Seeing the Future (of Oil, Wheat, etc.)

Tyler Cowen at Marginal Revolution has an interesting post on Julian Simon, an economist who famously bet Paul Ehrlich that prices of metals would drop. His logic was, the most important resource we have is the human brain--the more brains we have the better everyone (on average) will do and brains can remedy any shortfall in any seemingly scarce resource. His heyday was during the last run-up in prices of oil and grains and other commodities in the 1970's, when he was a contrarian voice who seemed for 25 years to have been more right than wrong. But with today's prices, Tyler asks whether people can believe his thesis, at least enough to short oil, etc.

As you might expect, it gets lots of comments. (Also as you might expect, Simon's outlook is not popular among the Bill McKibben's of the world.) Anyone who is interested in the argument might also look at the study from Humboldt U. (Berlin) which basically argues that Simon was right (at least for food over the 1870-2000 period) but we face a changed environment. (It's nice to get a perspective from outside of the usual parties in the U.S.--we often are blind to our own biases.) An excerpt:

European Union agriculture has long stopped producing homogenous commodities. Rather it has become “boutique agriculture”. Farmers produce a wide range of goods which are characterised by differing production cost and sold for differing prices in the market place. Domestic consumers and those from abroad choose those qualities that best meet their individual preferences and income. It is likely that sustained higher market prices for agricultural products will act to slow down the growth in the demand for organic food. Moreover, the price of organic food relative to that of other food has declined in recent years, making organic food less profitable to produce.

And from the conclusion:

In this study the driving forces of changes in agricultural world market prices and their implications for European Union agriculture have been analysed for the time period 2003/05 -2013/15. The mega-trend of declining world market prices, which is sometimes referred to as the Agricultural Treadmill, has ended. Since the turn of the millennium, world market prices for agricultural goods have been increasing. This trend can be expected to continue for at least the time period analysed here. Not only will prices have a tendency to increase, but also fluctuations of agricultural world market prices are likely to be higher in the future than they have been in the past.

The reason for the positive trend in agricultural world market prices is that global demand growth outstrips the growth in global supply, and this trend will continue in the foreseeable future. Global demand for food will continue to grow at a fairly rapid pace mainly for two reasons. One is the continued growth in world population; the other is the sustained growth in per capita incomes in developing and newly industrialising countries, with a corresponding increase of per capita food consumption.

Green Milk

No, it's not a belated St. Patrick's Day story, but a piece in the NYTimes on new milk containers, touted as more efficient and greener, because there are no milk crates to wash. The 1-gallon milk jugs must be shipped from bottler (jugger?) to grocery store in crates "because the shape of old-fashioned milk jugs prohibits stacking them atop one another. The crates take up a lot of room, they are unwieldy to move, and extra space must be left in delivery trucks to take empty ones back from stores to the dairy." And, in one bottling plant, it takes 100,000 gallons of water to wash the crates.

The article says Wal-mart and Costco are pushing it, but consumers have problems learning how to pour (if I understand, the new container is basically a box). But if I can adapt to coffee cans that are cubical plastic jobbies, consumers for the sake of the earth can learn how to pour milk from these. After all, I can remember lots of different milk containers, lots of improvements.

We used to sell (raw) milk to a couple of neighbors, who'd bring a stainless steel container, which we would fill. Other neighbors had milk delivered, in the glass quart bottles, which made interesting shapes when it was zero and the milk wasn't taken in promptly. That milk was pasteurized and homogenized and took a while for me to get used to the taste. (But my mother had TB, so you won't find me a strong defender of raw milk.) Of course, the glass bottles had a deposit and were returnable, just as the pop (soft drink) bottles were back then. When I went to college, the cafeteria I worked in dispensed milk from a machine, the milk arriving in a plastic bag within a cardboard box. The boxes were good for packing books in at the end of the term when it was time to head back to the farm. The Army may have had a similar system, but fortunately I didn't do enough KP to remember. (Youngsters ask: "KP? What's KP") Then in civilian life and married life we bought milk in the waxed cardboard cartons, then the plastic gallon jugs. (I don't remember when we switched--funny how we don't notice the small changes in our lives.)

