What Happens After a Farm Program Ends? II

I blogged the other day about what might happen if farm programs were ended. Today's NYTimes has an article on what happened in New Zealand to the dairy farmers when their subsidies were ended.

It's mostly positive, though between the lines you see that there was consolidation--more large farms, fewer small (opponents of US farm programs say that the program helps large farmers, but the free market may be more helpful) and there would have been a lot of bankruptcies when the program ended if the banks hadn't given relief.

Because New Zealand dairy is mostly export, it's hard to do a real comparison. Nor does the article discuss any fluctuations in the 20+ years since the program was ended. My guess is that NZ may, in part, be "free-riding" on the dairy programs in the rest of the world--there would be more volatility in price if the world dairy market was entirely free, and volatility in price leads to humans hurting.

Aerial Photos from the Past

I'm guessing, but this story from the Post mentions aerial photos from 1937 (link to comparison shots) as part of a national agricultural surveying effort. Whether that related to the Agricultural Adjustment Administration I don't know, but in general this reminds us that data created by one bureaucracy can become useful in unexpected ways.

The contrast between the mostly farms of 1937 and the development now (this is well inside the Beltway) is striking.

Two Views on Terrorism

Mitt Romney wants to redo the DHS to focus on intelligence and attack prevention, rather than recovery from attacks.

This is from Princeton's blurb for a new book:

Many popular ideas about terrorists and why they seek to harm us are fueled by falsehoods and misinformation. Leading politicians and scholars have argued that poverty and lack of education breed terrorism, despite the wealth of evidence showing that most terrorists come from middle-class, and often college-educated, backgrounds. In What Makes a Terrorist, Alan Krueger argues that if we are to correctly assess the root causes of terrorism and successfully address the threat, we must think more like economists do.

Krueger is an influential economist who has applied rigorous statistical analysis to a range of tough issues, from the minimum wage and education to the occurrence of hate crimes. In this book, he explains why our tactics in the fight against terrorism must be based on more than anecdote and speculation. Krueger closely examines the factors that motivate individuals to participate in terrorism, drawing inferences from terrorists' own backgrounds and the economic, social, and political conditions in the societies from which they come. He describes which countries are the most likely breeding grounds for terrorists, and which ones are most likely to be their targets. Krueger addresses the economic and psychological consequences of terrorism. He puts the terrorist threat squarely into perspective, revealing how our nation's sizeable economy is diverse and resilient enough to withstand the comparatively limited effects of most terrorist strikes. And he calls on the media to be more responsible in reporting on terrorism.

The egghead seems to me to have much the better argument. The US may be attacked by terrorists once for every 10 attacks on EU nations and 1 in 10,000 attacks in Iraq. While some attacks may be scary, and some damaging, we have much more to fear from mother nature. Our general policy should be to do intelligence and defense reasonably well, but respond to disaster very well.

Changing Times

Things I could not have imagined at some point in my past (relevant time specified in parens):

• Chinese plagiarizing and imitating Harry Potter (1999)
• Afghans watching TV (2003)
• Israel supporting Fatah (1990)
  

Red State/Blue State

A new version of the red state/blue state map is now out--much more realistic in that it ignores state boundaries, so the color is proportional to the number of votes. Via Brad Delong

Another Eating Local Venture

This article describes a NC venture. Because the article is limited in focus, it misses some bits of information. It doesn't say whether the nonprofit organization is paying market rental to the parents. (Presumably the parents are still getting tobacco buyout payments.) It repeats unchallenged this statement:

“It’s one of the big problems for farmers that they don’t have health insurance and retirement plans,” Alice Brooke Wilson said. “That’s why farms get sold.

In fact, farmers are covered by Social Security and Medicare, assuming they've been conscientious about paying in.

The five people are not taking a salary. Actually four people, because one has left during the 3 years it's been in operation.

All in all, the mixture of idealism and naivete means to me that this is more likely a niche than a great new frontier. Of course, the nice thing about a free society is that you can have lots of such efforts, a handful of which may hit upon the right formula.

Eating Local

"Eating local", meaning buying food from local farmers, often through community supported agriculture (see USDA link) is getting trendy. (Of course, that's a way to put it down.) The idea is that the farmer profits by getting more of the food dollar, the environment gains because there's less energy used to move the food around the world, nutrition gains because there's less nutrient loss in processing and the consumer gains because the food tastes better.

I've no real quarrel with any of this, but I suspect it works better in the restaurant environment, as this article on the gains being made in the Washington suburgs shows. Why? Because the basic tradeoff (and there's always tradeoffs, as Robert Heinlein once wrote--there's no free lunch) is time for the benefits. It takes time to travel to the farm or farmer market, select the food, and come home and cook. It takes time to gain the expertise to make good meals from what's seasonally available. So it makes sense for the affluent to eat local at their restaurant, and to choose among restaurants based on that criteria.

FDR Wasn't Always a Liberal

Bureaucracy

Bureaucrats versus Founding Fathers--Classic Quote

I highly recommend "Sons of Providence: The Brown Brothers, the Slave Trade, and the American Revolution", by Charles Rappleye. The Browns of Providence RI were a prominent family of merchants--John traded in slaves and was a Congressman. Moses became a Quaker and an abolitionist and wrote a law regulating the slave trade which his brother was convicted of violating.

But from the bureaucratic standpoint, this quote, relating to the US Navy buying a ship from John Brown, shows the constraints that bureaucrats are always subject to:

pp313-4 "In ordering the purchase, Navy Secretary Benjamin Stoddert, a merchant in civilian life, agreed to John's price, but warned his agent, "Mr. Brown, who seems to be a complete master of the art of bargain-making, will probably ask more. You must do the best you can with him, and let the public be screwed as little as possible."

What Happens When A Farm Program Ends

The report is that Virginia tobacco acreage has increased a bit, after falling after the end of the program. Of course, this means nothing. But just a few Sunday afternoon guesses at what would happen if farm programs were ended:

• land values would fall very drastically
• retired farmers and widows would have to reduce their standard of living
• farms would consolidate, as those farmers with the capital take advantage of the lower land values to rent/buy more land
• there would be some shifts in who produced what. But I'd guess that the pursuit of flexibility since 1996 has lessened the amount of shifting. Some land would go out of cotton and rice to other crops (perhaps marijuana?--I'm only following in the footsteps of those economists who focus on economic rationality)
• if ag land values fall, then there might be more suburban sprawl, or maybe just lower housing prices
• there'd be more volatility in farming, and perhaps more interest in mechanisms to reduce volatility (i.e., vertical integration, contract farming)

Notably, I'm skeptical of Oxfam and others who argue that ending the programs would cause prices to rise, at least, not in the sense of rising and staying on a new plateau. I'd guess the increased volatility would mean temporary price increases, and then decreases.

All of this is wasted electrons, because the farm program isn't going to end any time soon.