milk production."
Friday, June 12, 2009
Behavioral Economics
A recent story on National Public Radio ( link) gives an overview of a subfield of economics called behavioral economics. Behavioral economics incorporates elements of psychology into economic theory. Some people believe that behavioral economics will improve economic models because it makes a correction for what they believe are errors in the assumptions of classical economics. As a result many people have come to think that behavioral economics may even justify the unprecedented amount of government intervention in the economy and improve our lives.
Continue reading at AgWeb.
Continue reading at AgWeb.
Sunday, May 17, 2009
Friday, April 03, 2009
Fascist Policies
From The American Spectator:
Trying to handle the crisis, the Fascist government nationalized the holdings of large banks which had accrued significant industrial securities. The government also issued new securities to provide a source of credit for the banks and began enlisting the help of various cartels…. The government offered recognition and support to these organizations in exchange for promises that they would manipulate prices in accordance with government priorities. A number of mixed entities were formed… whose purpose it was to bring together representatives of the government and of the major businesses.… This economic model based on a partnership between government and business was soon extended to the political sphere, in what came to be known as corporatism.… The Fascists began to impose significant tariffs and other trade barriers.… Various banking and industrial companies were financially supported by the state.… [The national leader] created the [New Governmental Entity]….[which soon] controlled 20% of [the nation's] industry through government-linked companies.… [The national leader] also adopted a Keynesian policy of government spending on public works to stimulate the economy.… Public works spending tripled to overtake defense spending as the largest item of government expenditure.
the above passage of course describes the economics of fascist Italy in the 1930s,...."The Fascist conception of life," Mussolini wrote, "stresses the importance of the State and accepts the individual only in so far as his interests coincide with the State. It is opposed to classical liberalism [which] denied the State in the name of the individual; Fascism reasserts the rights of the State as expressing the real essence of the individual."
Public-Private partnerships, or the incorporation of private institutions into the state via the regulatory apparatus ( the definition of economic fascism by the way) often benefits 'some' big businesses, and because big business is often associated with the right wing, people often confuse economic fascism with being right wing.
Trying to handle the crisis, the Fascist government nationalized the holdings of large banks which had accrued significant industrial securities. The government also issued new securities to provide a source of credit for the banks and began enlisting the help of various cartels…. The government offered recognition and support to these organizations in exchange for promises that they would manipulate prices in accordance with government priorities. A number of mixed entities were formed… whose purpose it was to bring together representatives of the government and of the major businesses.… This economic model based on a partnership between government and business was soon extended to the political sphere, in what came to be known as corporatism.… The Fascists began to impose significant tariffs and other trade barriers.… Various banking and industrial companies were financially supported by the state.… [The national leader] created the [New Governmental Entity]….[which soon] controlled 20% of [the nation's] industry through government-linked companies.… [The national leader] also adopted a Keynesian policy of government spending on public works to stimulate the economy.… Public works spending tripled to overtake defense spending as the largest item of government expenditure.
the above passage of course describes the economics of fascist Italy in the 1930s,...."The Fascist conception of life," Mussolini wrote, "stresses the importance of the State and accepts the individual only in so far as his interests coincide with the State. It is opposed to classical liberalism [which] denied the State in the name of the individual; Fascism reasserts the rights of the State as expressing the real essence of the individual."
Public-Private partnerships, or the incorporation of private institutions into the state via the regulatory apparatus ( the definition of economic fascism by the way) often benefits 'some' big businesses, and because big business is often associated with the right wing, people often confuse economic fascism with being right wing.
Friday, March 27, 2009
Harper's Keizer, Right vs. Left vs. Center : All Are Irrelevant
Harper's, Garret Keizer:
The mega-irony of the Republican Party: that of all people conservatives ought to have been the first to grasp the dangers of unregulated markets. If big government is susceptible to the abuses of "sinful" human beings, how much more susceptible is a corporate system that is bigger than any government? The right wing of the party ought to have seen this better than the center, and the religious right ought to have seen it best of all. That they failed to see it bespeaks a spiritual bankruptcy beside which the financial plight of an auto industry is as a gnat unto a camel.
A market is certainly much larger than the government but with that comes certain advantages over government as well.
Government, large or small as it may be, is run by greedy politicians and bureaucrats, and relies on their limited knowledge and preferences to make decisions and allocate resources. They are accountable primarily only to the constraints of elections, and the political environment ( their relationships with other politicians and bureaucrats etc.)
