Some of the top reasons that people offer for choosing organic food is their belief that it is safer, better for the environment, and some go as far as to say that it is more nutritious. Others feel that it helps promote the family farmer. Through this blog I will continually resound the theme that these notions are incorrect.
Why? First, for scientific accuracy. Second, because aside from being a fad, and aside from those organic patrons genuinely seeking health and well being, there are those cohorts of an organic movement that are motivated by an anti-capitalist and anti-agriculture agenda.
Because modern technology makes agriculture an information driven and capital-intensive industry, because this is made possible by economic growth and capitalism, and because it works so well, the modern farmer makes a difficult mascot for any socialist or interventionist agenda.
These people prefer an agriculture of the past. I’m not talking about the strong work ethic and rural values that they try to romanticize in their cause, I’m talking about mules and pitchforks. For their mascot they want the `family farmer` that milks two cows and grows sweet corn for the local market. And they want the government to subsidize that way of life. They want us to believe that only this type of organic production is healthy and sustainable.
The modern farming operation then becomes a `factory` farm and livestock management is deemed cruelty.
The truth is that this is an anathema to modern agriculture, and the most anti-agricultural stance one could take. This vision promotes the stereotype of an ignorant rural America devoid of education and technology. It then stigmatizes the modern producer that takes advantage of better education (High School FFA or College) and technology like herbicide resistant crops and improved livestock genetics.
While organic foods can offer us a fad choice and possibly a sense of nostalgia, modern agriculture will provide us with food, fiber, medicine, and perhaps energy for years to come.
Monday, March 27, 2006
Thursday, March 23, 2006
FARMERS' MARKETS
Do we need local governments to subsidize the development of farmers’ markets? Farmers in fact already have developed markets for their products-the CBOT (Chicago Board of Trade). More and more farmers are utilizing the risk management tools offered via futures markets. In addition direct contracting with buyers allows other firms to share market risk traditionally associated with agriculture.
According to the USDA, 40% of total agricultural production in 2003 (vs. just 11% in 1969), and 47% of livestock production, was accounted for by contract marketing. For small operations this accounted for 20% of their production and more than 50% of production with regards to larger operations.
Of course this mostly comprises major food staples like livestock, corn, wheat, and soybeans as opposed to produce. More so than farmers, city and local governments have stronger interests in local ‘farm’ produce markets for the sake of local tourism and to promote so called ‘green’, ‘sustainable’, or ‘organic’ agriculture (see also 'Is Organic Better').
The truth is, as agriculture has evolved into a heavily capitalized information driven industry, there are too many other profitable investment opportunities for producers to engage in as opposed to tomatoes and carrots. Investments in RTK (real-time-kinetics) technology or a GPS consulting service can save enough in production and energy costs to pay for itself sometimes within one season -and is a free market solution to environmental pollution (see 'Free Market Agriculture-Green Profits').
Livestock markets have overcome the equivalent to the age-old ‘lemon’ problem by using micro chip inserts. This technology can guarantee the identity, health, and genetics of livestock, allowing producers to receive a premium for better livestock.
It's likely that many of the ‘roadside pickup truck’ marketers are the weekend gardener types. Local governments and fad enthusiasts may be trying to capitalize on the romanciticism of old fashioned agriculture to promote tourism via pork barrel spending. I think this undermines those legitimate producers interested in transitioning from tobacco to produce, and tarnishes the image of the modern producer and the self-reliance that modern technology makes possible.
According to the USDA, 40% of total agricultural production in 2003 (vs. just 11% in 1969), and 47% of livestock production, was accounted for by contract marketing. For small operations this accounted for 20% of their production and more than 50% of production with regards to larger operations.
Of course this mostly comprises major food staples like livestock, corn, wheat, and soybeans as opposed to produce. More so than farmers, city and local governments have stronger interests in local ‘farm’ produce markets for the sake of local tourism and to promote so called ‘green’, ‘sustainable’, or ‘organic’ agriculture (see also 'Is Organic Better').
The truth is, as agriculture has evolved into a heavily capitalized information driven industry, there are too many other profitable investment opportunities for producers to engage in as opposed to tomatoes and carrots. Investments in RTK (real-time-kinetics) technology or a GPS consulting service can save enough in production and energy costs to pay for itself sometimes within one season -and is a free market solution to environmental pollution (see 'Free Market Agriculture-Green Profits').
