IRAQ & THE WAR ON TERROR
When a reporter brought up the fact that Al Queda was not in Iraq prior to the invasion, former president Bush has been reported to have said 'So What.' Of course he has been greatly ridiculed about this.That is just one exhibit of ignorance in the media, which may be the reason for the ignorance that many American people have about this war. Many politicians and those in the media love to say 'Bush Lied' and want to impeach him for his 'War Crimes.' Lets start off by looking at some of the 'lies', myths, and misconceptions that many Americans have come to accept due to media ignorance. ( or is it just media bias, what is the difference).
The first myth is the belief that the war on terrorism should be focused exclusively on Al-Queda. If Al-Queda was not in Iraq, Iraq was not a problem, and we should never have invaded. Afghanistan is the central front on the war on terror, while Iraq was just a distraction. Another myth is that the only other justification for going into Iraq was because Saddam Hussein had weapons of mass destruction. Both of these myths lead many to conclude that Bush misled us, or he lied, and the war was illegal, and he should be prosecuted for war crimes.
Let's start with the simplest lie first. When we look at the bipartisan authorization to use force in Iraq, only about a quarter of the reasons given for the invasion had to do with weapons of mass destruction. Once it appeared that no smoking gun would be found, democrats and the media found a political opportunity to hang George W. Bush. All of a sudden, what was once agreed to be the central front on the war on terror, became a 'wild cowboy' finishing his 'daddy's war.' It turns out that the media and the democrats are the ones creating the fabrications. When you look at the original justifications for going into Iraq, most of the reasons had to do with removing a tyrant and enforcing the cease fire with Iraq that had been violated for years. Now in a post 911 environment, it was very dangerous for the U.S. to maintain such a position of weakness with an middle eastern government.If George Bush is guilty of war crimes, then so should be every member of congress that gave authorization to invade in the first place.
The second myth is that it was important that Al Queda be in Iraq. The problem with terrorism is much larger that just Al Queda. The heart of the problem is to convince radical Muslims to reject 'jihad of the sword' and accept the mainstream philosphy of 'jihad of the heart'. We must get the middle east to embrace 'modernization without westernization'.
According to Najib Razak, Deputy Prime Minister of Malaysia, Islam is misunderstood:
"We like to say that we are fundamentalist; but that is a different connotation in the west. Because the West uses fundamentalism as equated to extremism. When we say we are fundamentalist, we pray five times a day for example. But in the same manner we reject violence, we reject extremism, we are a very pluralistic society, because that is what Islam is all about. Islam protects other religions; Islam allows other religions to exist, to co-exist with Islam. And that is the practice in Malaysia."
Dinesh D'Souza, an expert on middle eastern relations and culture states:
'Incredibly many Americans think that somehow Islam is incompatible with democracy, or that traditional Muslims don’t want democracy. In reality, a majority of the world’s Muslims today live under democratic governments—in Indonesia, Malaysia, India, Bangladesh, Nigeria, and Turkey, not to mention Muslims living in Western countries. There is nothing in the Koran or the Islamic tradition that forbids democracy.'
In another article D'Souza goes on to say:
'Muslims don't reject modernity or the West: rather, they embrace what may be termed "1950s America" while rejecting the libertine values of the 1960s."
Modernization without westernization (westernization referring to contemporary cultural values of the American left) is the worst nightmare for extremist Muslims.Once extremist Muslims realize that their acts of terror will not stop the spread of global capitalism, but instead encourage the U.S. to take an active role militarily in helping mainstream Muslims establish modernized democracies in the middle east, the stakes of terrorism become quite large. That is why hundreds of Muslims who espouse extremist views have flocked to Iraq to stop what what may be a revolutionary change in the middle east.
Again fron D'Souza:
'Democracy, even fragile democracy, would refute the pessimism of history and provide an example to the rest of the Muslim world. And if democracy began to spread to other countries—perhaps Iran, perhaps Egypt—we could see the beginnings of an historical transformation no less staggering than the transformation of the former Soviet Union.'
and
‘Iraq represents America’s initiative not to establish democracy everywhere but to establish democracy somewhere. Bin Laden and the Islamic radicals want America to fail in Iraq not because they fear democracy per se but because they fear pro-American democracy.... Iraq is America’s best chance to promote traditional Islam as a viable alternative to radical Islam.’
For these reasons Iraq truly represents the central front for the war on terror. Was Al-Queda there before the invasion? No? So What.
All of the referenced to D'Souza can be found here, here, here, here, and here
Saturday, January 31, 2009
Agriculture and Free Markets
How does a free market oriented blogger like myself 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, I admit there are some 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.
We no longer see the commodity surpluses from farm programs like we did in my grandfather's day. Nor do we see the chronic shortages of food that characterized Soviet agriculture. However, if we look at government interventions outside the ag sector, we are plagued with these problems.
Take for instance the auto industry. One thing that plagues the auto industry is the surplus of low quality high fuel economy cars that noone wants to drive. Corporate average fuel economy (CAFE) standards forced automakers to overproduce these cars instead of the trucks and SUV's that Americans have revealed a preference for even in an environment of high fuel prices. ( see this article from Forbes and my other posts here ) Instead, if left to the market, the auto industry could have focused resources on the long term problem of building more fuel efficeint trucks and SUV's vs the immediate problem of meeting CAFE requirements.
And look at the current housing/financial market collapse. Could this have happened without major government interventions? Every time the federal reserve meets to 'set' the federal funds rate, they are engaging in the social planning of interest rates. i.e. depending on their policy stance, they are effectively setting a floor or cieling on interest rates. When investers react, resources get channeled into assets at an abnormal rate, often leading to a 'bubble'. This time we got a 'surplus' of housing on the market, as well as a 'surplus' of risky financial instruments related to housing. Eventually this 'malinvestment' must be corrected, leading to a bust. Many economists believe that this effect had much to do with the current financial problems we are experiencing today. ( see Walter E. Williams post on Town Hall for a good discussion)
Agricultural programs are not the drag on our economy that they are made out to be when compared to government interventions in other industries. That is why my posts are often more concerned with interventions in the ag industry that could be detrimental to our ability to provide safe, healthy, environmentally friendly, and abundant food. We don't want government interventions to cripple our industry like they have others, as I mentioned here. With the amount of lobbying, rent seeking, and government intervention that goes on across the board in all industries, Agriculture does not stand out any more than government programs related to the financial auto, oil, defense, construction, retail, education, medical, cosmetic... industries.
Because agricultural production is very much an export-oriented enterprise, free trade is essential to opening up markets for food and fiber. Further, given the free market solutions to pollution ( via the use of biotechnology, GPS & potential for selling carbon credits) that the ag industry provides, it is not accurate to characterize the agricultural industry as having a prominent interventionist overtone in relation to other sectors of the economy.It turns out that modern agriculture is very much a free market driven industry. As a result our farmers are competitive, independent, resilient, and the best in the world.
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, I admit there are some 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.
We no longer see the commodity surpluses from farm programs like we did in my grandfather's day. Nor do we see the chronic shortages of food that characterized Soviet agriculture. However, if we look at government interventions outside the ag sector, we are plagued with these problems.
Take for instance the auto industry. One thing that plagues the auto industry is the surplus of low quality high fuel economy cars that noone wants to drive. Corporate average fuel economy (CAFE) standards forced automakers to overproduce these cars instead of the trucks and SUV's that Americans have revealed a preference for even in an environment of high fuel prices. ( see this article from Forbes and my other posts here ) Instead, if left to the market, the auto industry could have focused resources on the long term problem of building more fuel efficeint trucks and SUV's vs the immediate problem of meeting CAFE requirements.
And look at the current housing/financial market collapse. Could this have happened without major government interventions? Every time the federal reserve meets to 'set' the federal funds rate, they are engaging in the social planning of interest rates. i.e. depending on their policy stance, they are effectively setting a floor or cieling on interest rates. When investers react, resources get channeled into assets at an abnormal rate, often leading to a 'bubble'. This time we got a 'surplus' of housing on the market, as well as a 'surplus' of risky financial instruments related to housing. Eventually this 'malinvestment' must be corrected, leading to a bust. Many economists believe that this effect had much to do with the current financial problems we are experiencing today. ( see Walter E. Williams post on Town Hall for a good discussion)
Agricultural programs are not the drag on our economy that they are made out to be when compared to government interventions in other industries. That is why my posts are often more concerned with interventions in the ag industry that could be detrimental to our ability to provide safe, healthy, environmentally friendly, and abundant food. We don't want government interventions to cripple our industry like they have others, as I mentioned here. With the amount of lobbying, rent seeking, and government intervention that goes on across the board in all industries, Agriculture does not stand out any more than government programs related to the financial auto, oil, defense, construction, retail, education, medical, cosmetic... industries.
Because agricultural production is very much an export-oriented enterprise, free trade is essential to opening up markets for food and fiber. Further, given the free market solutions to pollution ( via the use of biotechnology, GPS & potential for selling carbon credits) that the ag industry provides, it is not accurate to characterize the agricultural industry as having a prominent interventionist overtone in relation to other sectors of the economy.It turns out that modern agriculture is very much a free market driven industry. As a result our farmers are competitive, independent, resilient, and the best in the world.
Sunday, January 18, 2009
ABANDONING FUEL TAXES: CHANGE I CAN BELIEVE IN
Recently it has came out that Barak Obama plans to take the idea of rasing gasoline taxes off the table. This is a great call, and may show testament that we have elected a leader that will bring real ‘change’ to the Whitehouse. Genuine change would mean that he is going to have to ruffle some feathers among those members of his party that have so long ridiculed free markets, the auto industry, and thrash and burn environmental policies. This blog post from the Washington Post/Newsweek is testament to the feather ruffling that will be required if we are going to see more ‘change’ from the democratic party. The author starts off by stating:
“But by failing to raise the gasoline tax, the president-elect risks complicating another problem: Fixing the U.S. automobile industry.”