Markets are much larger and consist of millions of greedy individuals. Both markets and governments consist of greedy individuals armed with imperfect information. The difference is that with markets, decisions regarding the allocation of resources are based on the knowledge and preferences of millions of individuals, who are all accountable to one another via the checks and balances of the price system. Markets draw from a much larger pool of knowledge and are subject to much greater constraints than governments.
It would seem then that the institution with the larger pool of knowledge and a greater extent of checks and balances would be the one that is less dangerous.
Confusing the issue with republican vs. democrat vs. religious right vs. center etc. is not an effective framework for ' grasping the danger' of one institutional arrangement vs another.
What we have seen recently is chaos introduced by public private partnerships and a mixed economy, making it difficult to identify the 'dangers' of both government and corporate arrangements. By upsetting the checks and balances of the price system, ( primarily via the federal reserve’s longstanding policy of centrally planned interest rates) and the creation of public private partnerships like the government sponsored enterprises such as Fannie and Freddie, incentive structures favoring greater risk and unaccountability have arisen that would not occur in the context of a free market. The result being a housing bubble, bust, and over leveraged and bankrupt financial institutions.
The question now becomes what is the least dangerous response to this situation, and which institutional arrangement will be best equipped with the knowledge and incentives to bring about recovery? Are more distortionary interventions and public/private partnerships i.e. more government, the solution when they have played such a pivotal role in getting us where we are today? Markets have worked well in allocating resources and bringing about prosperity over the past few decades. Is the solution to our current problem to limit their role and ability to do this in the future?
The mega-irony of the Republican Party: that of all people conservatives ought to have been the first to grasp the dangers of unregulated markets. If big government is susceptible to the abuses of "sinful" human beings, how much more susceptible is a corporate system that is bigger than any government? The right wing of the party ought to have seen this better than the center, and the religious right ought to have seen it best of all. That they failed to see it bespeaks a spiritual bankruptcy beside which the financial plight of an auto industry is as a gnat unto a camel.
A market is certainly much larger than the government but with that comes certain advantages over government as well.
Government, large or small as it may be, is run by greedy politicians and bureaucrats, and relies on their limited knowledge and preferences to make decisions and allocate resources. They are accountable primarily only to the constraints of elections, and the political environment ( their relationships with other politicians and bureaucrats etc.)
Markets are much larger and consist of millions of greedy individuals. Both markets and governments consist of greedy individuals armed with imperfect information. The difference is that with markets, decisions regarding the allocation of resources are based on the knowledge and preferences of millions of individuals, who are all accountable to one another via the checks and balances of the price system. Markets draw from a much larger pool of knowledge and are subject to much greater constraints than governments.
It would seem then that the institution with the larger pool of knowledge and a greater extent of checks and balances would be the one that is less dangerous.
Confusing the issue with republican vs. democrat vs. religious right vs. center etc. is not an effective framework for ' grasping the danger' of one institutional arrangement vs another.
What we have seen recently is chaos introduced by public private partnerships and a mixed economy, making it difficult to identify the 'dangers' of both government and corporate arrangements. By upsetting the checks and balances of the price system, ( primarily via the federal reserve’s longstanding policy of centrally planned interest rates) and the creation of public private partnerships like the government sponsored enterprises such as Fannie and Freddie, incentive structures favoring greater risk and unaccountability have arisen that would not occur in the context of a free market. The result being a housing bubble, bust, and over leveraged and bankrupt financial institutions.
The question now becomes what is the least dangerous response to this situation, and which institutional arrangement will be best equipped with the knowledge and incentives to bring about recovery? Are more distortionary interventions and public/private partnerships i.e. more government, the solution when they have played such a pivotal role in getting us where we are today? Markets have worked well in allocating resources and bringing about prosperity over the past few decades. Is the solution to our current problem to limit their role and ability to do this in the future?
Saturday, March 21, 2009
Antibiotic Use in Agriculture
Some recent articles:
Comprehensive Reviews in Food Science and Food Safety
"applying interventions to control foodborne pathogens in general, rather than focusing on antibiotic-resistant
strains specifically, would have the greatest impact in reducing overall foodborne illnesses."
And from Pork Magazine here.
Comprehensive Reviews in Food Science and Food Safety
"applying interventions to control foodborne pathogens in general, rather than focusing on antibiotic-resistant
strains specifically, would have the greatest impact in reducing overall foodborne illnesses."
And from Pork Magazine here.
Saturday, March 14, 2009
Laying Out The Facts
From a recent issue of Nature Biotechnology:
"Obama is clearly a science buff, and is really, honestly, into knowing the facts, having them laid out, and then making the best choices that can be mustered," says a policy watcher who was close to the transition team but is outside the federal government. "It is a whole different approach compared to the 'How can we spin this information?' approach of the [Bush administration]. Back to 'honest-to-goodness' curiosity, which is, yes, incredibly refreshing."
