- if the Republicans accede to the Democratic demand for tax increases, that is not a permanent change--it's something which will be changed down the line. Look at tax rates after the Reagan/Rostenkowski tax deal in 1986--they've gone up and down as it seemed appropriate and according to the power of the parties.
- if the Democrats accede to the Republican demand for changes in entitlement programs, those are permanent changes. Look at the Greenspan/Reagan Social Security "fixes" in 1983--the change in the age for full eligibility for Social Security was changed to 67. No one expects that change to be changed--it's a ratchet effect.
Tuesday, November 22, 2011
Compromise and the Ratchet
One aspect of the discussion over the deficit and possible compromise is the ratchet effect:
Sunday, November 20, 2011
The Profitability of Organics
This report (Iowa State) at the extension site says organic field crops are as productive as conventional.
I assume doing organic requires a different set of knowledges and perhaps skills, creating an entry hurdle. A farmer who is beginning farming and who wants to begin as an organic farmer faces a major challenge. An established farmer who want to switch to organic faces a major transition, which few people like to do when they're established.
As I've written before, I think the biggest problem for organic farmers is they produce crops for which the market is small. Note these rotations:
Organic corn-soybean-oat/alfalfa (3 year)
Organic corn-soybean-oat/alfalfa-alfalfa (4 year)
Organic soybean-wheat/red clover (2 year)
A farmer who converts from corn/soybeans now needs to find a market for oats, alfalfa and clover. In the old days the horses would eat those, but not any more, except for the Amish.
Think about the process of marketing these organic outputs. The transportation costs are going to be the same regardless of how the crop was raised, but because the markets are smaller on average the crop is going to have to travel a longer distance. So the costs facing a possible organic chicken farm will mount up.
Looking at the brochure, there's also the question of inputs. "Organic corn and soybean plots receive an average of two rotary-hoeings and two row cultivations per season for weed management." and "The organic plots receive local compost made from a mixture of corn stover and manure" Now the cost accounting would cover the costs, but on an operational farm four trips over the land is going to require more labor, which might be a limiting factor. There's also the question of where the manure, and maybe the corn stover, comes from. Once again, if we go back to the sort of farming done pre-WWI or on Amish farms, everything works together; the crop rotations include feed for the livestock; the livestock produce manure for the land, etc. But the challenges of integrating organic operations on a large scale with today's patterns of marketing and consumption are great.
The LTAR [Long-Term Agroecological Research Experiment] experiment shows that organic crops can remain competitive with conventional crops even during the three-year transition. Averaged over 13 years, yields of organic corn, soybean and oats have been equivalent to or slightly greater than their conventional counterparts. Likewise, a 12-year average for alfalfa and an 8-year average for winter wheat also show no significant difference between organic yields and the Adair County average.Because of higher returns for organic grains, the study showed a $200 per acre premium over conventional. Given these results, I would think there'd be a lot of acreage being converted from conventional to organic; that's what economics says should happen, isn't it?. On the other hand:
I assume doing organic requires a different set of knowledges and perhaps skills, creating an entry hurdle. A farmer who is beginning farming and who wants to begin as an organic farmer faces a major challenge. An established farmer who want to switch to organic faces a major transition, which few people like to do when they're established.
As I've written before, I think the biggest problem for organic farmers is they produce crops for which the market is small. Note these rotations:
Organic corn-soybean-oat/alfalfa (3 year)
Organic corn-soybean-oat/alfalfa-alfalfa (4 year)
Organic soybean-wheat/red clover (2 year)
A farmer who converts from corn/soybeans now needs to find a market for oats, alfalfa and clover. In the old days the horses would eat those, but not any more, except for the Amish.
Think about the process of marketing these organic outputs. The transportation costs are going to be the same regardless of how the crop was raised, but because the markets are smaller on average the crop is going to have to travel a longer distance. So the costs facing a possible organic chicken farm will mount up.
Looking at the brochure, there's also the question of inputs. "Organic corn and soybean plots receive an average of two rotary-hoeings and two row cultivations per season for weed management." and "The organic plots receive local compost made from a mixture of corn stover and manure" Now the cost accounting would cover the costs, but on an operational farm four trips over the land is going to require more labor, which might be a limiting factor. There's also the question of where the manure, and maybe the corn stover, comes from. Once again, if we go back to the sort of farming done pre-WWI or on Amish farms, everything works together; the crop rotations include feed for the livestock; the livestock produce manure for the land, etc. But the challenges of integrating organic operations on a large scale with today's patterns of marketing and consumption are great.