Livestock markets have overcome the equivalent to the age-old ‘lemon’ problem by using micro chip inserts. This technology can guarantee the identity, health, and genetics of livestock, allowing producers to receive a premium for better livestock.
It's likely that many of the ‘roadside pickup truck’ marketers are the weekend gardener types. Local governments and fad enthusiasts may be trying to capitalize on the romanciticism of old fashioned agriculture to promote tourism via pork barrel spending. I think this undermines those legitimate producers interested in transitioning from tobacco to produce, and tarnishes the image of the modern producer and the self-reliance that modern technology makes possible.
Friday, March 17, 2006
GM TOMATOES
Myth: The reason the tomatoes on my salad are so pale and tasteless is that they are mass-produced or genetically engineered.
Many consumers have a negative attitude about Genetically Modified (GM) foods because they think that their perceived bad experiences with them in the past only confirm the bad press that they may have heard.
One example includes GM tomatoes. When tomatoes ripen certain enzymes begin to degrade the fruit’s cell wall (because breakdown of the fruit is necessary for seed dispersal). While this makes ripe tomatoes tender and juicy, it also makes them very susceptible to damage and disease.
There are many ways that producers try to avoid this. With organic produce you can harvest early. Buyers can then ripen them in the window seal. Conventional producers harvest early and then treat their produce with the ripening hormone ethylene. Genetically modified varieties have altered enzyme systems that allow early harvest and delayed ripening.
In every case, the end product is typically a chewy, pale, tasteless tomato. There is no way to distinguish a GM tomato from any other based on taste or appearance. Nor is there any difference in safety or nutritional quality. In fact, GM tomatoes can be produced with fewer herbicides and pesticides than conventional tomatoes ( see also 'Green Profits' and 'Is Organic Better?' ) making them much safer.
Many consumers have a negative attitude about Genetically Modified (GM) foods because they think that their perceived bad experiences with them in the past only confirm the bad press that they may have heard.
One example includes GM tomatoes. When tomatoes ripen certain enzymes begin to degrade the fruit’s cell wall (because breakdown of the fruit is necessary for seed dispersal). While this makes ripe tomatoes tender and juicy, it also makes them very susceptible to damage and disease.
There are many ways that producers try to avoid this. With organic produce you can harvest early. Buyers can then ripen them in the window seal. Conventional producers harvest early and then treat their produce with the ripening hormone ethylene. Genetically modified varieties have altered enzyme systems that allow early harvest and delayed ripening.
In every case, the end product is typically a chewy, pale, tasteless tomato. There is no way to distinguish a GM tomato from any other based on taste or appearance. Nor is there any difference in safety or nutritional quality. In fact, GM tomatoes can be produced with fewer herbicides and pesticides than conventional tomatoes ( see also 'Green Profits' and 'Is Organic Better?' ) making them much safer.
Thursday, March 02, 2006
Free Market Agriculture II
It is easy enough to recognize that when it comes to issues regarding production and the environment that free markets and agriculture go hand in hand (see ‘Free Market Agriculture:Green Profits’ post ). But, how does one approach the issue of government funding and farm programs?
There are two things that I would like to point out regarding this issue.
1) Total spending on agriculture comprises 1% of the federal budget. Of that amount, less than half is allocated to the producer. The bulk of the rest is spent on aid to the poor and school lunch programs.
2) Despite that the funding is a small proportion of total federal spending, there are still market distortions that result from these programs.
One Iowa State University economist has pointed out that up to 1/3 of the price of farmland can be attributed to government payments. In fact many producers have expressed that government programs have increased the price of land and impeded their ability to expand their operation and remain competitive.
It seems that while many producers favor maintaining a safety net, they are also utilizing technology, crop insurance, and marketing tools to manage much of the risk characteristic to their market. In addition since agricultural production is very much an export-oriented enterprise, free trade is essential to opening up markets for food and fiber.
With the amount of lobbying and rent seeking that goes on across the board in all industries, it is not accurate to characterize the agricultural industry as having a prominent interventionist overtone. It turns out that modern agriculture is very much a free market friendly industry.
There are two things that I would like to point out regarding this issue.
1) Total spending on agriculture comprises 1% of the federal budget. Of that amount, less than half is allocated to the producer. The bulk of the rest is spent on aid to the poor and school lunch programs.