This sounds like it could be good for biotech, but I’m not so refreshed. It seems that in the past the approach of those favoring larger government and regulation has been only to embrace the science that supports their interventions. This is more of a feigned or disingenuous intellectual curiosity, which really is no different than ‘How can we spin this information.’ Policy makers often pretend to embrace science, but really are ‘invoking the name and mystique of science to override other peoples choices’ to borrow a phrase from economist Thomas Sowell.
Examples that come to mind include aggressive attempts to combat climate change, despite the lack of consensus with regard to the effectiveness of such policies. They may have established a consensus that the earth is warming , but that is only the first step in a long process of determining an optimal policy procedure. If we are going to tax carbon or establish a market based cap and trade solution, then we need to be able to determine the relevance of our carbon foot print and put a price on it. Price ranges are all over the board, from the credulous Stern reports estimate of $300/ton to William Nordhaus more rigorous estimate of $30/ton ( which is still 10 times the implied price via Kyoto).
Currently there are private exchanges allowing producers to sell carbon offsets in a voluntary market. We should start from there. By the time we figure out the ‘optimal policy’ it is likely that the private market will have taken care of the problem for us as it has many times in the past. Markets and technological change have never allowed us to run out of copper, coal, cattle, oil ,or numerous other natural resources, there is no reason to believe they will allow us to run out of clean air. Some interventions may be necessary, to establish property rights ( which is what cap and trade does) but we are a long way from having the science to support them at this time. As Dr. Nordhaous concludes ‘the central questions about global-warming policy--how much, how fast, and how costly—remain open.’
With the current stimulus package flying in the face of everything we have learned from macroeconomic research over the last 60 years we have more reason to wonder just how much of our future polices will be the result of ‘knowing the facts, having them laid out, and then making the best choices that can be mustered.’
There has certainly been a problem in the past with closed mindedness and fact spinning with regard the environmental and health benefits of biotechnology ( although I would say that this was likely due more to environmental hypochondriacs and those that are averse to capitalism and technology on the left , as opposed to the Bush administration’s policies) However, if the current administration is open minded and curious about the science of agriculture and willing to embrace the evidence and communicate that to others, that will be a great thing. As stated later in the article:
"The EU approach has helped keep African countries from adopting GM [genetically modified] crops," agrees De Greef of EuropaBio. "We hope if the EU and US become less adversarial, it could remove pressure from Africa, which feels forced to choose between US or EU regulations."
The current administration may warm up much better to the Europeans, and as a result win some influence that could be beneficial to the biotech industry. That would be refreshing, as long as we are not selling them on our policies in exchange for some of their more troubling ideas regarding healthcare , taxes, and unemployment.
Source: Nature Biotechnology 27, 237 - 244 (2009)
"Obama is clearly a science buff, and is really, honestly, into knowing the facts, having them laid out, and then making the best choices that can be mustered," says a policy watcher who was close to the transition team but is outside the federal government. "It is a whole different approach compared to the 'How can we spin this information?' approach of the [Bush administration]. Back to 'honest-to-goodness' curiosity, which is, yes, incredibly refreshing."
This sounds like it could be good for biotech, but I’m not so refreshed. It seems that in the past the approach of those favoring larger government and regulation has been only to embrace the science that supports their interventions. This is more of a feigned or disingenuous intellectual curiosity, which really is no different than ‘How can we spin this information.’ Policy makers often pretend to embrace science, but really are ‘invoking the name and mystique of science to override other peoples choices’ to borrow a phrase from economist Thomas Sowell.
Examples that come to mind include aggressive attempts to combat climate change, despite the lack of consensus with regard to the effectiveness of such policies. They may have established a consensus that the earth is warming , but that is only the first step in a long process of determining an optimal policy procedure. If we are going to tax carbon or establish a market based cap and trade solution, then we need to be able to determine the relevance of our carbon foot print and put a price on it. Price ranges are all over the board, from the credulous Stern reports estimate of $300/ton to William Nordhaus more rigorous estimate of $30/ton ( which is still 10 times the implied price via Kyoto).
Currently there are private exchanges allowing producers to sell carbon offsets in a voluntary market. We should start from there. By the time we figure out the ‘optimal policy’ it is likely that the private market will have taken care of the problem for us as it has many times in the past. Markets and technological change have never allowed us to run out of copper, coal, cattle, oil ,or numerous other natural resources, there is no reason to believe they will allow us to run out of clean air. Some interventions may be necessary, to establish property rights ( which is what cap and trade does) but we are a long way from having the science to support them at this time. As Dr. Nordhaous concludes ‘the central questions about global-warming policy--how much, how fast, and how costly—remain open.’