Actually he doesn’t. The author ( and many in the media and politicians) want to perpetuate the myth that the market, or the automobile industry has something inherently wrong with it that needs fixing. Really, all that needs to be done is for government to get out of the way and let them do what they do best.
“Here's the problem. Obama and leading members of Congress keep saying they want ailing automakers to make more fuel-efficient vehicles. But the automakers in the past made more money on the guzzlers”
Well let’s ask why they make more money on gas guzzlers? Could it be that these are the cars that American’s want to buy? Over the last 10 years what were the top selling models? – TRUCKS and SUV’s. Even with increased gas prices ( which had a lot of help from Congress by the way, ) the top 2 selling vehicles in the US for 2008 were trucks.
“in the future, they will have trouble charging enough to make money on new cars using costly new technologies for plug-in or hybrid cars. So the car company of the future may be a money-losing operation, just like the car company of the present.”
Well, the author may be correct, but for the wrong reasons.
A company fails to make money when they fail to provide products or services that consumers want. ( like TRUCKS &SUV’s). Why have the automakers been losing money? Because (harmful and deadly) fuel economy standards have forced automakers to make a lot of small fuel efficient cars that no one wants to buy. Resources that could have went into the costly engineering problem of developing more fuel efficient TRUCKS and SUV’s over time have hastily been funneled to meet immediate regulatory demands. Further, automakers not only had to waste resources building these low quality cars that no one wants to drive, but they had to absorb heavy losses because they don’t sell. Were it not for the regulatory requirements imposed ‘yesterday’ it is likely that we would have more fuel efficient options in TRUCKS & SUV’s for the higher gas prices ‘today.’
So yes, forcing automakers to produce more cars using costly new technologies for plug-in or hybrid cars that most people don’t want to drive will likely lead to a car company of the future that is a money losing operation, ‘just like the present.’
‘Raising the gasoline tax would increase consumer demand for more fuel-efficient vehicles. That could help automakers charge more for them and make more money on sales of plug-ins, hybrids or more efficient conventional engines.’
Well, it is true that if we use the force and coercion of government to get people to buy cars they don’t want, those selling the cars will benefit. Most environmental legislation and government regulation in general involves taking from one party and giving to another in some way shape or form by using government. There is always a disingenuous justification that it will be ‘good’ for the 'consumer' or the environment. It is what economists refer to as ‘rent seeking’.
‘Not surprisingly, Ford and General Motors both belong to the U.S. Climate Action Partnership, which this week proposed a detailed blueprint for a cap-and-trade system for carbon dioxide emissions. Such a system would put a price on carbon and would effectively tax gasoline and all other fossil fuels.’
Yeah, ‘not surprisingly’ big business is engaging in rent seeking behavior. The problem however, is that while there may be some consensus on the causes of ‘global warming’ there is NO CONSESUS on the actual effects, or what an optimal carbon tax should be to prevent it without doing more harm to the economy, public health, the environment, or the poor.
“After being burned last summer by sky-high gasoline prices, do Americans really need higher gasoline taxes to get them to buy fuel-efficient cars? Yes, actually. Americans have an astonishingly short memory about gasoline prices. Sales of the Toyota Prius have hit the skids now that gasoline prices are back below $2 a gallon. And sales of SUVs are relatively strong compared to many other models.”
Frankly this is a very condescending view of the American consumer. The fact that Americans prefer to drive TRUCKS & SUVs over GO-CARTs like the PRIUS does not mean they have a short memory. Sales of SUVs have been relatively strong over the last 10 years, and automakers have done the right thing to continue to make cars that Americans want to buy. Gasoline at $4 /gallon reflected a strong economy, uncertainty in the Middle East, and lack of commitment to developing existing fossil fuel resources. $2 / gallon fuel today reflects the collapse of the financial market ( again due to mis-priced risk via government distortions)
"If Obama did want to raise gasoline taxes without imposing a hardship on Americans at a time of economic duress, there are (at least) two ways of going about it other than throwing it out the car window. First, he could cut other taxes to compensate people for the fuel tax. Second, he could delay the effective date of the tax, or increase it in small steps over time. A phased-in tax increase would still have a big impact on the choices people make when purchasing cars, which tend to stay on the road for 10 years or so. "
These may actually be great ideas. Taxing carbon actually makes a lot more sense than fuel economy standards and emissions standards.( the author actually goes on to say this) But again we are way too uncertain about what the price of carbon should be, and so we don’t know how much the tax should be. The harm done could be greater than the benefit.
The best solution would be to strike down corporate fuel economy standards, relax emissions standards ( which make the engineering for fuel economy so difficult) forget about a tax, and let the automakers plow that money into making better TRUCKS & SUVs. Over time, if fuel becomes more scarce and gasoline prices increase, automakers will be forced to make more fuel efficient TRUCKS & SUVs or consumers will adapt their choices to other vehicles that are more fuel efficient.
Of course, to prevent huge spikes in energy prices ( which hurt consumers and automakers severely this past year )we need continued commitment to developing existing energy sources including ethanol, wind, natural gas etc. and keep government out of the housing and financial markets ( recall, after financial stocks took a beating once they started correcting for government distortions, many investors took on commodities driving up the cost of oil).
“But by failing to raise the gasoline tax, the president-elect risks complicating another problem: Fixing the U.S. automobile industry.”
Actually he doesn’t. The author ( and many in the media and politicians) want to perpetuate the myth that the market, or the automobile industry has something inherently wrong with it that needs fixing. Really, all that needs to be done is for government to get out of the way and let them do what they do best.
“Here's the problem. Obama and leading members of Congress keep saying they want ailing automakers to make more fuel-efficient vehicles. But the automakers in the past made more money on the guzzlers”
Well let’s ask why they make more money on gas guzzlers? Could it be that these are the cars that American’s want to buy? Over the last 10 years what were the top selling models? – TRUCKS and SUV’s. Even with increased gas prices ( which had a lot of help from Congress by the way, ) the top 2 selling vehicles in the US for 2008 were trucks.
“in the future, they will have trouble charging enough to make money on new cars using costly new technologies for plug-in or hybrid cars. So the car company of the future may be a money-losing operation, just like the car company of the present.”
Well, the author may be correct, but for the wrong reasons.
A company fails to make money when they fail to provide products or services that consumers want. ( like TRUCKS &SUV’s). Why have the automakers been losing money? Because (harmful and deadly) fuel economy standards have forced automakers to make a lot of small fuel efficient cars that no one wants to buy. Resources that could have went into the costly engineering problem of developing more fuel efficient TRUCKS and SUV’s over time have hastily been funneled to meet immediate regulatory demands. Further, automakers not only had to waste resources building these low quality cars that no one wants to drive, but they had to absorb heavy losses because they don’t sell. Were it not for the regulatory requirements imposed ‘yesterday’ it is likely that we would have more fuel efficient options in TRUCKS & SUV’s for the higher gas prices ‘today.’
So yes, forcing automakers to produce more cars using costly new technologies for plug-in or hybrid cars that most people don’t want to drive will likely lead to a car company of the future that is a money losing operation, ‘just like the present.’
‘Raising the gasoline tax would increase consumer demand for more fuel-efficient vehicles. That could help automakers charge more for them and make more money on sales of plug-ins, hybrids or more efficient conventional engines.’
Well, it is true that if we use the force and coercion of government to get people to buy cars they don’t want, those selling the cars will benefit. Most environmental legislation and government regulation in general involves taking from one party and giving to another in some way shape or form by using government. There is always a disingenuous justification that it will be ‘good’ for the 'consumer' or the environment. It is what economists refer to as ‘rent seeking’.
‘Not surprisingly, Ford and General Motors both belong to the U.S. Climate Action Partnership, which this week proposed a detailed blueprint for a cap-and-trade system for carbon dioxide emissions. Such a system would put a price on carbon and would effectively tax gasoline and all other fossil fuels.’
Yeah, ‘not surprisingly’ big business is engaging in rent seeking behavior. The problem however, is that while there may be some consensus on the causes of ‘global warming’ there is NO CONSESUS on the actual effects, or what an optimal carbon tax should be to prevent it without doing more harm to the economy, public health, the environment, or the poor.
“After being burned last summer by sky-high gasoline prices, do Americans really need higher gasoline taxes to get them to buy fuel-efficient cars? Yes, actually. Americans have an astonishingly short memory about gasoline prices. Sales of the Toyota Prius have hit the skids now that gasoline prices are back below $2 a gallon. And sales of SUVs are relatively strong compared to many other models.”
Frankly this is a very condescending view of the American consumer. The fact that Americans prefer to drive TRUCKS & SUVs over GO-CARTs like the PRIUS does not mean they have a short memory. Sales of SUVs have been relatively strong over the last 10 years, and automakers have done the right thing to continue to make cars that Americans want to buy. Gasoline at $4 /gallon reflected a strong economy, uncertainty in the Middle East, and lack of commitment to developing existing fossil fuel resources. $2 / gallon fuel today reflects the collapse of the financial market ( again due to mis-priced risk via government distortions)
"If Obama did want to raise gasoline taxes without imposing a hardship on Americans at a time of economic duress, there are (at least) two ways of going about it other than throwing it out the car window. First, he could cut other taxes to compensate people for the fuel tax. Second, he could delay the effective date of the tax, or increase it in small steps over time. A phased-in tax increase would still have a big impact on the choices people make when purchasing cars, which tend to stay on the road for 10 years or so. "
These may actually be great ideas. Taxing carbon actually makes a lot more sense than fuel economy standards and emissions standards.( the author actually goes on to say this) But again we are way too uncertain about what the price of carbon should be, and so we don’t know how much the tax should be. The harm done could be greater than the benefit.