2) Despite that the funding is a small proportion of total federal spending, there are still market distortions that result from these programs.
One Iowa State University economist has pointed out that up to 1/3 of the price of farmland can be attributed to government payments. In fact many producers have expressed that government programs have increased the price of land and impeded their ability to expand their operation and remain competitive.
It seems that while many producers favor maintaining a safety net, they are also utilizing technology, crop insurance, and marketing tools to manage much of the risk characteristic to their market. In addition since agricultural production is very much an export-oriented enterprise, free trade is essential to opening up markets for food and fiber.
With the amount of lobbying and rent seeking that goes on across the board in all industries, it is not accurate to characterize the agricultural industry as having a prominent interventionist overtone. It turns out that modern agriculture is very much a free market friendly industry.
Friday, February 17, 2006
Bush Bio-fuel
President Bush in his state of the union address made it a national goal to reduce our dependence on foreign oil by 75% by the year 2050.
Is this realistic? Lets look at the facts.
1) We currently produce 40 billion gallons ethanol (corn) out of a 146 billion gallon gasoline market, which is approximately 3%.
2) After this year estimates indicate that biodiesel production will be >100 million gallons out of a 55 billion gallon market for diesel fuel.
3) Current estimates based on current technology indicate that it would require 40% of cropland to replace just 10% of gasoline consumption.
We may not be able to replace 75% of our gasoline and diesel consumption with biofuels, at best we may only be able to pick up the slack in conjunction with improved fuel efficiency, hybrid fuel technology, and increased domestic production. It is estimated by the department of energy that we could replace 30% of gasoline consumption by the year 2030 with biofuels.
With technological change over the last 50 years, we produce twice the output per unit of energy than we did 50 years go. Even modest increases in biofuel production will help alleviate the volatility of our balkanized gasoline markets dictated by EPA rules. Biofuels are more than just a PR opportunity for modern agriculture; they are another example of how technological change will once again help markets triumph over 'limits to growth' pessimists.
Is this realistic? Lets look at the facts.
1) We currently produce 40 billion gallons ethanol (corn) out of a 146 billion gallon gasoline market, which is approximately 3%.
2) After this year estimates indicate that biodiesel production will be >100 million gallons out of a 55 billion gallon market for diesel fuel.
3) Current estimates based on current technology indicate that it would require 40% of cropland to replace just 10% of gasoline consumption.
We may not be able to replace 75% of our gasoline and diesel consumption with biofuels, at best we may only be able to pick up the slack in conjunction with improved fuel efficiency, hybrid fuel technology, and increased domestic production. It is estimated by the department of energy that we could replace 30% of gasoline consumption by the year 2030 with biofuels.
With technological change over the last 50 years, we produce twice the output per unit of energy than we did 50 years go. Even modest increases in biofuel production will help alleviate the volatility of our balkanized gasoline markets dictated by EPA rules. Biofuels are more than just a PR opportunity for modern agriculture; they are another example of how technological change will once again help markets triumph over 'limits to growth' pessimists.
Thursday, February 02, 2006
Minimum Wages = Minimum Opportunities
Recently there has been talk about raising the minimum wage in Kentucky.
Basic economic theory and empirical evidence tells us that increases in the minimum wage leads to increased unemployment (via decreased hours,decreased hiring,consolidation of duties) especially among the low skilled. It also increases the potential of discrimination.
By cutting off the potential for low skilled workers to develop human capital ( ability to follow directions, be on time, communicate with others etc.) these policies condemn many to a life of poverty. In addition they give larger corporations like Wal-Mart a competitive advantage over small proprietors.
The assumption that a third party could arbitrarily determine the value of one's labor is not only arrogant but logically confusing. It makes an assumption of a 'just price' for labor.
In the case of goods, when you pay $15 for a CD you do so because you value the satisfaction that it brings to be worth $15 or more . When the retailer offers to sell you the CD for $15 he believes that the CD is worth at most $15, but probably much less. When two people have completely different valuations for a good, there cannot be ‘one’ price that is just. Increase the exchange to include millions of others, and the problem becomes much more complicated. It therefore seems an impossible feat for a third party to be able to calculate a price that even closely approximates a ‘just price.’
This same logic also applies to the price of labor.