But, as I say, there's always a tradeoff. At each step along the way the new system may be more efficient and maybe more safe, but it also requires dairy companies to invest in new equipment (rather like the old days when farmers had to get milk coolers to put their milk cans in--the next step was requiring bulk tanks). So it's also another straw on the camel's back for the dairy company that's just getting by, day-to-day, and which can't afford the new equipment to compete. People, at least those who drink milk, gain; those who work at the companies who can't compete, don't.

Bureaucracy and Farm Bill Implementation

Whenever there's a new program enacted, the question becomes which bureaucracy will implement it. The Sustainable Agriculture Coalition reports on the infighting in their weekly newsletter:

Farm Bill Implementation News: Two letters have been sent this week from Capitol Hill to USDA to clarify beginning farmer provisions in the new farm bill. On Thursday, House Chairman Peterson (D-MN) and Senate Chairman Harkin (D-IA) wrote to Secretary Schafer to provide a clear direction that the farm bill designates the Beginning Farmer and Rancher Development Program to be administered by the Cooperative State Research Education and Extension Service (soon to be renamed the National Institute for Food and Agriculture). The letter came in response to surprising news from the Department that the program might be assigned to either Rural Development or to the new Office of Outreach and Advocacy. The clear intent of Congress, supported by SAC, was for this program to go to CSREES.

On Friday, a letter from Senator Feingold (D-WI) and Chairman Harkin was sent to the Secretary to outline their intent, as the Senate champions for the new Office of Outreach and Advocacy and its Small Farms and Beginning Farmers and Ranchers sub-unit, regarding the placement and mission of the new office. SAC has been working closely with the Rural Coalition on the implementation of this new office, which also includes a sub-unit for Socially Disadvantaged Farmers and Ranchers. The newly-positioned and enhanced office will be at the executive level of the Department, reporting directly to the Secretary, not through any department mission area and Under Secretary.

The program sponsors want it placed as high in the bureaucracy as possible and in as sympathetic bureaucracy as possible. If the sponsors succeed, the bureaucrats naturally feel gratitude to the sponsors. It's a very different process than a public adminisration-type analysis of the logic and appropriateness of the bureaucratic setup.

Pigford and Discrimination

The case of blacks who tried to maintain their family farms and failed, originally labeled as "Pigford", was revived in the new farm bill.

The NY Times has an update today--actually it's an AP story carried in the Times. It makes these points:

• it summarizes the case--73,000 claimed to have missed the filing period under the original Pigford agreement.
• the new provision in the farm bill passed only because the cost estimate was only $100,000. (The article cites possible costs of $1.5 to 2.4 billion.)
• 800 have already filed suit under the new provision.
• Rep. Davis seems to concede he deliberately low-balled the cost estimate.
  

In my own view, I think Rep. Davis is wrong--the costs will never get that high because the former black farmers who are applying have been sold a pig in a poke. It's another case of 50 acres and a mule. But if he admits the cost will be low, he becomes the bad guy who disillusions the potential claimants. If he pretends the cost will be high, the court system and USDA retain their roles as the bad guys.

Life Is Fragile

Remember our first view of the earth from the moon? See NASA's site, visible earth. The "blue marble" image stimulated the environmental movement, emphasizing the fragility of life on earth.

To compare incomparables, I had a reminder yesterday that life is fragile--screwing up my back while getting out of the car. :-) Now I'm gimping around the house, my routine disrupted, fussing at the cats, dependent on my better half. (I hate being dependent.) The good news is, behind the scenes in my lower back the damage is being repaired. Thank you, body. The bad news is, my body gets older and slower at repairs every day.

How Legislation Is (Not) Implemented

From a press conference at USDA, this exchange:

REPORTER: Thank you. Just quickly, I wanted to ask about the Lacy Act Amendments. Is USDA implementing the expansion of the Lacy Act for illegally taken plants? Or is that strictly a CBP function?