The best solution would be to strike down corporate fuel economy standards, relax emissions standards ( which make the engineering for fuel economy so difficult) forget about a tax, and let the automakers plow that money into making better TRUCKS & SUVs. Over time, if fuel becomes more scarce and gasoline prices increase, automakers will be forced to make more fuel efficient TRUCKS & SUVs or consumers will adapt their choices to other vehicles that are more fuel efficient.
Of course, to prevent huge spikes in energy prices ( which hurt consumers and automakers severely this past year )we need continued commitment to developing existing energy sources including ethanol, wind, natural gas etc. and keep government out of the housing and financial markets ( recall, after financial stocks took a beating once they started correcting for government distortions, many investors took on commodities driving up the cost of oil).
Sunday, December 07, 2008
The Bailout: Lessons for the Beef Industry
I recently came across this disturbing story. It is speculation that the EPA may want to impose air pollution taxes on cattle and hog producer's.
One person in the article is quoted as saying: "We certainly support making factory farms pay their fair share," he said.
But now, lets look at this closer- the tax is speculated to be as follows:
'It would require farms or ranches with more than 25 dairy cows, 50 beef cattle or 200 hogs to pay an annual fee of about $175 for each dairy cow, $87.50 per head of beef cattle and $20 for each hog.'
First of all the term 'factory farm' has been misused to the point of becoming meaningless, but a producer with only 25 dairy cows or 50 beef cattle is hardly a 'big timer.'
Now as an aside, is this even necessary? With beef production becoming more efficient and environmentally friendly by the day, do we really need government interference?
And, given the current state of science, are such drastic actions to prevent climate change even necessary? While many scientists agree that human activity may be contributing to increased temperatures, the science is still uncertain as to there will be drastic consequences of this. And given the consequences, economists are much more uncertain as to the appropriate policy response.
Currently, America does a great job producing beef and feeding the world. We used to have the world's top rate cars and financial institutions. Then the government got involved. Socially planned interest rates, government sponsored enterprises, and political pressure to make bad loans led to the housing bubble and the financial crisis. Stringent environmental standards and 'deadly' fuel economy standards have forced automakers into having to loose money producing low quality 'fuel efficient' cars that no one wants in order to be able to sell profitable trucks and suv's. If left alone more resources could have went into making our trucks and suv's run on less gas. ( see 6 Myths about the auto industry) Now they are swimming in red ink.
Getting back to the point, if these sorts of taxes and regulations go into effect on the farm, we may eventually reduce ourselves from being a modern science-driven industry of independent producers to a heavily subsidized, low tech, group of small farmers looking for handouts.
Do we really need to sidetrack the livestock industry with unnecessary government interference? Currently less than 1/2 of 1 % of federal money is spent 'on the farm' compared to the $700 billion bailout and more to come for the financial and auto industry. Lets not create a 'food crisis' and another industry that will need a bailout.
One person in the article is quoted as saying: "We certainly support making factory farms pay their fair share," he said.
But now, lets look at this closer- the tax is speculated to be as follows:
'It would require farms or ranches with more than 25 dairy cows, 50 beef cattle or 200 hogs to pay an annual fee of about $175 for each dairy cow, $87.50 per head of beef cattle and $20 for each hog.'
First of all the term 'factory farm' has been misused to the point of becoming meaningless, but a producer with only 25 dairy cows or 50 beef cattle is hardly a 'big timer.'
Now as an aside, is this even necessary? With beef production becoming more efficient and environmentally friendly by the day, do we really need government interference?
And, given the current state of science, are such drastic actions to prevent climate change even necessary? While many scientists agree that human activity may be contributing to increased temperatures, the science is still uncertain as to there will be drastic consequences of this. And given the consequences, economists are much more uncertain as to the appropriate policy response.
Currently, America does a great job producing beef and feeding the world. We used to have the world's top rate cars and financial institutions. Then the government got involved. Socially planned interest rates, government sponsored enterprises, and political pressure to make bad loans led to the housing bubble and the financial crisis. Stringent environmental standards and 'deadly' fuel economy standards have forced automakers into having to loose money producing low quality 'fuel efficient' cars that no one wants in order to be able to sell profitable trucks and suv's. If left alone more resources could have went into making our trucks and suv's run on less gas. ( see 6 Myths about the auto industry) Now they are swimming in red ink.
Getting back to the point, if these sorts of taxes and regulations go into effect on the farm, we may eventually reduce ourselves from being a modern science-driven industry of independent producers to a heavily subsidized, low tech, group of small farmers looking for handouts.
Do we really need to sidetrack the livestock industry with unnecessary government interference? Currently less than 1/2 of 1 % of federal money is spent 'on the farm' compared to the $700 billion bailout and more to come for the financial and auto industry. Lets not create a 'food crisis' and another industry that will need a bailout.
Wednesday, November 26, 2008
The First Thanksgiving
This post has become a tradition for me on this blog, with excerpts from a posting at the Foundation for Economic Education . Many may also have heard this story as told by Rush Limbaugh on his radio show.
Thanksgiving was not about the Pilgrims embracing diversity and thanking the Indians for helping them survive. The celebration was about thanking God for the abundance which resulted from a move away from socialism ( imposed on them by the Colony’s Sponsors) to free market agriculture.
As governor William Bradford commented on the dreadful conditions of 1622:
“The experience that was had in this common course and condition, tried sundry years and that amongst godly and sober men, may well evince the vanity of that conceit of Plato's and other ancients applauded by some of later times; that the taking away of property and bringing in community into a commonwealth would make them happy and flourishing; as if they were wiser than God. For this community was found to breed much confusion and discontent and retard much employment that would have been to their benefit and comfort. For the young men, that were most able and fit for labor and service, 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 no more in division of victuals and clothes than he that was weak and not able to do a quarter the other could; this was thought injustice."
In 1623, they moved away from Socialism and embraced the incentives of private property and capitalism:
“They had very good success, for it made all hands very industrious, so as much more corn was planted than otherwise would have been. 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…By this time harvest was come, and instead of famine, now God gave them plenty, and the faces of things were changed, to the rejoicing of the hearts of many, for which they blessed God.”
The first Thanksgiving was a great example of agricultural productivity, given the proper incentives.
Thanksgiving was not about the Pilgrims embracing diversity and thanking the Indians for helping them survive. The celebration was about thanking God for the abundance which resulted from a move away from socialism ( imposed on them by the Colony’s Sponsors) to free market agriculture.
As governor William Bradford commented on the dreadful conditions of 1622:
“The experience that was had in this common course and condition, tried sundry years and that amongst godly and sober men, may well evince the vanity of that conceit of Plato's and other ancients applauded by some of later times; that the taking away of property and bringing in community into a commonwealth would make them happy and flourishing; as if they were wiser than God. For this community was found to breed much confusion and discontent and retard much employment that would have been to their benefit and comfort. For the young men, that were most able and fit for labor and service, 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 no more in division of victuals and clothes than he that was weak and not able to do a quarter the other could; this was thought injustice."
In 1623, they moved away from Socialism and embraced the incentives of private property and capitalism:
“They had very good success, for it made all hands very industrious, so as much more corn was planted than otherwise would have been. 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…By this time harvest was come, and instead of famine, now God gave them plenty, and the faces of things were changed, to the rejoicing of the hearts of many, for which they blessed God.”
The first Thanksgiving was a great example of agricultural productivity, given the proper incentives.
Friday, November 14, 2008
Traditonal, Organic, or Modern Agriculture?
In the Chornicle of Higher Education Blog, there is a troubling post. Below are some excerpts:
" There is no doubt that food issues will be increasingly important in coming years, as agriculture is stressed by climate change, dwindling petroleum supplies, and environmental degradation in the form of loss of biodiversity and erosion."
and
"traditional agriculture and the industrialization of food have led people to wage war against nature, against each other, and even against their own bodies, in the form of cancers and obesity. The industrialization of food has led to empty countrysides both here in the U.S. and in India, Ms. Shiva’s native country."
Then colleges of agriculture are blamed:
"The so-called Green Revolution, which created fertilizer-dependent industrial agriculture, is a result of research done at colleges and universities. “The solutions will have to come out of the place where it started”
I assert that both industry and universities have addressed all of these issues quite well by helping to bring biotechnology to the world.
The article is supposed to be about gardening and asserts that 'middle-school students are learning about agriculture and cuisine by growing gardens.'
That is great, but great harm is also being done if these kids are not learning about the tools of modern agricultural biotechnology, and even worse if they are being taught that it is harmful!
" There is no doubt that food issues will be increasingly important in coming years, as agriculture is stressed by climate change, dwindling petroleum supplies, and environmental degradation in the form of loss of biodiversity and erosion."
and
"traditional agriculture and the industrialization of food have led people to wage war against nature, against each other, and even against their own bodies, in the form of cancers and obesity. The industrialization of food has led to empty countrysides both here in the U.S. and in India, Ms. Shiva’s native country."
Then colleges of agriculture are blamed:
"The so-called Green Revolution, which created fertilizer-dependent industrial agriculture, is a result of research done at colleges and universities. “The solutions will have to come out of the place where it started”
I assert that both industry and universities have addressed all of these issues quite well by helping to bring biotechnology to the world.
The article is supposed to be about gardening and asserts that 'middle-school students are learning about agriculture and cuisine by growing gardens.'
That is great, but great harm is also being done if these kids are not learning about the tools of modern agricultural biotechnology, and even worse if they are being taught that it is harmful!
Sunday, November 09, 2008
IS PROGRESSIVE TAXATION SOCIALIST
A fairly recent Newsweek article entitled : ‘Spread The Wealth? What’s New?’ argues that progressive taxation inherently spreads wealth and is nothing new in American politics. It is essentially asserted that even the Bush and Regan tax cuts maintained a 'progressive' tax system, and because of this, both Bush and Regan polices could be labeled 'socialist.'