Basic economic theory and empirical evidence tells us that increases in the minimum wage leads to increased unemployment (via decreased hours,decreased hiring,consolidation of duties) especially among the low skilled. It also increases the potential of discrimination.
By cutting off the potential for low skilled workers to develop human capital ( ability to follow directions, be on time, communicate with others etc.) these policies condemn many to a life of poverty. In addition they give larger corporations like Wal-Mart a competitive advantage over small proprietors.
The assumption that a third party could arbitrarily determine the value of one's labor is not only arrogant but logically confusing. It makes an assumption of a 'just price' for labor.
In the case of goods, when you pay $15 for a CD you do so because you value the satisfaction that it brings to be worth $15 or more . When the retailer offers to sell you the CD for $15 he believes that the CD is worth at most $15, but probably much less. When two people have completely different valuations for a good, there cannot be ‘one’ price that is just. Increase the exchange to include millions of others, and the problem becomes much more complicated. It therefore seems an impossible feat for a third party to be able to calculate a price that even closely approximates a ‘just price.’
This same logic also applies to the price of labor.
Tuesday, January 31, 2006
Organic Destruction
While organic production avoids synthetics, it introduces other hazards to our health and environment. Organic producers use 'naturally' derived substances such as copper sulfate and pyrethrum, which are just as toxic and carcinogenic as many conventional chemistries.
Organic cultural practices require tillage and the use of manures, which both contribute to erosion and pollution. Organic production also can have yields as low as 10-40% less than conventional methods. Thus feeding the world via organic methods would require more land i.e. destruction of habitat and biodiversity.
Organic cultural practices require tillage and the use of manures, which both contribute to erosion and pollution. Organic production also can have yields as low as 10-40% less than conventional methods. Thus feeding the world via organic methods would require more land i.e. destruction of habitat and biodiversity.
Tuesday, January 24, 2006
Is Organic Better?
The first myth or misunderstanding that I would like to address is that "organic foods are healthier and better for the environment than conventional and GM foods."
Health and Safety
Many people fear synthetic pesticides and herbicides. The media in its use of terms like "factory farming" and "frankenfoods" has helped create the perception that GM foods are unsafe as well. Since organic foods avoid chemicals and 'genetic engineering' people naturally think that they are safer. Since organic products are produced naturally on 'small' family or cooperative farms people feel that these foods are better because quality is lost with mass produced foods.
2) Even organic and 'natural' foods are not 'natural'. They have been developed by plant breeding that involves bringing together thousands of unknown gene combinations with unknown functions. Seedless grapes and watermelons result exactly because these combinations have adverse effects on the plant embryo(seed).
3) Without herbicides, you get weeds that can host pests. In absence of pesticides, pests feed on plants, which can lead to disease and mycotoxins that are known carcinogens.
4) Transgenic crops will actually enable us to improve the nutritional quality of our food- on the market now we have 'Vestive' soybeans that have improved fats that obviate hydrogenation and unhealthy trans-fats.
Next I will discuss myths regarding environmental pollution and organic vs. conventional foods.
Health and Safety
Many people fear synthetic pesticides and herbicides. The media in its use of terms like "factory farming" and "frankenfoods" has helped create the perception that GM foods are unsafe as well. Since organic foods avoid chemicals and 'genetic engineering' people naturally think that they are safer. Since organic products are produced naturally on 'small' family or cooperative farms people feel that these foods are better because quality is lost with mass produced foods.
The Facts
1) Mass produced foods are able to be produced with great precision, getting each plant what it needs as accurately as technically possible using GPS technology.2) Even organic and 'natural' foods are not 'natural'. They have been developed by plant breeding that involves bringing together thousands of unknown gene combinations with unknown functions. Seedless grapes and watermelons result exactly because these combinations have adverse effects on the plant embryo(seed).
3) Without herbicides, you get weeds that can host pests. In absence of pesticides, pests feed on plants, which can lead to disease and mycotoxins that are known carcinogens.
4) Transgenic crops will actually enable us to improve the nutritional quality of our food- on the market now we have 'Vestive' soybeans that have improved fats that obviate hydrogenation and unhealthy trans-fats.
Next I will discuss myths regarding environmental pollution and organic vs. conventional foods.
Thursday, December 29, 2005
Scientific Misnomers
There are many misnomers, misunderstandings, or myths out there because some people have been influenced by the media, never been exposed to sound science, or have a recently outdated concenption of modern science in their daily lives. Some of the following are examples.