With the current stimulus package flying in the face of everything we have learned from macroeconomic research over the last 60 years we have more reason to wonder just how much of our future polices will be the result of ‘knowing the facts, having them laid out, and then making the best choices that can be mustered.’
There has certainly been a problem in the past with closed mindedness and fact spinning with regard the environmental and health benefits of biotechnology ( although I would say that this was likely due more to environmental hypochondriacs and those that are averse to capitalism and technology on the left , as opposed to the Bush administration’s policies) However, if the current administration is open minded and curious about the science of agriculture and willing to embrace the evidence and communicate that to others, that will be a great thing. As stated later in the article:
"The EU approach has helped keep African countries from adopting GM [genetically modified] crops," agrees De Greef of EuropaBio. "We hope if the EU and US become less adversarial, it could remove pressure from Africa, which feels forced to choose between US or EU regulations."
The current administration may warm up much better to the Europeans, and as a result win some influence that could be beneficial to the biotech industry. That would be refreshing, as long as we are not selling them on our policies in exchange for some of their more troubling ideas regarding healthcare , taxes, and unemployment.
Source: Nature Biotechnology 27, 237 - 244 (2009)
Thursday, March 05, 2009
National Health Care Links
Markets generate prices which reflect trade-offs based on the knowledge and preferences of millions of individuals, and provide incentives to act on that knowledge to allocate resources. Eliminating the price mechanism through national health care only takes the information and coordination problem away from markets, and places it in the lap of government. With government, decisions are based on the limited knowledge and preferences of a few bureaucrats.
From the Journal of Physicians and Surgeons
Here, ( JPANDS)
"When the government denied Mr. D. the new medicine on the
grounds that the subsidies would cost too much, he offered to pay
the full cost of the medicine himself. He was denied the option to
pay full cost out of his own pocket because, the bureaucrats said, it
would set a bad precedent and lead to unequal access to medicine."
"discoveries of this magnitude are ruled out in Sweden:
In our budget-governed health care there is no room for
curious, young physicians and other [medical]
professionals to challenge established views. New
knowledge is not attractive but typically considered a
problem [that brings] increased costs and disturbances in
today’s slimmed-down health care…. Primarily the system
endorses health care regions and administrative directors
who can show a surplus in their budget. Quality of care and
patients’well-being are second-tier goals."
NATIONAL HEALTH CARE IN CANADA
CBC NEWS here
"Overcrowding in the emergency ward at Royal Columbian Hospital in New Westminster has become so bad that patients are being forced to sleep in closets, says a senior surgeon."
"There are patients that are literally in closets. They're in the nurses' lounge, where the nurses go to have coffee, there are patients in there," said Dr. Bertrand Perey, the hospital's deputy chief of surgery."
"In other words, we have an acute shortage of beds in all wards, surgeries have been cancelled because of this overcrowding and it's becoming a much worse problem than it ever was before."
here
“It’s becoming clearer that Canada’s current health-care system cannot meet the needs of Canadians in a timely and efficient manner, unless you consider access to a waiting list timely and efficient,” Esmail added.
NATIONAL HEALTH CARE IN THE UK
From the BBC :
"Dr Rustin said that before he sees a patient he has to check their postcode to see which health authority pays for their treatment. He says he can only then prescribe the drug if he knows the authority will fund it.
He said authorities have to make a crude calculation.
"They want to show that we can improve duration of life with a new drug and they then try to calculate the extra duration of life," he said.
"If you get an extra year of life for less than £10,000 then it is generally considered that that is a reasonable buy."
From the Telegraph, here ,
From a Patient in the UK:
"In two hours time I have to attend a clinic in a town 15 miles away for follow up mammography. There is no mammography available in the borough where I live,pop 380,000.I worked hard to raise funds for a breast cancer unit in our DGH, that has all now been shipped out to a PFI hospital in another town. This despite a petition of 50,000 names asking for this and various other departments not to be closed"
here ,
"THE controversy over hospital waiting lists will continue to dog the Government in the forthcoming election campaign, a study by mathematicians claims"
here
"To commemorate the 60th anniversary of the founding of the NHS, Gordon Brown plans to introduce a "constitution" setting out the rights and responsibilities of our healthcare system"
What this seems to amount to in practice are the Government's rights to refuse treatment, and the patient's responsibilities to live up to what the state decides are model standards.