Here is the crucial point the author purposefully ignores: It is not necessarily the method of taxation that can be characterized as being ‘socialist’ . More important is the purpose for which the taxes are levied.
According to the Blackwell Encyclopedia of Political Thought (Oxford,1987) Socialism is the ‘theory of social nature or aspects of production and of its consequences.’ Specifically it involves the argument ‘that economic production has an essential social as distinct from individual element , and that this requires public investment and justifies a public share and distribution of rewards.’
So then, where does capitalism end and socialism begin? A recent article by economist Walter E. Williams of George Mason University describes this well:
‘Under laissez-faire capitalism, government activity is restricted to the protection of the individual's rights against fraud, theft and the initiation of physical force.’
Taxation to support the government’s role to provide national defense, provide police protection, or fund the courts and define property rights are clearly not ‘socialist’ by nature, regardless of how taxes are levied, progressive or not.
What about increasing taxes on the wealthy to fund public housing, to fund health care, give tax refund checks to the middle class, or forcing businesses to pay a minimum wage, or increasing social security taxes? These policies seem could be seen as one approach to making a claim on the public’s share in the distribution of the rewards of production. It is understandable that some would refer to them as having a ’socialist’ flavor.
The author is correct about what appears to be a ‘bipartisan consensus that has favored federal spending at approximately the same level for the past 40 years.’
I can’t close without pointing out that the author inaccurately claims that :
‘What has changed in that period is the way the market has distributed wealth. Since the 1970s,income inequality in the United States has increased dramatically’
First, and most importantly, the author fails to point out what this same data reveals: Wealth and income has increased for both the 'rich' and the 'poor' dramatically since the 1970's.
Anyone that understands economics, understands that markets do not distribute income or wealth. Income is earned and wealth is attained based on the valuations that individuals place on what is produced. As Hayek and Mises pointed out long ago, ‘the absence of human intention in a spontaneous order is neither just nor unjust’.
Here is the crucial point the author purposefully ignores: It is not necessarily the method of taxation that can be characterized as being ‘socialist’ . More important is the purpose for which the taxes are levied.
According to the Blackwell Encyclopedia of Political Thought (Oxford,1987) Socialism is the ‘theory of social nature or aspects of production and of its consequences.’ Specifically it involves the argument ‘that economic production has an essential social as distinct from individual element , and that this requires public investment and justifies a public share and distribution of rewards.’
So then, where does capitalism end and socialism begin? A recent article by economist Walter E. Williams of George Mason University describes this well:
‘Under laissez-faire capitalism, government activity is restricted to the protection of the individual's rights against fraud, theft and the initiation of physical force.’
Taxation to support the government’s role to provide national defense, provide police protection, or fund the courts and define property rights are clearly not ‘socialist’ by nature, regardless of how taxes are levied, progressive or not.
What about increasing taxes on the wealthy to fund public housing, to fund health care, give tax refund checks to the middle class, or forcing businesses to pay a minimum wage, or increasing social security taxes? These policies seem could be seen as one approach to making a claim on the public’s share in the distribution of the rewards of production. It is understandable that some would refer to them as having a ’socialist’ flavor.
The author is correct about what appears to be a ‘bipartisan consensus that has favored federal spending at approximately the same level for the past 40 years.’
I can’t close without pointing out that the author inaccurately claims that :
‘What has changed in that period is the way the market has distributed wealth. Since the 1970s,income inequality in the United States has increased dramatically’
First, and most importantly, the author fails to point out what this same data reveals: Wealth and income has increased for both the 'rich' and the 'poor' dramatically since the 1970's.
Anyone that understands economics, understands that markets do not distribute income or wealth. Income is earned and wealth is attained based on the valuations that individuals place on what is produced. As Hayek and Mises pointed out long ago, ‘the absence of human intention in a spontaneous order is neither just nor unjust’.
Wednesday, November 05, 2008
CONGRATS TO OBAMA
I hope that yesterday's election was more a referendum on the Bush administration ( although I believe history will prove him to have been a great American hero)and much less an endorsement for socialism.
That being said I congratulate our new president, and hope to turn back to topics in Agriculture for future posts.
That being said I congratulate our new president, and hope to turn back to topics in Agriculture for future posts.
Thursday, October 09, 2008
Saturday, October 04, 2008
Which Failed Philisophy?
Eight years of a failed philosophy? Again history has shown that the failed philosophy we need to be concerned about is socialism not capitalism and freedom. The excerpts from the NYT article below provide more evidence that the recent financial crisis is not the result of unfettered markets, but the response of market forces to government intervention.
------------------------------------------------------------------9/30/1999
Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.
Demographic information on these borrowers is sketchy. But at least one study indicates that 18 percent of the loans in the subprime market went to black borrowers, compared to 5 per cent of loans in the conventional loan market.
In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.
''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.''
The change in policy also comes at the same time that HUD is investigating allegations of racial discrimination in the automated underwriting systems used by Fannie Mae and Freddie Mac to determine the credit-worthiness of credit applicants.
And just this year we have Barney Frank defending the soundness of these government sponsored institutions.
------------------------------------------------------------------9/30/1999
Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.
Demographic information on these borrowers is sketchy. But at least one study indicates that 18 percent of the loans in the subprime market went to black borrowers, compared to 5 per cent of loans in the conventional loan market.
In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.
''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.''
The change in policy also comes at the same time that HUD is investigating allegations of racial discrimination in the automated underwriting systems used by Fannie Mae and Freddie Mac to determine the credit-worthiness of credit applicants.
And just this year we have Barney Frank defending the soundness of these government sponsored institutions.
Friday, October 03, 2008
8 YEARS OF A FAILED PHILOSOPHY?
Aside from the fact that we have socialized interest rates via the fed, which have resulted in every boom and bust of the last century, and despite the socialist ideology behind Freddie and Fannie there is a misconception that the current financial crisis is the result of free markets!
This is exactly why some democrats support the book burning ideology behind the 'Fairness Doctrine'. One of their own gets caught by the free press! See below.
This is exactly why some democrats support the book burning ideology behind the 'Fairness Doctrine'. One of their own gets caught by the free press! See below.
Tuesday, September 23, 2008
DOES 'CHANGE' OFFER 'HOPE'
If we are experiencing depression era problems in the markets, should we adopt the same depression era policies that exacerbated it?
From Thomas Sowell:
"a recycling of the kinds of policies and rhetoric of the New Deal that prolonged the Great Depression of the 1930s far beyond the duration of any depression before or since."
From: Federal Reserve Bank of Minneapolis Quarterly Review
Winter 1999, vol. 23, no. 1, pp. 25–31
"The capitalistic economy is stable, and absent some change in technology or the rules of the economic game, the economy converges to a constant growth path with the standard of living doubling every 40 years. In the 1930s, there was an important
change in the rules of the economic game. This change lowered the steady-state market hours. The Keynesians had it all wrong. In the Great Depression, employment was not low because investment was low. Employment and investment were low because labor market institutions and industrial policies changed in a way that lowered normal employment."
From Thomas Sowell:
"a recycling of the kinds of policies and rhetoric of the New Deal that prolonged the Great Depression of the 1930s far beyond the duration of any depression before or since."
From: Federal Reserve Bank of Minneapolis Quarterly Review
Winter 1999, vol. 23, no. 1, pp. 25–31
"The capitalistic economy is stable, and absent some change in technology or the rules of the economic game, the economy converges to a constant growth path with the standard of living doubling every 40 years. In the 1930s, there was an important
change in the rules of the economic game. This change lowered the steady-state market hours. The Keynesians had it all wrong. In the Great Depression, employment was not low because investment was low. Employment and investment were low because labor market institutions and industrial policies changed in a way that lowered normal employment."
Friday, August 29, 2008
Eating Local
There is nothing wrong with wanting to grow or eat your own food, or get it from your neighbor, if that's your choice. We all should have to power to decide how we spend our money. More and more schools and government organizations are promoting and purchasing local food under the assumption that it is better for the environment and taking your taxpayer money to do it.
By doing this, policy makers can feel good about themselves at our expense.
The following post from the Marginal Revolution economics blog addresses eating local and the relationship between food miles and your ‘carbon footprint.’
Is there a tradeoff between how ‘local’ your food is and your impact on the environment?
Some say yes , but there is much debate about that issue, as you may find in the blog link or here in National Geographic.
Actual research related to this issue can be found here
Of course some of these take a shot at beef. They forget that cars are very necessary for transportation, and we know that they produce greenhouse gases, but we don’t stop driving altogether. We continue to produce more and more fuel efficient cars instead. The same can be said for beef production. Considering beef is a healthy and nutritious food source, we should not stop eating it altogether. Instead we should continue to produce more and more efficient cattle.
Today we get 185lbs more beef per head than we did just 40 years ago, and today's beef is a lot leaner and healther.
By doing this, policy makers can feel good about themselves at our expense.
The following post from the Marginal Revolution economics blog addresses eating local and the relationship between food miles and your ‘carbon footprint.’
Is there a tradeoff between how ‘local’ your food is and your impact on the environment?
Some say yes , but there is much debate about that issue, as you may find in the blog link or here in National Geographic.
Actual research related to this issue can be found here
Of course some of these take a shot at beef. They forget that cars are very necessary for transportation, and we know that they produce greenhouse gases, but we don’t stop driving altogether. We continue to produce more and more fuel efficient cars instead. The same can be said for beef production. Considering beef is a healthy and nutritious food source, we should not stop eating it altogether. Instead we should continue to produce more and more efficient cattle.
Today we get 185lbs more beef per head than we did just 40 years ago, and today's beef is a lot leaner and healther.