- Organic foods are healthier and better for the environment than conventional and GM foods.
- GM foods are not as safe as natural or organic foods.
- Decaffeinated coffee is unhealthy because it is produced using toxic chemicals like ammonia.
- We are running out of oil and are on the verge of an energy crisis.
I will address each of these in later posts.
Wednesday, December 07, 2005
Free Market Agriculture-Green Profits
Critics from the left maintain that modern large scale production agriculture and 'factory farms' are another example of free market degradation of the environment. This notion is not correct.
In fact the profit motive and large scale agriculture have led to the development of technologies that save energy, reduce pollution, and result in more abundant and healthier foods. Examples follow:
1ST GENERATION GM FOODS
Bt Corn: targets only pests that feed on the plant. Leads to a reduction in pesticide use, exposure, and pollution.
Roundup Ready Crops: Allows producers to switch away from using very toxic and environmentally unsound herbicide and use the much safer and low residual 'glyphosate' herbicide.
In addition these products require less management and less mechanization- saving on fuel,soil erosion, and air pollution.
In fact the profit motive and large scale agriculture have led to the development of technologies that save energy, reduce pollution, and result in more abundant and healthier foods. Examples follow:
1ST GENERATION GM FOODS
Bt Corn: targets only pests that feed on the plant. Leads to a reduction in pesticide use, exposure, and pollution.
Roundup Ready Crops: Allows producers to switch away from using very toxic and environmentally unsound herbicide and use the much safer and low residual 'glyphosate' herbicide.
In addition these products require less management and less mechanization- saving on fuel,soil erosion, and air pollution.
Wednesday, November 30, 2005
A Religous Thanksgiving
George Washington certainly felt that the celebration of Thanksgiving could not be divorced from any religious connotation, as indicated in the following Thanksgiving Day proclamation:
"It is the duty of all Nations to acknowledge the providence of Almighty God, to obey his will, to be grateful for his benefits, and humbly to implore his protection and favors."
Although certainly not as revered as the Birth of Christ, it is as much a religious holiday as Christmas, Easter or Passover. Unfortunately this aspect of Thanksgiving has been downplayed in our schools and replaced with teachings about tolerance and ethnic diversity. They have been so successful at this there is no wonder that when it comes time to talk about Thanksgiving in the classroom, virtually no one opposes. This is because the celebration has become completely divorced from its true meaning, and hence is uncontroversial to the secularists.
They have not been so successful with Christmas, however the attempts to divorce this holiday from all historical meaning are well underway. We are seeing 'Christmas' replaced with 'Holiday.' It is done in the name of tolerance and diversity awareness.
It was in 1789 that George Washington gave the above Thanksgiving Day Proclamation. By 1989 its celebration has already lost much of its true meaning as taught in the schools and celebrated by many. I wonder what will be the fate of Christmas in the year 2089?
"It is the duty of all Nations to acknowledge the providence of Almighty God, to obey his will, to be grateful for his benefits, and humbly to implore his protection and favors."
Although certainly not as revered as the Birth of Christ, it is as much a religious holiday as Christmas, Easter or Passover. Unfortunately this aspect of Thanksgiving has been downplayed in our schools and replaced with teachings about tolerance and ethnic diversity. They have been so successful at this there is no wonder that when it comes time to talk about Thanksgiving in the classroom, virtually no one opposes. This is because the celebration has become completely divorced from its true meaning, and hence is uncontroversial to the secularists.
They have not been so successful with Christmas, however the attempts to divorce this holiday from all historical meaning are well underway. We are seeing 'Christmas' replaced with 'Holiday.' It is done in the name of tolerance and diversity awareness.
It was in 1789 that George Washington gave the above Thanksgiving Day Proclamation. By 1989 its celebration has already lost much of its true meaning as taught in the schools and celebrated by many. I wonder what will be the fate of Christmas in the year 2089?
Wednesday, November 23, 2005
The Real Thanksgiving
Thanksgiving was not about the Pilgrims embracing diversity and thanking the Indians (otherwise known as Native Americans) for helping them survive. The celebration was about thanking God for the abundance which ultimately resulted from a move away from socialism ( imposed on them by the Colony’s Sponsors) to free market capitalism.