Saturday, November 19, 2011
Congress and MIDAS
From the conference report on the appropriations bill:
The conferees provide that not less than $66,685,000 shall be for Modernize and Innovate the Delivery of Agricultural Systems. The conferees strongly support the implementation of ModernizeOctober 2012 seems a bit late to me, but then it's easy to carp from the sidelines.
and Innovate the Delivery of Agricultural Systems (MIDAS), and encourage the agency to ensure that MIDAS’s initial operating capability will be released by October 2012. The conference agreement provides $13,000,000 for the Common Computing Environment.
David Brooks of the Short Memory
From the transcript of Friday's Shields/Brooks discussion on the Newshour, in regards to the SuperCommittee:
DAVID BROOKS: Yes. I mean, I'm hearing the exact same thing. [failure]Mr. Brooks appears to have forgotten the budget was balanced for FY 2001.
I think the tragedy of it is, if it was ever going to work, it was going to work under these circumstances. The rules were rigged to make a deal as possible as -- as possible as possible, which is to say there was going to be a clean vote on the House. They were going to meet in private. They had this sword of Damocles hanging over them. And they still couldn't reach a deal.
JUDY WOODRUFF: And still didn't...
DAVID BROOKS: And still -- and so it's a history of really 10 or 15 years of potential moments where we could have -- somebody could have made a deal with doing some spending cuts, some tax increases, jam it all together in whatever form you want to do.[emphasis added] And every think tank has their own version.
Organic Versus Pasture-Raised
Grist has an interesting article from a small poultry outfit on the trade-offs between raising organic poultry/eggs and raising free range poultry. It triggered some nostalgia. One factor the author doesn't mention which we faced in the 1950's and he doesn't face today is big variation in prices. In the 1950's the poultry industry was still in the process of consolidation and vertical integration, operating under the influence of the forces of specialization and economies of scale (see preceding post). That meant egg prices could go from $.30 a dozen to $.70 a dozen in the space of a year or 18 months (figures based on memory).
Today, after all the "sturm und drang" of the "creative destruction", something beloved of economists and hated by those who are destroyed, I'm assuming prices of eggs and chicken are much less variable. That difference in variability is probably one reason we found it necessary to have both poultry and dairy, while the author can focus only on poultry.
Today, after all the "sturm und drang" of the "creative destruction", something beloved of economists and hated by those who are destroyed, I'm assuming prices of eggs and chicken are much less variable. That difference in variability is probably one reason we found it necessary to have both poultry and dairy, while the author can focus only on poultry.
Local Food, Economics, and Evolution
Freakonomics has a post with this theme:
Makes sense to me, though it's quite possible over the long long term that arguments from evolution will trump the arguments from economies: remember the dinosaurs.
But implicit in the argument that local farming is better for the environment than industrial agriculture is an assumption that a “relocalized” food system can be just as efficient as today’s modern farming. That assumption is simply wrong. Today’s high crop yields and low costs reflect gains from specialization and trade, as well as scale and scope economies that would be forsaken under the food system that locavores endorse.Part of the argument is "comparative advantage" and specialization: Iowa gets higher corn yields than Mississippi, Idaho gets higher potato yields than Florida, etc. Part of the argument is "economies of scale".
Makes sense to me, though it's quite possible over the long long term that arguments from evolution will trump the arguments from economies: remember the dinosaurs.
Friday, November 18, 2011
Blue State, Not So Blue Air
Treehugger has a list of the 20 dirtiest cities (dirtiest air, that is). When you look at it, note that seven of the worst 10 cities are in California. Except for Houston, Phoenix, and Salt Lake City, the other cities are mostly in blue states. This might be a clue for the reason why conservatives and liberals talk past each other on environmental issues: they look out the window and they see a different reality.
The Poor Goats
Buried in this Politico piece on the passage of the ag (plus others) appropriations bill is a sentence: "Mohair subsidies would be ended." First VP Gore goes after them in the 1990's, and now the program is ended again. I wonder if there's any record for the number of times a program has been ended, and then revived?
Powerpoint: Gee We Knew That in 1991
Megan McArdle rants about the misuse of Powerpoint, including reading the slides and having the font too small to read. My reaction: My boss, SP, and employees knew better than that 20 years ago.
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