UNNATURAL CAUSES III: MAKING HEALTH CARE MORE AFFORDABLE BUT LIMITING ITS AVAILABILITY
One of the policy recommendations for the policy guide for the documentary ‘Unnatural Causes: Is Inequality Making Us Sick?’, is to support guaranteed and culturally competent quality healthcare, access, and treatment for all.
Of all of the inconsistent policy proposals included in the policy guide, this one is probably the most egregious. National healthcare is incompatible with quality, access, and treatment for all but a few people.
Perhaps we could get advice from our neighbors to the north. Transforming broom closets into hospital rooms seems to be their specialty. Even with nationalization, they still seem to be having trouble with people not getting treatment due to cost issues. I thought national health care was supposed to make 'cost' a non issue? I though 'cost' was only an issue with private health care?
The truth is, medical care requires scarce resources, specific information about the circumstances of time and place, and incentives for people to act on that information to produce results. National health care just takes this 'information and coordination' problem out of the hands of markets and individuals and dumps it in the laps of politicians and administrators. Instead of allocating resources by recognizing trade offs based on the knowledge and preferences of millions ( via prices), resources are allocated utilizing the limited knowledge and preferences of a few administrators.
The following headlines are descriptive of how this information and coordination problems is being handled by Canada’s national healthcare plan:
B.C. hospital's bed crunch getting worse
Last Updated: Tuesday, January 30, 2007 | 11:25 AM ET
CBC News
"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.
A Fraser Health Authority internal estimate predicts that about 200 acute care beds will be eliminated in the coming year because of rising costs.
Wait times for surgery in Canada at all-time high: study
Last Updated: Monday, October 15, 2007 | 10:33 AM ET
The Canadian Press
"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.
Of all of the inconsistent policy proposals included in the policy guide, this one is probably the most egregious. National healthcare is incompatible with quality, access, and treatment for all but a few people.
Perhaps we could get advice from our neighbors to the north. Transforming broom closets into hospital rooms seems to be their specialty. Even with nationalization, they still seem to be having trouble with people not getting treatment due to cost issues. I thought national health care was supposed to make 'cost' a non issue? I though 'cost' was only an issue with private health care?
The truth is, medical care requires scarce resources, specific information about the circumstances of time and place, and incentives for people to act on that information to produce results. National health care just takes this 'information and coordination' problem out of the hands of markets and individuals and dumps it in the laps of politicians and administrators. Instead of allocating resources by recognizing trade offs based on the knowledge and preferences of millions ( via prices), resources are allocated utilizing the limited knowledge and preferences of a few administrators.
The following headlines are descriptive of how this information and coordination problems is being handled by Canada’s national healthcare plan:
B.C. hospital's bed crunch getting worse
Last Updated: Tuesday, January 30, 2007 | 11:25 AM ET
CBC News
"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.
A Fraser Health Authority internal estimate predicts that about 200 acute care beds will be eliminated in the coming year because of rising costs.
Wait times for surgery in Canada at all-time high: study
Last Updated: Monday, October 15, 2007 | 10:33 AM ET
The Canadian Press
"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.
Saturday, August 02, 2008
UNNATURAL CAUSES II: LOCAL AND NATIONAL POLICIES
In a previous post I mentioned the inconsistency in policy recommendations with regard to food and agriculture as outlined in the policy guide for the documentary ‘Unnatural Causes: Is Inequality Making Us Sick?’
Next I will discuss problems with their policies regarding housing and wealth. They recommend policies that support zoning reform, affordable housing, green spaces, repealing recent tax cuts and loopholes for the rich ( which would actually target family farms and small businesses as well), and increasing minimum or living wages. They also have adopted the grand goal of reducing the influence of money and lobbyists over politics.
First of all, increasing taxes on income and profits will undermine the productive base of society and economic growth. The result will be increased inequality and the reduction of resources that could be used to promote public health.
Empirical evidence and economic science suggests that green spaces, zoning restrictions, and ‘smart growth’ type policies lead to increased housing costs ( a boon to wealthy property owners) and are inconsistent with affordable housing.
Minimum wage laws, especially living wages, discriminate against low productivity labor in favor of wealthier, higher skilled members of society. Most current minimum wage earners are already from families earning incomes greater than $60,000 per year, and less than 5% are ‘working poor.’ In addition, these laws further entrench large corporations like Wal-Mart at the expense of small businesses.
Finally, these sorts of government interventions only increase the stakes involved, and provide stronger incentives for big business to lobby congress and influence the political process.
Most of the proposals found in the Policy Guide turn out to be ineffective in accomplishing their goals, and will likely result in greater burdens for the poor.
REFERENCES:
http://www.bls.gov/cps/minwage2005.htm.
David Neumark, Mark Schweitzer, and William Wascher, “Order from Chaos? The Effects of Early Labor Market Experiences on Adult Labor Market Outcomes,” Industrial and Labor Relations Review, Vol. 51, no. 2, January 1998, pp. 299-322.
David Neumark and William Wascher, “Do Minimum Wages Fight Poverty?,” Economic Inquiry, 2002,
v40(3,Jul), pp. 315-333.
Cox, James C., and Oaxaca, Ronald L. 1986. Minimum Wage Effects With Output Stabilization. Economic Inquiry, vol. 24 (July): 443-453.
Behrman, Jere R.; Sickles, Robin C.; and Taubman, Paul. 1983. The Impact of Minimum Wages on the Distributions of Earnings for Major Race-Sex Groups: A Dynamic Analysis. American Economic Review, vol. 73 (September): 766-778.
Neumark, David, and Wascher, William. 1992. Employment Effects of Minimum and Subminimum Wages: Panel Data on State Minimum Wage Laws. Industrial and Labor Relations Review, vol. 46 (October): 55-81.
Other : 50 years of research related to the minimum wage: http://www.house.gov/jec/cost-gov/regs/minimum/50years.htm
http://www.americandreamcoalition.org/penalty.html
Harvard Institute of Economic Research
Discussion Paper Number 1948
The Impact of Zoning on
Housing Affordability
by
Edward L. Glaeser and Joseph Gyourko
March 2002
Harvard University
Cambridge, Massachusetts
http://post.economics.harvard.edu/hier/2002papers/HIER1948.pdf
Does Sprawl Reduce the Black/White Housing Consumption Gap?,
http://www.mi.vt.edu/Research/PDFs/kahn.pdf
• The Dynamics of Metropolitan Housing Prices by University of North Carolina researchers Donald Jud and Daniel Winkler shows that housing prices grow faster in places "with restrictive growth management policies and limitations on land availability."
Robert Barrow. Macroeconomics- 5th Edition MIT Press 1997
Lindsey, Lawrence B. 1987. “Individual Taxpayer Response to Taxcuts, 1982-1984.” J. of Public Economics 33 (July) 173-206
Lucas (1988). ‘On the Mechanics of Economic Development.’ Journal of Monetary Economics 22 (July) 3-42.
Krueger (1993) ‘Virtuous and Vicious Circles in Economic Development.’ American Economic Review 83 (May) 351-355.
Next I will discuss problems with their policies regarding housing and wealth. They recommend policies that support zoning reform, affordable housing, green spaces, repealing recent tax cuts and loopholes for the rich ( which would actually target family farms and small businesses as well), and increasing minimum or living wages. They also have adopted the grand goal of reducing the influence of money and lobbyists over politics.
First of all, increasing taxes on income and profits will undermine the productive base of society and economic growth. The result will be increased inequality and the reduction of resources that could be used to promote public health.
Empirical evidence and economic science suggests that green spaces, zoning restrictions, and ‘smart growth’ type policies lead to increased housing costs ( a boon to wealthy property owners) and are inconsistent with affordable housing.
Minimum wage laws, especially living wages, discriminate against low productivity labor in favor of wealthier, higher skilled members of society. Most current minimum wage earners are already from families earning incomes greater than $60,000 per year, and less than 5% are ‘working poor.’ In addition, these laws further entrench large corporations like Wal-Mart at the expense of small businesses.
Finally, these sorts of government interventions only increase the stakes involved, and provide stronger incentives for big business to lobby congress and influence the political process.
Most of the proposals found in the Policy Guide turn out to be ineffective in accomplishing their goals, and will likely result in greater burdens for the poor.
REFERENCES:
http://www.bls.gov/cps/minwage2005.htm.
David Neumark, Mark Schweitzer, and William Wascher, “Order from Chaos? The Effects of Early Labor Market Experiences on Adult Labor Market Outcomes,” Industrial and Labor Relations Review, Vol. 51, no. 2, January 1998, pp. 299-322.
David Neumark and William Wascher, “Do Minimum Wages Fight Poverty?,” Economic Inquiry, 2002,
v40(3,Jul), pp. 315-333.
Cox, James C., and Oaxaca, Ronald L. 1986. Minimum Wage Effects With Output Stabilization. Economic Inquiry, vol. 24 (July): 443-453.
Behrman, Jere R.; Sickles, Robin C.; and Taubman, Paul. 1983. The Impact of Minimum Wages on the Distributions of Earnings for Major Race-Sex Groups: A Dynamic Analysis. American Economic Review, vol. 73 (September): 766-778.
Neumark, David, and Wascher, William. 1992. Employment Effects of Minimum and Subminimum Wages: Panel Data on State Minimum Wage Laws. Industrial and Labor Relations Review, vol. 46 (October): 55-81.