As governor William Bradford commented on the dreadful conditions of 1622:
" . . . the young men . . . did repine that they should spend their time and strength to work for other men's wives and children without any recompense. The strong . . . had not more in division . . . than he that was weak and not able to do a quarter the other could; this was thought injustice. The aged and graver men to be ranked and equalized in labors and victuals, clothes, etc . . . thought it some indignity and disrespect unto them. And the men's wives to be commanded to do service for other men, as dressing their meat, washing their clothes, etc., they deemed it a kind of slavery, neither could many husbands well brook it."
"For this community of property (so far as it went) was found to breed much confusion and discontentment and retard much employment that would have been to their benefit and comfort . . . all being to have alike, and all to do alike . . . if it did not cut off those relations that God hath set amongst men, yet it did at least much diminish and take off the mutual respects that should be preserved amongst them."
In the Spring of 1623, they moved away from Socialism and embraced the incentives of Private Property and Capitalism:
"All their victuals were spent . . . no supply was heard of, neither knew they when they might expect any. So they began to think how they might raise as much corn as they could, and obtain a better crop than they had done, that they might not still thus languish in misery. At length . . . the Governor (with the advice of the chiefest among them) gave way that they should set corn every man for his own particular, and in that regard trust to themselves. . . . And so assigned to every family a parcel of land . . . "
"This had very good success, for it made all hands very industrious, so as much more corn was planted than otherwise would have been by any means the Governor or any other could use, and saved him a great deal of trouble, and gave far better content. The women now went willingly into the field, and took their little ones with them to set corn, which before would allege weakness and inability, whom to have compelled would have been thought great tyranny and oppression."
Thanksgiving is therefore about freedom, private property and the unrestrained ability to worship and show thanksgiving.
As governor William Bradford commented on the dreadful conditions of 1622:
" . . . the young men . . . did repine that they should spend their time and strength to work for other men's wives and children without any recompense. The strong . . . had not more in division . . . than he that was weak and not able to do a quarter the other could; this was thought injustice. The aged and graver men to be ranked and equalized in labors and victuals, clothes, etc . . . thought it some indignity and disrespect unto them. And the men's wives to be commanded to do service for other men, as dressing their meat, washing their clothes, etc., they deemed it a kind of slavery, neither could many husbands well brook it."
"For this community of property (so far as it went) was found to breed much confusion and discontentment and retard much employment that would have been to their benefit and comfort . . . all being to have alike, and all to do alike . . . if it did not cut off those relations that God hath set amongst men, yet it did at least much diminish and take off the mutual respects that should be preserved amongst them."
In the Spring of 1623, they moved away from Socialism and embraced the incentives of Private Property and Capitalism:
"All their victuals were spent . . . no supply was heard of, neither knew they when they might expect any. So they began to think how they might raise as much corn as they could, and obtain a better crop than they had done, that they might not still thus languish in misery. At length . . . the Governor (with the advice of the chiefest among them) gave way that they should set corn every man for his own particular, and in that regard trust to themselves. . . . And so assigned to every family a parcel of land . . . "
"This had very good success, for it made all hands very industrious, so as much more corn was planted than otherwise would have been by any means the Governor or any other could use, and saved him a great deal of trouble, and gave far better content. The women now went willingly into the field, and took their little ones with them to set corn, which before would allege weakness and inability, whom to have compelled would have been thought great tyranny and oppression."
Thanksgiving is therefore about freedom, private property and the unrestrained ability to worship and show thanksgiving.
Tuesday, November 15, 2005
Pre-pay Pumps and Smoking Bans
Trading Liberty for Safety in Bowling Green, KY
Considering the new ordinance that will require us to pre-pay for gasoline, I wonder how many businesses were supportive. I suspect that some rent seeking or anti-competitive motives may be shared among the supportive businesses.
It is similar to the case of smoking bans other cities have passed. In the free market, becoming smoke free involves the potential to increase the patronage of non-smokers at the cost of alienating smokers who have other alternatives.
For those restaurant owners that want to be smoke free and avoid this cost, the smoking ban offers an escape (from what economists would call a prisoner's dilemma game).
In the same way it would seem palpable that the new pre-pay law would offer some gas station owners (who would favor the ordinance) an escape from the competition of other stations that may be better able to monitor theft.
