Farmers, Free Market, and the Future

This Agweb article tied to the American Farm Bureau Federation's annual meeting shows the complexities of farming. Corn farmers in particular are looking to a bright future based on ethanol production expanding. But livestock producers, particularly pork, are facing red ink. Why--because hogs eat corn. The "iron triangle" is at work, as Keith Collins, USDA's chief economist, talks to the meeting and representatives of the universities and other farm organizations are heard from.

Farm groups are concerned with international trade, the Doha round of trade negotiations, immigration, the new farm bill, air quality, and animal protection (against the last two :-) ).

This year has seen a run-up in corn prices. Indeed, I saw one summary that said that corn was the "commodity" with the largest percent increase in 2006. Don't know what price measure was used. Farmers should be used to this--there was a big price increase in 1996, I believe. And then it went to hell again.

Meanwhile, this morning's news has John Deere's stock prices, up 40+% last year, looking good for the future (again based on rosy prices for corn, etc.). But oil prices are falling again, reaching new lows. That means less impetus for ethanol, lower prices for corn, higher profits for pork, and different pressures on politicians doing the new farm bill.

Being a cynic, I think I'll plan to sell John Deere short.

What Price Security?

Apparently a PricewaterhouseCoopers security audit of my old agency found a major vulnerability in its distributed computer system. They have IBM AD-400 minicomputers in about 2300 sites with local administration. I've seen a notice where they're tightening up on procedures for granting access to the system. I've also seen a request for information (which I may discuss in a separate post) considering the possible moving of the computers from county offices to more centralized locations.

I can understand what happened. The accounting firm probably sent out some people who found that anyone could break into a county office (mostly located in small towns of 2-10,000), break into the system and make off with personal data, or hack into the overall system. It could happen. And, as a public agency, you can't really say that the chances are very, very small of this happening, there are things we can do to reduce the risk and mitigate the damage from any such break-in, so we should devote our attention to those areas. Remember that people have lost their jobs over the handling/mishandling of data on laptop computers even though no damage resulted. And know that Congress would pillory anyone who appeared before them after a break-in.

It's the game we bureaucrats have to play--hire an outside firm and then go through hoops just to cover our ass.

What Do Bureaucrats Do?

Rob Carrigan, who's involved with newpapers and technology, believes bureaucrats are an enemy of "process change", as he says:

"The Bureaucrat - This character not only lives “by” the rules, but “for” the rules. “We must follow this rule no matter what,” according to this enemy of progress. In process change, many of the old rules should be reconsidered and some probably be thrown out the window. The bureaucrat, however, will fight tooth and nail to preserve the way things are because “it is the rule."

Bureaucrats occur at different levels in an organization. The "operatives", to use James Q. Wilson's term for them (the clerk at the DMV window), wrap themselves in the "rules" as protection against the demands of their customers. They don't have the authority to change the rules. To get them to change, you need to offer a process that is better in their eyes (hopefully in the eyes of their customers) and training that gives them confidence in the new rules and new process.

At the upper levels you find the bureaucrats who do have the power to change the rules. But to change you have to make a rational case for the superiority of the new process and overcome the natural conservatism of those who are comfortable with the current process and who, in many cases, have invested sweat and tears in developing and perfecting the current process. And you need to recognize that spin doctors in the past have pushed various organizational nostrums and improvements on the incumbent bureaucrats with benefits that have evaporated into thin air. Finally, and the straw breaker in my case, you need to recognize that process improvements that increase efficiency may and should cost jobs in the organization.

The Wisdom of A.J.

Another Post article in the "Black Men" series Sunday, this one on A.J.--a killer and drug dealer. Two things struck me:

One afternoon after a group counseling session, he and another seasoned offender, Kenneth Williams, got to talking. They had been eyeing each other and finally discovered that they had attended the District's Garnet-Patterson Middle School together. Reminiscing with Williams seemed to unlock some happiness stored inside of James. A smile replaced his scowl. "You remember Miss Brown? Miss Mack?" James proudly mentioned he had been in the gifted-and-talented program as a seventh-grader, the last shining moment of his schooling.

That was the only expression in the story of affection--teachers do make a difference, if only in memory and in failing to make all the difference.

The other thing that struck me was his observation--in the context of the justice system, that his allegiances were relative. If he was in prison away from DC, then his homeboys were everyone from DC and that was his identification. If he were in DC jail, then his homeboys were from the neighborhood. But if he were in the neighborhood, he'd be fighting and killing his neighbors.

Cost of Living Index

Cost of one hour of attorney's time in Syracuse, NY = $150; in Falls Church, VA = $300.

Gerald Ford's Legacy

Two contrasting posts on his legacy: one positive--his support for rescuing Vietnamese refugees over the opposition/disdain of some Democrats in this Post op-ed; the other negative, Tim Noah in Slate on his pardon of Nixon as either or both premature (should have waited for the indictment to specify what he was being pardoned for) or wrong (set a bad precedent, as when George H.W. pardoned Caspar Weinberger (who had been indicted).