Other : 50 years of research related to the minimum wage: http://www.house.gov/jec/cost-gov/regs/minimum/50years.htm
http://www.americandreamcoalition.org/penalty.html
Harvard Institute of Economic Research
Discussion Paper Number 1948
The Impact of Zoning on
Housing Affordability
by
Edward L. Glaeser and Joseph Gyourko
March 2002
Harvard University
Cambridge, Massachusetts
http://post.economics.harvard.edu/hier/2002papers/HIER1948.pdf
Does Sprawl Reduce the Black/White Housing Consumption Gap?,
http://www.mi.vt.edu/Research/PDFs/kahn.pdf
• The Dynamics of Metropolitan Housing Prices by University of North Carolina researchers Donald Jud and Daniel Winkler shows that housing prices grow faster in places "with restrictive growth management policies and limitations on land availability."
Robert Barrow. Macroeconomics- 5th Edition MIT Press 1997
Lindsey, Lawrence B. 1987. “Individual Taxpayer Response to Taxcuts, 1982-1984.” J. of Public Economics 33 (July) 173-206
Lucas (1988). ‘On the Mechanics of Economic Development.’ Journal of Monetary Economics 22 (July) 3-42.
Krueger (1993) ‘Virtuous and Vicious Circles in Economic Development.’ American Economic Review 83 (May) 351-355.
Wednesday, July 16, 2008
UNNATURAL CAUSES: AN ATTACK ON ‘UNNATURAL’ AGRICULTURE?
I recently came across ‘Unnatural Causes’ a 7 part documentary about racial and economic inequalities in public health. I have not watched it, but I did download the policy guide :
The main theme seems to be (that) ‘Building a social movement that can advocate effectively for more equitable social policies is critical to changing our economic, physical, and social environments so they can promote rather than threaten our health.’
On the surface, this does not seem so bad, but many of the policies they recommend in doing this show a lack of understanding of economic science and modern agriculture. Since economics is the study of our choices and how they are made compatible in a world of scarce resources, their neglect of economics leads them to adopt many policy recommendations that are incompatible with their stated goals.
Policy recommendation #9 : Improve Food Security and Quality, recommends among other things that we support ‘sustainable agriculture and local food production, especially organics.’
Now I don’t have a specific problem with organic food as long as it is not promoted at the expense of modern science and agriculture. Agriculture is a competitive industry and I believe that there is a niche for everyone including local/organic producers, but their explicit mention of organic and their failure to mention biotech options implies the exclusion of biotech.
This is not consistent with their goal of sustainability,considering the environmental, safety, and health benefits of biotech foods that organics could never provide such as the elimination or decreased use of toxic chemicals ( organics use harmful ‘natural’ chemicals like copper sulfate and mercuric), decreased tillage ( which organics depend upon heavily) and improved biodiversity ( tillage and use of broadcast Bt in organic production is detrimental to non-target pests and ecosystems).
One example is Bt corn( a biotech crop). Not only does it eliminate the use of millions of pounds of insecticide and save millions of gallons of fuel and water per year, but it also is safer for food consumption. The use of Bt corn decreases fumonisin ( a fungal parasite) infestation by 80% compared to conventional and organic corn. Fumonisin is responsible for esphogeal cancer and neural disorders in infants.
Another example is Roundup Ready technology. 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.
They also talk about reforming the ‘subsidy program’ that regards the producers of processed foods. They must be talking about nonrecourse loans. If they assume that these ‘subsidies’ lead to an increase in supply and result in cheap input prices for large processors, then they should wake up to see current commodity prices.
Given that they also mention multiple times throughout the policy guide that they support increased taxes, I assume they would support doing away with non-recourse loan programs and instead increase the income and inheritance taxes on grain farmers. In place I’m sure they would like to implement actual subsidies for local and organic growers.
Let’s just hope this propaganda does not make it on the local news or into school curriculums.
REFERENCES:
Abelson, P.H. (1990) ‘‘Hybrid Corn.’’ Science 249 (August 24): 837.
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.
The main theme seems to be (that) ‘Building a social movement that can advocate effectively for more equitable social policies is critical to changing our economic, physical, and social environments so they can promote rather than threaten our health.’
On the surface, this does not seem so bad, but many of the policies they recommend in doing this show a lack of understanding of economic science and modern agriculture. Since economics is the study of our choices and how they are made compatible in a world of scarce resources, their neglect of economics leads them to adopt many policy recommendations that are incompatible with their stated goals.
Policy recommendation #9 : Improve Food Security and Quality, recommends among other things that we support ‘sustainable agriculture and local food production, especially organics.’
Now I don’t have a specific problem with organic food as long as it is not promoted at the expense of modern science and agriculture. Agriculture is a competitive industry and I believe that there is a niche for everyone including local/organic producers, but their explicit mention of organic and their failure to mention biotech options implies the exclusion of biotech.
This is not consistent with their goal of sustainability,considering the environmental, safety, and health benefits of biotech foods that organics could never provide such as the elimination or decreased use of toxic chemicals ( organics use harmful ‘natural’ chemicals like copper sulfate and mercuric), decreased tillage ( which organics depend upon heavily) and improved biodiversity ( tillage and use of broadcast Bt in organic production is detrimental to non-target pests and ecosystems).
One example is Bt corn( a biotech crop). Not only does it eliminate the use of millions of pounds of insecticide and save millions of gallons of fuel and water per year, but it also is safer for food consumption. The use of Bt corn decreases fumonisin ( a fungal parasite) infestation by 80% compared to conventional and organic corn. Fumonisin is responsible for esphogeal cancer and neural disorders in infants.
Another example is Roundup Ready technology. 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.
They also talk about reforming the ‘subsidy program’ that regards the producers of processed foods. They must be talking about nonrecourse loans. If they assume that these ‘subsidies’ lead to an increase in supply and result in cheap input prices for large processors, then they should wake up to see current commodity prices.
Given that they also mention multiple times throughout the policy guide that they support increased taxes, I assume they would support doing away with non-recourse loan programs and instead increase the income and inheritance taxes on grain farmers. In place I’m sure they would like to implement actual subsidies for local and organic growers.
Let’s just hope this propaganda does not make it on the local news or into school curriculums.
REFERENCES:
Abelson, P.H. (1990) ‘‘Hybrid Corn.’’ Science 249 (August 24): 837.
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.
Wednesday, July 02, 2008
DO INDIVIDUALS HAVE THE RIGHT TO KEEP AND BEAR ARMS?
Usually I don't write posts this long, but in light of the coming Independence Day holiday, and recent supreme court decision, both the length and the subject matter of this post are an exception.
The second amendment reads as follows:
‘A well regulated militia, being necessary to the security of a free state, the right of the people to keep and bear arms, shall not be infringed.’
This language is very confusing to many, and for those that take it out of the context of history, and our founders writings about its purpose, many are led to believe that the right to keep and bear arms only applies to the militia, which in modern terms may be our military or national guard.
Note however, from the start, it does not state that ‘A well regulated militia, being necessary to the security of a free state, the right of the PEOPLE IN THE MILITIA to keep and bear arms, shall not be infringed.’
If we understand the plain language of the 2nd amendment, and especially if we look at it in the historical context in which it was written, we will see that the 2nd amendment is a compromise to forming a militia at all, due to the fears that the anti- federalists and the people at that time had of standing armies under the control of a centralized government.
We would see that well armed citizens are in fact a pre-requisite for the existence of the militia, as opposed to the view that the pre-requisite for citizens to be armed is that they be in the militia.
Federalist #29 and #46 give us context for this understanding. Federlist # 29 states:
‘If circumstances should at any time oblige the government to form an army of any magnitude, that army can never be formidable to the liberties of the people while there is a large body of citizens, little if at all, inferior to them in discipline and the use of arms, who stand ready to defend their rights and those of their fellow citizens.’
This statement clearly distinguishes the militia or the army from the citizen, and implies that the citizens may be armed, and in fact it is absolutely necessary that they be armed to defend their rights if need be. It did not imply that the militia would defend our rights, but that ‘a large body of armed citizens would defend themselves from an army of any magnitude, and this would include the possibility that they may need to defend themselves from even the militia. While the militia may be composed of armed citizens, it was assumed that other armed citizens, not in the militia would hold it in check. This could not be so if there was no individual right to keep and bear arms.
In Federalst #29, we see that there is a notion that our national military be composed of armed citizens, called to duty when the need arises. Some feared that perhaps this loose collection of soldiers may not be strong enough to keep us safe, but also feared a large strong standing army. A compromise was introduced, such that a small select group of citizens should form a select militia, to train regularly, and in time of need be supplemented by drawing on the ranks of other armed citizens. As stated:
‘The attention of the government ought particularly to be directed to the formation of a select corps of moderate extent…it will be possible to have an excellent body of well trained militia, ready to take the field whenever the defence of the state shall require it.’
Would this small select militia be a threat to the liberties of the people? What about our national defense? Only if individual citizens had the right to keep and bear arms to supplement the small select militia and also to keep it in check would this work. In fact our founders were certain of the strength and power of armed citizens, drawing recently from the experience of a victorious war against England’s powerful military. Again going back to Federalist #46 it is stated:
‘Besides the advantage of being armed, which the Americans posses over the people of almost every other nation, the existence of subordinate governments, to which the people are attached, and by which the militia officers are appointed, forms a barrier against the enterprises of ambition……the military establishments in several kingdoms in Europe, which are carried as far as the public resources will bear, the governments are afraid to trust the people with arms.’
Again, a reason and reaffirmation that it was intended that the second amendment protect the rights of individuals to keep and bear arms.
There is a distinction made between this select militia and citizens, a point made in the recent case DISTRICT OF COLUMBIA ET AL. v. HELLER (2008):
"The Amendment’s prefatory clause ( the well regulated militia part) announces a purpose, but does not limit or expand the scope of the second part , the operative
clause. The operative clause’s text and history demonstrate that it connotes an individual right to keep and bear arms."
"The “militia” comprised all males physically capable of acting in concert for the common defense. The Antifederalists feared that the Federal Government would disarm the people in order to disable this citizens’ militia, enabling a politicized standing army or a select militia to rule. The response was to deny Congress power to abridge the ancient right of individuals to keep and bear arms, so that the ideal of a citizens’ militia would be preserved."