In both cases, consumers suffer in the name of 'public safety.' Regardless of the motives of the station owners or city officials, we as citizens and consumers are once again being forced to trade a certain amount of liberty for an uncertain or perceived amount of safety
Considering the new ordinance that will require us to pre-pay for gasoline, I wonder how many businesses were supportive. I suspect that some rent seeking or anti-competitive motives may be shared among the supportive businesses.
It is similar to the case of smoking bans other cities have passed. In the free market, becoming smoke free involves the potential to increase the patronage of non-smokers at the cost of alienating smokers who have other alternatives.
For those restaurant owners that want to be smoke free and avoid this cost, the smoking ban offers an escape (from what economists would call a prisoner's dilemma game).
In the same way it would seem palpable that the new pre-pay law would offer some gas station owners (who would favor the ordinance) an escape from the competition of other stations that may be better able to monitor theft.
In both cases, consumers suffer in the name of 'public safety.' Regardless of the motives of the station owners or city officials, we as citizens and consumers are once again being forced to trade a certain amount of liberty for an uncertain or perceived amount of safety
School Choice
The state of California would certainly change its tune (regarding recent headlines) about parental discretion and sex education if school choice were both a legal and financial reality for parents.--All the more reason parents,citizens, and churches should be in favor of school choice legislation in Kentucky.
Monday, November 14, 2005
Gas Prices III:Gouged by Government
Gas Prices III:Gouged by Government
Liberals and Democrats are quick to blame corporations, republicans, and especially President Bush for high gas prices.Yet the tight inventories and scarcity that were created by the Hurricane would not have been so bad if we already did not have so little refining capacity.
Due to stringent environmental restrictions we have not built a refinery since 1976, and we have to refine nearly 20 different types of gasoline to meet these standards. The cost to oil companies of complying with these types of regulations is nearly $10 billion per year. Taking this into perspective dwarfs the one time 'windfall profits' we have recently seen.
These are all policies coming from the left. It is therefore the democrats that have set the stage for 'windfall' profits and high gas prices.
Liberals and Democrats are quick to blame corporations, republicans, and especially President Bush for high gas prices.Yet the tight inventories and scarcity that were created by the Hurricane would not have been so bad if we already did not have so little refining capacity.
Due to stringent environmental restrictions we have not built a refinery since 1976, and we have to refine nearly 20 different types of gasoline to meet these standards. The cost to oil companies of complying with these types of regulations is nearly $10 billion per year. Taking this into perspective dwarfs the one time 'windfall profits' we have recently seen.
These are all policies coming from the left. It is therefore the democrats that have set the stage for 'windfall' profits and high gas prices.
Wednesday, November 09, 2005
Gas Prices II- Unspoken Miracle
GAS PRICES II- Unspoken Miracle
While there is much attention given to 'price gouging' and 'windfall profits', no one in the media seems to be talking about how well the markets have functioned. In a time of tight inventories, reduced crude oil supplies, peak driving, damaged refining capacity, and great uncertainty increased prices and profit incentives allowed us a peaceful and effective transition through a time of crisis. The increased profits provided the incentive for increased imports, while the high prices prevented hoarding and shortages.
The miracle is that despite the devastation from hurricane Katrina and Rita, we did not run out of fuel and we did not have to stand in long lines with violent mobs. I would much rather pay more at the pump than take on an angry driver in a long line or get stranded because I'm out of gas and the nearest gas station had to shut down.
While there is much attention given to 'price gouging' and 'windfall profits', no one in the media seems to be talking about how well the markets have functioned. In a time of tight inventories, reduced crude oil supplies, peak driving, damaged refining capacity, and great uncertainty increased prices and profit incentives allowed us a peaceful and effective transition through a time of crisis. The increased profits provided the incentive for increased imports, while the high prices prevented hoarding and shortages.
The miracle is that despite the devastation from hurricane Katrina and Rita, we did not run out of fuel and we did not have to stand in long lines with violent mobs. I would much rather pay more at the pump than take on an angry driver in a long line or get stranded because I'm out of gas and the nearest gas station had to shut down.
Monday, November 07, 2005
Wal-Mart
I often hear the accusation that Wal-Mart destroys communities. While they certainly drive out competitors ( often small businesses that have been around for generations) it doesn't seem logical that they destroy communities or their local economies. If people were actually devastated, then how would they be able to shop at Wal-Mart. Does it make since for Wal-Mart to invest millions to destroy their competition and customer base and then leave town? I would agree that the aesthetics of main street are often destroyed and that is a great and horrible cost, but that is different from devastating a community.