UK Daily Mail
"plans by NICE, the Government's drug rationing body, mean no life-extending therapies will be available to new patients because the cost of the most expensive exceeds its threshold of £30,000 per head"
From the Journal of Physicians and Surgeons
Here, ( JPANDS)
"When the government denied Mr. D. the new medicine on the
grounds that the subsidies would cost too much, he offered to pay
the full cost of the medicine himself. He was denied the option to
pay full cost out of his own pocket because, the bureaucrats said, it
would set a bad precedent and lead to unequal access to medicine."
"discoveries of this magnitude are ruled out in Sweden:
In our budget-governed health care there is no room for
curious, young physicians and other [medical]
professionals to challenge established views. New
knowledge is not attractive but typically considered a
problem [that brings] increased costs and disturbances in
today’s slimmed-down health care…. Primarily the system
endorses health care regions and administrative directors
who can show a surplus in their budget. Quality of care and
patients’well-being are second-tier goals."
NATIONAL HEALTH CARE IN CANADA
CBC NEWS here
"Overcrowding in the emergency ward at Royal Columbian Hospital in New Westminster has become so bad that patients are being forced to sleep in closets, says a senior surgeon."
"There are patients that are literally in closets. They're in the nurses' lounge, where the nurses go to have coffee, there are patients in there," said Dr. Bertrand Perey, the hospital's deputy chief of surgery."
"In other words, we have an acute shortage of beds in all wards, surgeries have been cancelled because of this overcrowding and it's becoming a much worse problem than it ever was before."
here
“It’s becoming clearer that Canada’s current health-care system cannot meet the needs of Canadians in a timely and efficient manner, unless you consider access to a waiting list timely and efficient,” Esmail added.
NATIONAL HEALTH CARE IN THE UK
From the BBC :
"Dr Rustin said that before he sees a patient he has to check their postcode to see which health authority pays for their treatment. He says he can only then prescribe the drug if he knows the authority will fund it.
He said authorities have to make a crude calculation.
"They want to show that we can improve duration of life with a new drug and they then try to calculate the extra duration of life," he said.
"If you get an extra year of life for less than £10,000 then it is generally considered that that is a reasonable buy."
From the Telegraph, here ,
From a Patient in the UK:
"In two hours time I have to attend a clinic in a town 15 miles away for follow up mammography. There is no mammography available in the borough where I live,pop 380,000.I worked hard to raise funds for a breast cancer unit in our DGH, that has all now been shipped out to a PFI hospital in another town. This despite a petition of 50,000 names asking for this and various other departments not to be closed"
here ,
"THE controversy over hospital waiting lists will continue to dog the Government in the forthcoming election campaign, a study by mathematicians claims"
here
"To commemorate the 60th anniversary of the founding of the NHS, Gordon Brown plans to introduce a "constitution" setting out the rights and responsibilities of our healthcare system"
What this seems to amount to in practice are the Government's rights to refuse treatment, and the patient's responsibilities to live up to what the state decides are model standards.
UK Daily Mail
"plans by NICE, the Government's drug rationing body, mean no life-extending therapies will be available to new patients because the cost of the most expensive exceeds its threshold of £30,000 per head"
Tuesday, March 03, 2009
Sunday, March 01, 2009
Hold on to your wallets, and your cell phone!
Back in September Peter Wallison wrote a piece debunking the myth that deregulation was the cause of our financial shortfalls these past couple of years. One thing that he noted was :
"It is correct to say that there has been significant deregulation in the U.S. over the last 30 years, most of it under Republican auspices. But this deregulation--in long-distance telephone rates, air fares, securities-brokerage commissions, and trucking, to name just a few sectors of the economy where it occurred--has produced substantial competition and innovation, driving down consumer costs and producing vast improvements and efficiencies in our economy."
Today I found this piece from Reuters affirming that the current administration is ready to reverse these trends. It's important to remember during this period of zeal for re-regulation that one of the effects of deregulation has been to bring prosperity to the masses. One of the most liberating technologies of the last decade has been affordable telecommunications and internet access.
"It is correct to say that there has been significant deregulation in the U.S. over the last 30 years, most of it under Republican auspices. But this deregulation--in long-distance telephone rates, air fares, securities-brokerage commissions, and trucking, to name just a few sectors of the economy where it occurred--has produced substantial competition and innovation, driving down consumer costs and producing vast improvements and efficiencies in our economy."
Today I found this piece from Reuters affirming that the current administration is ready to reverse these trends. It's important to remember during this period of zeal for re-regulation that one of the effects of deregulation has been to bring prosperity to the masses. One of the most liberating technologies of the last decade has been affordable telecommunications and internet access.
Subscribe to:
Posts (Atom)