I will end my discussion with other quotes made by our founders and others discussing the constitution and the right of the people to keep and bear arms.
"That the said Constitution shall never be construed to authorize Congress to infringe the just liberty of the press or the rights of conscience; or to prevent the people of the United States who are peaceable citizens from keeping their own arms ... " -- Samuel Adams, Debates and Proceedings in the Convention of the Commonwealth of Massachusetts, at 86-87 (Pierce & Hale, eds., Boston, 1850)
"Whereas civil-rulers, not having their duty to the people duly before them, may attempt to tyrannize, and as military forces, which must be occasionally raised to defend our country, might pervert their power to the injury of their fellow citizens, the people are confirmed by the article in their right to keep and bear their private arms."
-- Tench Coxe, in Remarks on the First Part of the Amendments to the Federal Constitution
"The right [to bear arms] is general. It may be supposed from the phraseology of this provision that the right to keep and bear arms was only guaranteed to the militia; but this would be an interpretation not warranted by the intent. The militia, as has been explained elsewhere, consists of those persons who, under the laws, are liable to the performance of military duty, and are officered and enrolled for service when called upon.... [I]f the right were limited to those enrolled, the purpose of the guarantee might be defeated altogether by the action or the neglect to act of the government it was meant to hold in check. The meaning of the provision undoubtedly is, that the people, from whom the militia must be taken, shall have the right to keep and bear arms, and they need no permission or regulation of law for the purpose. But this enables the government to have a well regulated militia; for to bear arms implies something more than mere keeping; it implies the learning to handle and use them in a way that makes those who keep them ready for their efficient use; in other words, it implies the right to meet for voluntary discipline in arms, observing in so doing the laws of public order."-- Thomas M. Cooley, General Principles of Constitutional Law, Third Edition [1898]
"The most foolish mistake we could possibly make would be to allow the subject races to possess arms. History shows that all conquerors who have allowed their subject races to carry arms have prepared their own downfall by so doing."-- Adolph Hitler, Hitler's Secret Conversations 403 (Norman Cameron and R.H. Stevens trans., 1961)
In the context of our history and our founder’s writings, we see that the clause regarding the militia fails to limit in any way the rights of the people to keep and bear arms. In this context the following statement is certainly equivalent to the one in question, being the 2nd amendment:
‘Because a well regulated militia is necessary for the security of a free state, and because it both draws from the ranks of ,and its power is held in check by, armed citizens, the right of the people to keep and bear arms shall not be infringed.’
The second amendment reads as follows:
‘A well regulated militia, being necessary to the security of a free state, the right of the people to keep and bear arms, shall not be infringed.’
This language is very confusing to many, and for those that take it out of the context of history, and our founders writings about its purpose, many are led to believe that the right to keep and bear arms only applies to the militia, which in modern terms may be our military or national guard.
Note however, from the start, it does not state that ‘A well regulated militia, being necessary to the security of a free state, the right of the PEOPLE IN THE MILITIA to keep and bear arms, shall not be infringed.’
If we understand the plain language of the 2nd amendment, and especially if we look at it in the historical context in which it was written, we will see that the 2nd amendment is a compromise to forming a militia at all, due to the fears that the anti- federalists and the people at that time had of standing armies under the control of a centralized government.
We would see that well armed citizens are in fact a pre-requisite for the existence of the militia, as opposed to the view that the pre-requisite for citizens to be armed is that they be in the militia.
Federalist #29 and #46 give us context for this understanding. Federlist # 29 states:
‘If circumstances should at any time oblige the government to form an army of any magnitude, that army can never be formidable to the liberties of the people while there is a large body of citizens, little if at all, inferior to them in discipline and the use of arms, who stand ready to defend their rights and those of their fellow citizens.’
This statement clearly distinguishes the militia or the army from the citizen, and implies that the citizens may be armed, and in fact it is absolutely necessary that they be armed to defend their rights if need be. It did not imply that the militia would defend our rights, but that ‘a large body of armed citizens would defend themselves from an army of any magnitude, and this would include the possibility that they may need to defend themselves from even the militia. While the militia may be composed of armed citizens, it was assumed that other armed citizens, not in the militia would hold it in check. This could not be so if there was no individual right to keep and bear arms.
In Federalst #29, we see that there is a notion that our national military be composed of armed citizens, called to duty when the need arises. Some feared that perhaps this loose collection of soldiers may not be strong enough to keep us safe, but also feared a large strong standing army. A compromise was introduced, such that a small select group of citizens should form a select militia, to train regularly, and in time of need be supplemented by drawing on the ranks of other armed citizens. As stated:
‘The attention of the government ought particularly to be directed to the formation of a select corps of moderate extent…it will be possible to have an excellent body of well trained militia, ready to take the field whenever the defence of the state shall require it.’
Would this small select militia be a threat to the liberties of the people? What about our national defense? Only if individual citizens had the right to keep and bear arms to supplement the small select militia and also to keep it in check would this work. In fact our founders were certain of the strength and power of armed citizens, drawing recently from the experience of a victorious war against England’s powerful military. Again going back to Federalist #46 it is stated:
‘Besides the advantage of being armed, which the Americans posses over the people of almost every other nation, the existence of subordinate governments, to which the people are attached, and by which the militia officers are appointed, forms a barrier against the enterprises of ambition……the military establishments in several kingdoms in Europe, which are carried as far as the public resources will bear, the governments are afraid to trust the people with arms.’
Again, a reason and reaffirmation that it was intended that the second amendment protect the rights of individuals to keep and bear arms.
There is a distinction made between this select militia and citizens, a point made in the recent case DISTRICT OF COLUMBIA ET AL. v. HELLER (2008):
"The Amendment’s prefatory clause ( the well regulated militia part) announces a purpose, but does not limit or expand the scope of the second part , the operative
clause. The operative clause’s text and history demonstrate that it connotes an individual right to keep and bear arms."
"The “militia” comprised all males physically capable of acting in concert for the common defense. The Antifederalists feared that the Federal Government would disarm the people in order to disable this citizens’ militia, enabling a politicized standing army or a select militia to rule. The response was to deny Congress power to abridge the ancient right of individuals to keep and bear arms, so that the ideal of a citizens’ militia would be preserved."
I will end my discussion with other quotes made by our founders and others discussing the constitution and the right of the people to keep and bear arms.
"That the said Constitution shall never be construed to authorize Congress to infringe the just liberty of the press or the rights of conscience; or to prevent the people of the United States who are peaceable citizens from keeping their own arms ... " -- Samuel Adams, Debates and Proceedings in the Convention of the Commonwealth of Massachusetts, at 86-87 (Pierce & Hale, eds., Boston, 1850)
"Whereas civil-rulers, not having their duty to the people duly before them, may attempt to tyrannize, and as military forces, which must be occasionally raised to defend our country, might pervert their power to the injury of their fellow citizens, the people are confirmed by the article in their right to keep and bear their private arms."
-- Tench Coxe, in Remarks on the First Part of the Amendments to the Federal Constitution
"The right [to bear arms] is general. It may be supposed from the phraseology of this provision that the right to keep and bear arms was only guaranteed to the militia; but this would be an interpretation not warranted by the intent. The militia, as has been explained elsewhere, consists of those persons who, under the laws, are liable to the performance of military duty, and are officered and enrolled for service when called upon.... [I]f the right were limited to those enrolled, the purpose of the guarantee might be defeated altogether by the action or the neglect to act of the government it was meant to hold in check. The meaning of the provision undoubtedly is, that the people, from whom the militia must be taken, shall have the right to keep and bear arms, and they need no permission or regulation of law for the purpose. But this enables the government to have a well regulated militia; for to bear arms implies something more than mere keeping; it implies the learning to handle and use them in a way that makes those who keep them ready for their efficient use; in other words, it implies the right to meet for voluntary discipline in arms, observing in so doing the laws of public order."-- Thomas M. Cooley, General Principles of Constitutional Law, Third Edition [1898]
"The most foolish mistake we could possibly make would be to allow the subject races to possess arms. History shows that all conquerors who have allowed their subject races to carry arms have prepared their own downfall by so doing."-- Adolph Hitler, Hitler's Secret Conversations 403 (Norman Cameron and R.H. Stevens trans., 1961)
In the context of our history and our founder’s writings, we see that the clause regarding the militia fails to limit in any way the rights of the people to keep and bear arms. In this context the following statement is certainly equivalent to the one in question, being the 2nd amendment:
‘Because a well regulated militia is necessary for the security of a free state, and because it both draws from the ranks of ,and its power is held in check by, armed citizens, the right of the people to keep and bear arms shall not be infringed.’
Tuesday, June 24, 2008
DO WE BLAME SPECULATORS?
With the increase in commodity prices, including agricultural and energy futures, many critics have come down hard on speculators. Some are calling for more regulation including increased margin requirements, or requirements for players to actually take delivery of the products.
These critics seem to forget that the role of futures markets is to provide risk management tools to suppliers and producers of commodities. Speculators provide the liquidity to make this possible.
Futures prices, like any other price, have an important social function in transmitting information, providing incentives, and allocating resources. It is in the interest of speculators to search out information related to the relative scarcity ( now and in the future) of commodities. The potential for profit provides the incentive to do so. Further, as ‘speculation’ drives up the price of scarce commodities, it provides incentives for producers to increase supply and for consumers to find substitutes or reduce consumption. As a result we get an optimal allocation of commodities over time, as opposed to catastrophic shortages or surpluses.