These charges often come from those on the left that also favor inheritance taxes, minimum wage laws, elaborate workplace regulations, over zealous environmental laws, and taxing the wealthy. These things actually give large corporations like Wal-Mart advantages over small businesses. In addition it makes it difficult for small enterprises to reinvest in their businesses, or pass them on to a new generation of entrepreneurs.
It is funny how the definition of "wealthy Americans" changes when it suits political purposes. When it is Wal-Mart vs. main street rural America, the "wealthy" small business holder becomes the little guy. When it comes to income and inheritance taxes the little guy is placed among the entrenched wealthiest 6% and should not 'need' a tax cut.
These charges often come from those on the left that also favor inheritance taxes, minimum wage laws, elaborate workplace regulations, over zealous environmental laws, and taxing the wealthy. These things actually give large corporations like Wal-Mart advantages over small businesses. In addition it makes it difficult for small enterprises to reinvest in their businesses, or pass them on to a new generation of entrepreneurs.
It is funny how the definition of "wealthy Americans" changes when it suits political purposes. When it is Wal-Mart vs. main street rural America, the "wealthy" small business holder becomes the little guy. When it comes to income and inheritance taxes the little guy is placed among the entrenched wealthiest 6% and should not 'need' a tax cut.
Friday, November 04, 2005
Gas Prices
For now I say let people make accusations about price gouging all they want. It appears to me that the markets have functioned just as they should. With already tight inventories and near capacity refinery operations, the Hurricanes certainly created a situation of scarcity. In addition to scarcity there was much fear and uncertainty about the future supply of gas.
In this situation one would expect prices to increase dramatically ( and I believe that prices were already fairly low in inflation adjusted dollars).
While record profits have been reported by the media, what was scarcely mentioned was the fact that the increased prices actually lead to a decrease in consumption and an increase in imports and production. AS a result of these efforts and less than expected damage to refineries prices have now started to drop.
Of course oil companies made huge profits, but the price was taking into account a great deal of uncertainty that turned out not to be a problem.
In this situation one would expect prices to increase dramatically ( and I believe that prices were already fairly low in inflation adjusted dollars).
While record profits have been reported by the media, what was scarcely mentioned was the fact that the increased prices actually lead to a decrease in consumption and an increase in imports and production. AS a result of these efforts and less than expected damage to refineries prices have now started to drop.
Of course oil companies made huge profits, but the price was taking into account a great deal of uncertainty that turned out not to be a problem.
Monday, October 31, 2005
School Choice: Foreign Language Requirement in KY Schools
It has come to my attention that it is going to be required that all high school students in Kentucky must “speak” a second language before they can graduate.
Too many students are graduating high school unprepared for college and the workforce. Massive amounts of resources are wasted on remedial course work on the part of students and universities. Tech schools and on the job training require rudimentary knowledge of math and science. Is it then the goal of public schools to graduate students that can speak another language, but be displaced in the work force because they haven’t developed basic math, writing, and science skills using their native language.
There is great value in learning a second language, but learning a second language does not turn an ill prepared student into a scholar. Shouldn’t we focus on those areas that are more critical, and then let those students that are most proficient in basic skills pursue learning a second language as an option.
How can we have such a drastic reform over night, when such an important issue such as school choice is tossed aside as being extreme and detrimental to our schools? Is this just an attempt for our public schools to secure more funding and jobs for more teachers?
Too many students are graduating high school unprepared for college and the workforce. Massive amounts of resources are wasted on remedial course work on the part of students and universities. Tech schools and on the job training require rudimentary knowledge of math and science. Is it then the goal of public schools to graduate students that can speak another language, but be displaced in the work force because they haven’t developed basic math, writing, and science skills using their native language.
There is great value in learning a second language, but learning a second language does not turn an ill prepared student into a scholar. Shouldn’t we focus on those areas that are more critical, and then let those students that are most proficient in basic skills pursue learning a second language as an option.
How can we have such a drastic reform over night, when such an important issue such as school choice is tossed aside as being extreme and detrimental to our schools? Is this just an attempt for our public schools to secure more funding and jobs for more teachers?
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