SEC. SCHAFER: Can you translate that into real language?

REPORTER: Sure. The expansion of the Lacy Act that essentially requires documentation to avoid any illegally logged tropical lumber, among other plants.

SEC. SCHAFER: And what was the other? You used an acronym.

REPORTER: Oh, the Customs and Border Protection. I wasn't sure given that APHIS inspectors had gone over there whether it's USDA that has to implement that part of the farm bill.

SEC. SCHAFER: I don't even know. Can't tell you. And you're drawing blanks from our expert team here, so you've stumped the panel.

What this mean is USDA is not likely to implement the provision. Customs may, assuming the reporter is poorly informed and it clearly fits within Customs jurisdiction. But if there's a genuine question, neither bureaucracy has an incentive to pick up the ball. If the Congressional sponsor doesn't push it, it may fall through the cracks.

Good Bureaucracy in the DC Government

I don't know who might be responsible, but I like the effort, as described in today's Post, to have one ID card that works for all functions of DC government. Apparently the ACLU doesn't have big problems with it.

Online ID and ID Cards

NYTimes has an article on an effort to simplify passwords online:

"The idea is to bring the concept of an identity card, like a driver’s license, to the online world. Rather than logging on to sites with user IDs and passwords, people will gain access to sites using a secure digital identity that is overseen by a third party. The user controls the information in a secure place and transmits only the data that is necessary to access a Web site."

Having recently scorned Medicare's refusal to take the SSN off their ID card, I think the government should join this effort.

Silos and the Lament of a Yellow-Dog Democrat

I'm a yellow-dog Democrat, at least since the Dems in Virginia got themselves half-way together, so I have no way of knowing the situation on the Republican side. But the situation on my side stinks.

What am I talking about? The decentralized, unbusinesslike way in which we Democrats work our campaign finances. I think Tom McAuliffe helped a little bit, but it's still bad.

Specifically, everyone and his sister solicits me because I have a long record of being a sucker, er--responding to solicitations. There's the DNC (the national committee), the DSCC (Senate campaign committee), the House committee, the individual campaigns (for some reason Clinton had my email address until she dropped her bid, but Obama didn't, but now he does), and then there's the Virginia Democrats and my various representatives and Senators.

I mentioned McAuliffe--once I used to get brochures and solicitations from the DNC every month or two. Then they made me an offer I couldn't resist--they'd drop the mail if I'd give them protection money, er--contribute on a regular basis. But, and here's my complaint, the DNC and the other Democratic units don't talk to each other. It'd be fine if they'd piggyback on the DNC's infrastructure, so they could ask me to boost my contribution and spread my money among the various units. But that's not the way the U.S. works--we believe in silos, everyone doing his or her own thing.

Delays in Program Implementation

Brownfield Network reports implementation problems for the ACRE program and permanent disaster:

"The data that is necessary to implement ACRE simply cannot be put upon the current computer system that is housed in the Farm Service Agency and there will need to be changes in that system before we can implement ACRE fully," Conner said.

Conner also emphasized the Bush administration is "working closely" with Congress to get "additional implementation resources" for the FSA. But Senate Ag Committee Chairman Tom Harkin disputed that statement Thursday. And Harkin told Brownfield he has little sympathy for USDA’s computer problems. According to Harkin, the Bush administration has known about the FSA computer problems for years, has never bothered to ask Congress for funding to fix the problem and still hasn’t done so.

"If they want money they should come up here and ask us for an emergency appropriation," Harkin said. "If they do that, we'll honor that. But where are they?"

ACRE isn't the only new farm bill program to face lengthy implementation delays. Schafer explained that permanent ag disaster aid program payments to producers devastated by flooding may not come for more than a year, mainly due to the fact Congress did not authorize USDA to speed-up the rulemaking process for the program.

I'm in no position to comment on either issue, though I did previously write about FSA/USDA computer problems. But I would note that the farm programs were operated without computers for decades, so what we're seeing is the symbiosis between bureaucratic technique and legislation--the more capable the bureaucrats become (using computers, etc.) the more complex the law.