The proposed regulations on commodities markets will likely reduce this consumption and production smoothing process, and increase the volatility of commodity prices. Most importantly, the information transmission function of commodity prices would be inhibited. As a result, knowledge about the relative scarcity of commodities may not be as complete or timely making things much worse than we can imagine today.
see also: </">Scapegoating the Speculatorsby Alan Reynolds
These critics seem to forget that the role of futures markets is to provide risk management tools to suppliers and producers of commodities. Speculators provide the liquidity to make this possible.
Futures prices, like any other price, have an important social function in transmitting information, providing incentives, and allocating resources. It is in the interest of speculators to search out information related to the relative scarcity ( now and in the future) of commodities. The potential for profit provides the incentive to do so. Further, as ‘speculation’ drives up the price of scarce commodities, it provides incentives for producers to increase supply and for consumers to find substitutes or reduce consumption. As a result we get an optimal allocation of commodities over time, as opposed to catastrophic shortages or surpluses.
The proposed regulations on commodities markets will likely reduce this consumption and production smoothing process, and increase the volatility of commodity prices. Most importantly, the information transmission function of commodity prices would be inhibited. As a result, knowledge about the relative scarcity of commodities may not be as complete or timely making things much worse than we can imagine today.
see also: </">Scapegoating the Speculatorsby Alan Reynolds
Wednesday, May 28, 2008
OBESITY AND CLIMATE CHANGE
Recently in the news there was a story about environmentalists targeting obese individuals as being major contributors to global warming. When the interviewer basically asked how an obese individual’s carbon footprint fromsitting on the couch all day compared with someone like a skinny Barbie girl that went to work, drove to a smoothie bar and had an organic smoothie, then drove to a climate controlled gym and spent 2 hours utilizing their electric powered equipment before stopping by the local organic market on the way home compared, they quickly changed the subject.
They immediately attacked meat consumption. I’ll admit, it is probably true that someone that eats a healthy well balanced diet probably has a lower carbon footprint than others. However, there is no reason that beef could not be part of a healthy diet, considering that there are 29 cuts of lean beef that have barley more than 1 gram more of saturated fat than a comparable serving of skinless chicken breast. In addition beef delivers many times more iron, zinc and vitamin B12.
It may be true that beef consumption requires more fuel to produce than say rice, but you are getting a lot more nutrition from beef than rice. Further, it does not make sense to focus so narrowly on one aspect of our lives when it comes to energy consumption and GHG’s ( greenhouse gas). We all know how much fossil fuel consumption and GHG production results from driving automobiles, but we don’t stop driving. Instead we focus on improving emissions and efficiency.
In the same way with beef, improvements in genetics, nutrition, and management will ( and have) lead to less pollution, and increased efficiency with regard to how much food we are getting from a given amount of animal units, land, water, and other resources ( especially compared to 'hormone free' and 'organic' meat production).
Despite rhetoric in the media, there is no scientific consensus to support the drastic sort of changes that these people want us to make in our lifestyles to combat climate change. If you read the IGPCC’s 4th Assessment report, all you will find is that there is a ‘consensus’ agreement that humans have contributed to increased temperatures over the last 100 years with about 90% certainty. When it comes to the changes to our environment, violent storms, draught, and loss of coastal areas, the consensus amounts to a coin toss. When economists take the consensus science about climate change into account, they find that the damage from implementing Kyoto style policies on a magnitude similar to what Al Gore or the ‘Stern Report’ advocates would be worse than doing nothing at all.
With congress debating a GHG emissions bill next week, let’s hope our political candidates and representatives are responsible about what they do in this regard.
They immediately attacked meat consumption. I’ll admit, it is probably true that someone that eats a healthy well balanced diet probably has a lower carbon footprint than others. However, there is no reason that beef could not be part of a healthy diet, considering that there are 29 cuts of lean beef that have barley more than 1 gram more of saturated fat than a comparable serving of skinless chicken breast. In addition beef delivers many times more iron, zinc and vitamin B12.
It may be true that beef consumption requires more fuel to produce than say rice, but you are getting a lot more nutrition from beef than rice. Further, it does not make sense to focus so narrowly on one aspect of our lives when it comes to energy consumption and GHG’s ( greenhouse gas). We all know how much fossil fuel consumption and GHG production results from driving automobiles, but we don’t stop driving. Instead we focus on improving emissions and efficiency.
In the same way with beef, improvements in genetics, nutrition, and management will ( and have) lead to less pollution, and increased efficiency with regard to how much food we are getting from a given amount of animal units, land, water, and other resources ( especially compared to 'hormone free' and 'organic' meat production).
Despite rhetoric in the media, there is no scientific consensus to support the drastic sort of changes that these people want us to make in our lifestyles to combat climate change. If you read the IGPCC’s 4th Assessment report, all you will find is that there is a ‘consensus’ agreement that humans have contributed to increased temperatures over the last 100 years with about 90% certainty. When it comes to the changes to our environment, violent storms, draught, and loss of coastal areas, the consensus amounts to a coin toss. When economists take the consensus science about climate change into account, they find that the damage from implementing Kyoto style policies on a magnitude similar to what Al Gore or the ‘Stern Report’ advocates would be worse than doing nothing at all.
With congress debating a GHG emissions bill next week, let’s hope our political candidates and representatives are responsible about what they do in this regard.
Tuesday, May 13, 2008
Markets and Resource Allocation & The Knowledge Problem
The economic problem of society is more than just achieving an optimal or just allocation of resources. It is easy to formulate a ‘positive’ solution mathematically, where P = marginal rate of substitution between any two goods or factors of production, balancing the costs and benefits of some activity. It is easy to state a ‘normative’ solution of what we believe to be a ‘just’ or ‘fair’ distribution of resources.
However, according to Hayek, the information necessary for any solution for allocating resources in society is seldom sufficient for effective government or bureaucratic decision making:
“the knowledge and 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 the separate individuals possess.”
The economic problem of society becomes “ the problem of the utilization of knowledge not given to anyone in its totality” but held by individuals.
Hayek proposes two methods for allocating resources 1) market prices and competition ( decentralized) 2) Planning ( total control by government or socialism)
The best system will be the one that is most effective at “putting at the disposal of a single authority (government) all the knowledge which ought to be used but which is initially dispersed among many different individuals, or in conveying to the individuals (free markets) such additional knowledge as they need in order to enable them to fit their plans in with those of others”
How does Government Obtain its Information
Government obtains much of its decision making information through the gathering of data and statistical analysis. However, this data is aggregated and very static compared to the knowledge held by individuals, or the “knowledge of the particular circumstances of time and place.”
Because individuals are involved in ‘the rapid adaption to changes in the particular circumstances of time and place, and it would seem to follow that the ultimate decisions must be left to people who are familiar with these circumstances, who know directly of the relevant changes and the resources immediately available to meet them.” Only individuals have knowledge of “the relative importance of the particular things with which he is concerned.”
This sort of knowledge by its very nature according to Hayek “cannot enter into statistics and therefore cannot be conveyed to any central authority in statistical form.” There fore government decisions are inherently doomed to be made with poor information and error, measured in terms of costs to individual well being and preferences.
How can markets be used to make the best use of information critical for the use of resources?
Hayek has an answer in that “in a system where the knowledge of the relevant facts is dispersed among many people, prices can act to coordinate the separate actions of individuals.”
Unlike with government, by making use of the price system, individuals do not have to directly possess all of the relevant knowledge in society to make decisions regarding the use of the resources at their disposal. Hayek states that is “because their limited individual fields of vision sufficiently overlap so that through many intermediaries the relevant information is communicated through all” This is due to the fact that everyone faces prices which reflect the relative tradeoffs between all of the possible alternative uses of resources.
Reference: F.A. Hayek. “The Use of Knowledge in Society.” The American Economic Review. Vol 35, No. 4 Sept 1945, p. 519-530.
However, according to Hayek, the information necessary for any solution for allocating resources in society is seldom sufficient for effective government or bureaucratic decision making:
“the knowledge and 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 the separate individuals possess.”
The economic problem of society becomes “ the problem of the utilization of knowledge not given to anyone in its totality” but held by individuals.
Hayek proposes two methods for allocating resources 1) market prices and competition ( decentralized) 2) Planning ( total control by government or socialism)
The best system will be the one that is most effective at “putting at the disposal of a single authority (government) all the knowledge which ought to be used but which is initially dispersed among many different individuals, or in conveying to the individuals (free markets) such additional knowledge as they need in order to enable them to fit their plans in with those of others”
How does Government Obtain its Information
Government obtains much of its decision making information through the gathering of data and statistical analysis. However, this data is aggregated and very static compared to the knowledge held by individuals, or the “knowledge of the particular circumstances of time and place.”
Because individuals are involved in ‘the rapid adaption to changes in the particular circumstances of time and place, and it would seem to follow that the ultimate decisions must be left to people who are familiar with these circumstances, who know directly of the relevant changes and the resources immediately available to meet them.” Only individuals have knowledge of “the relative importance of the particular things with which he is concerned.”
This sort of knowledge by its very nature according to Hayek “cannot enter into statistics and therefore cannot be conveyed to any central authority in statistical form.” There fore government decisions are inherently doomed to be made with poor information and error, measured in terms of costs to individual well being and preferences.
How can markets be used to make the best use of information critical for the use of resources?
Hayek has an answer in that “in a system where the knowledge of the relevant facts is dispersed among many people, prices can act to coordinate the separate actions of individuals.”
Unlike with government, by making use of the price system, individuals do not have to directly possess all of the relevant knowledge in society to make decisions regarding the use of the resources at their disposal. Hayek states that is “because their limited individual fields of vision sufficiently overlap so that through many intermediaries the relevant information is communicated through all” This is due to the fact that everyone faces prices which reflect the relative tradeoffs between all of the possible alternative uses of resources.
Reference: F.A. Hayek. “The Use of Knowledge in Society.” The American Economic Review. Vol 35, No. 4 Sept 1945, p. 519-530.
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