Individual Values Versus the System

This Washington Post article is an interesting description of now-retired black men who bowl. (It's part of their continuing series on black men.) They're part of a generation that moved North and found good government jobs (post office/Metro), raised families, moved to the suburbs, put kids through college. Several of the generation (mostly but not entirely female) worked with me at one time or another. One of the things they debate is whether the younger generation has gone to hell, whether the kids blame the system when they should blame themselves (think Bill Cosby).

Over at Greg Mankiw's blog there's a big discussion, sparked by Tyler Cowen's NYTimes column from yesterday, on whether poverty is the fault of the individual or the system. The discussion seems to split two ways--one side says the poor are unwise and don't save, the other says it's the system.

What's interesting is both groups tend to take extreme positions. It's one or the other, but not both.

Cowen and Ownership Society

Tyler Cowen of Marginal Revolution has his column in the Times today, discussing universal 401K's. (As pushed by Gene Sparling of American Progress.)

The core idea is simple. The federal government creates tax-free retirement accounts for lower-income Americans, supplementing private accounts where they already exist, and matching personal contributions to those accounts. The amount of the match would depend on the income of the family and how much they save.

He seems sympathetic, but points out the likelihood of creating two classes of poor--the one that uses the savings in the 401K wisely, the other that gets sucked into misusing the money. I think that's true. Even for the EITC, which both liberals and conservatives agree is a good measure, there is a problem. Or rather two problems: one of fraud--people claiming the credit who aren't entitled; one of nonuse--people who qualify not applying.

This leads to the age-old question: is a liberal more concerned for equality of opportunity or equality of result. Typical American liberals have mostly said the first; many radicals, either of the Marxian or Christian variety, have said the second.

From Cartel to ?, the History of AAA

In previous posts I referred to the idea that the farm programs started as a cartel. To expand: a good part of the "first New Deal", at least as Arthur Schlesinger, Jr. diagnosed the economic problems as a surplus of production due to excessive competition. By permitting and encouraging different industries and management and labor to cooperate and scientifically plan their work, production could be brought back into balance with demand. So the National Recovery Administration set up codes industry by industry and boards with labor on them. Similar thinking influenced the agricultural programs. Different commodities already had had different groups working. Whereas the movement of the early 20th century was the development of the extension service and scientific agriculture, followed by the organization of the Farm Bureau (I was raised in the home of the first Farm Bureau, Broome County, NY) and then the development of farmer cooperatives in the 1920's. Some co-ops were for production, some for purchasing. For example dairy farmers got together in co-operatives to handle the marketing of milk, while such co-ops as the GLF (Grange-League-Federation) bought feed and supplies for resale to farmers.

The problem with farmer production co-ops was that they were subject to "free riders". If the cotton growers tried to limit production to raise prices, any grower who stayed outside the arrangement could grow all he wanted and benefit from any increase in prices. So a lot of the early New Deal farm legislation was putting the power of the federal government behind such arrangements--hence the agricultural marketing orders for fruits and vegetables and the marketing quota programs for tobacco, peanuts, cotton. The economists call such arrangements "cartels". (They don't call the Federal Reserve System a cartel, but that's what it is--it fixes the supply and price of the commodity known as money.)

IMO over the years the focus for the major field crops and now dairy has moved away from adjusting production to demand and setting prices and towards direct subsidies.

The Iron Triangle (Updated)

Morgan, Cohen, and Gaul (seems as if that's a different sequence than yesterday, it's got the rhythm of FDR's "Martin, Baron, and Fish") have another article on farm programs . This one outlines the various interests that come together in creating a farm bill, with particular attention to Rep. Larry Combest (R) (Texas) and the 2002 Farm Bill. They even searched out my old boss, Bill Penn, for a comment on the changing of the rules for "actively engaged" determination in 1987. (Bill and his wife-to-be wanted to require half a year's worth of work for management; Rep. Huckaby (D) (LA) said no, managers could do it in their spare time.) Following personnel is one way to follow the interlinking of interests, what the political scientists used to call the "iron triangle" (relationships between the agency, Congress, lobbyists and clientele).

For example, another old boss of mine was an assistant to Huckaby, or maybe House Ag--Parks Shackelford. He moved from Congress to USDA in 1993. This is a good piece in Gov. Executive from 1998 on the overall background, including the problems of combining agencies. Googling his name reveals that he now has twin daughters and a son on the way. His father-in-law is chancellor of Arkansas State U, and his wife is general counsel to the American Farm Bureau. He himself is working for a Florida sugar company after serving as President of American Textile Manufacturers Institute.

It's way too difficult to Google "William Penn", for obvious reasons. He first came to ASCS as a deputy director in the area office, indicating good Republican connections (he might have been a State executive director in Michigan before), showed his talents and moved up to Asst. Deputy Administrator. Moved to the field of law and Arents Fox around the early 90's, focusing on payment limitation, then back to Michigan for a farmers organization.

The same sort of thing goes on with all administrations and both parties: the ambitious come to Washington, move among Congress, the executive, lobbyists and legal firms until they become satisfied or reach their level of incompetence. Then they're shunted to "turkey farms" to live out their days.

The Post article closes with discussion of prospects for the 2007 Farm Bill.