So far behaving better than most the europeans, but that is not a high bar.
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But in fact, mounting evidence suggests that beer in particular, and the beer industry that surrounds it, may be as good for growth as excess sobriety. In some of the world's toughest investment climates, beer companies today are building factories, creating jobs, and providing vital public services, all in the pursuit of new customers for a pint. It's the brewery as economic stimulus: a formula even a frat boy could love.Of course, one larger question is whether this effect would be more beneficial without beer marketing's essentially mobster-modeled wholesale monopolies for the giant brewers.
In a time of unprecedented global prosperity, there are an ever-growing number of beer guzzlers worldwide. Liesbeth Colen and Johan Swinnen of the University of Leuven report that beer consumption in China in 1980 was minimal. By 2005, however, the country consumed more than 40 billion liters per year. In 1961, Brazilians drank 630 million liters of beer; in 2007 that number was 7.5 billion liters.
And it isn't just those in booming economies: Even the poorest of the poor will spend money on alcohol. Abhijit Banerjee and Esther Duflo of MIT have shown that people living on a dollar a day or less can spend 6 cents or more of that on alcohol and tobacco. Add those pennies up and you get a potential market worth billions of dollars a year. Robust demand in even the poorest places is one reason that breweries invest where other industries fear to tread. In just the last few months, Heineken won a bid for two state-owned breweries in Ethiopia for $163 million; Rwanda's stock exchange recorded its first-ever initial public offering that involved a local brewery; and SABMiller dropped an additional $15 million on top of an initial $37 million investment in its brewery operation in Juba, the main city in the aspiring breakaway country of Southern Sudan.
These investments aren't just good for Big Beer. In Juba, SABMiller's brewery will provide tax revenue, lease payments, more than 200 local jobs, and increased demand for local agricultural produce. In more stable markets, breweries can be a considerable economic force. In 2005, East African Breweries was the first company in Kenya to reach $1 billion in market capitalization, and the company paid about $44 million in corporate income tax last year. [More]
Wisconsin’s craft brewers, who were not consulted while the measure was being framed, account for only about 5% of sales, but their share is increasing. “Everything in this bill is designed to make it harder for small craft brewers to grow,” complained Deb Carey, a co-owner of New Glarus Brewing. “It is a slimy piece of legislation.”It is also interesting to note that WI governor Scott Walker is framing his image as a low-government, free enterprise champion. Unfortunately, like his exempting of supportive unions from his public-union busting, it would appear that political stance is subject to financial persuasion.
“We are losing assets and we are losing control over our products,” Carey added. “This debate boils down to the fact that the wholesalers do not want a drop of beer going to market in Wisconsin without them making their 30 percent profit from it. That’s it.”
As explained by Think Progress, “The provision will make it much more difficult for the Wisconsin’s burgeoning craft breweries to operate and expand their business by barring them from selling directly to restaurants and liquor stores, and preventing them from selling their own product onsite. The new provision treats craft brewers — the 60 of whom make up just 5 percent of the beer market in Wisconsin — like corporate mega-brewers, forcing them to use a wholesale distributor to market their product. Under the provision, it would be illegal, for instance, for a small brewer located near a restaurant to walk next door to deliver a case of beer. They’ll have to hire a middle man to do it instead. [More]
The price-cost breakdown of mass produced beer in 1996:
(Consumer Reports, 1996) Retail and distributor markup 36.4% Taxes and Shipping 17.2% Packaging 16.5% Labor and Production 11.7% Advertising and Management 8.2% Brewer Profit 6% Ingredients 4% Cost breakdown for Mass-produced six-pack (in 1996): Ingredients .16 Labor and production .47 Packaging .66 Advertising and Management .33 Brewer profit .24 Retail and distributor markup 1.46 Taxes and shipping .69 Total $4.01 A six pack is 72 oz by volume, a case is 2.25 gallons [Source]
A large percentage of Cornbelt farms have semi-trailer trucks to more efficiently handle high capacity harvesting equipment. While some of those trucks have limited use other than harvest, many others become a second home for farmers who work as commercial carriers when they are not farming. Although they have the required commercial drivers’ licenses and many of their trucks have US Department of Transportation registration, many will not be happy to learn the DOT is working its way down further into their farming operation. Buckle your seat belt.Notice the outraged comments and helpful information in the comments to the above post, but there is a big part of the issue conspicuously absent:
The US Department of transportation has an internal administrative staff to develop rules and regulations and implement those for the Federal Motor Carrier Safety Act. It is designed to enhance safety on public roadways, and part of the rules are licensing and registration for commercial vehicles used in interstate commerce. Over the road truck and bus drivers know all about the FMCSA and its rules. And many farmers who obtained a commercial drivers license from their state department of motor vehicles will be familiar with many of those regulations, and may already have a USDOT number on their vehicle if it has been driven across a state line. [More]
Montague, et. al. immediately discovered a strong neural signal that drove many of the investment decisions. The signal was fictive learning. Take, for example, this situation. A player has decided to wager 10 percent of her total portfolio in the market, which is a rather small bet. Then, she watches as the market rises dramatically in value. At this point, the investor experiences a surge of regret, which is a side-effect of fictive learning. (We are thinking about how much richer we would be if only we’d invested more in the market.) This negative feeling is preceded by a swell of activity in the ventral caudate, a small area in the center of the cortex. Instead of enjoying our earnings, we are fixated on the profits we missed, which leads us to do something different the next time around. As a result investors in the experiment naturally adapted their investments to the ebb and flow of the market. When markets were booming, as in the Nasdaq bubble of the late 1990s, people perpetually increased their investments. In fact, many of Montague’s subjects eventually put all of their money into the rising market. They had become convinced that the bubble wasn’t a bubble. This boom would be different.I still don't think our markets are "bubbling", but the more I read about my lyin' brain, the less sure I am about my reasons.
And then, just like that, the bubble burst. The Dow sinks, the Nasdaq collapses, the Nikkei implodes. At this point investors race to dump any assets that are declining in value, as their brain realizes that it made some very expensive mistakes. Our investing decisions are still being driven by regret, but now that feeling is telling us to sell. That’s when we get a financial panic.
In the last year, Montague has expanded on these provocative results. He’s shown, for instance, that heavy smokers are less vulnerable to fictive learning. This is probably because they’ve learned, over time, to ignore those regretful thoughts telling them to quit smoking. (Although they lament their nicotine addiction — they know it’s killing them — they keep on lighting up.) The upshot is that their ability to not learn from fictional scenarios might also make them more resistant to the allure of bubbles. The lesson, I guess, is that it might be good to have a stock broker with a debilitating addiction.
Montague has also begun exploring the power of social comparison, or what he calls the “country club effect,” on the formation of financial bubbles. “This is what happens when you’re sitting around with your friends at the country club, and they’re all talking about how much money they’re making in the market,” Montague told me. “That casual conversation is going to change the way you think about investing.” In a series of ongoing experiments, Montague has studied what happens when people compete against each other in an investment game. While the subjects are making decisions about the stock market, Montague monitors their brain activity in two different fMRI machines. The first thing Montague discovered is that making more money than someone else is extremely pleasurable. When subjects “win” the investment game, Montague observes a large increase in activity in the striatum, a brain area typically associated with the processing of pleasurable rewards. (Montague refers to this as “cocaine brain,” as the striatum is also associated with the euphoric high of illicit drugs.) Unfortunately, this same urge to outperform others can also lead people to take reckless risks.
More recently, a team of Italian neuroscientists led by Nicola Canessa and Matteo Motterlini have shown that regret is also contagious, so that “observing the regretful outcomes of another’s choices reactivates the regret network.” (In other words, we internalize the errors of others. Or, as Motterlini wrote in an e-mail, “We simply live their emotions like these were our own.”) Furthermore, this empathy impacts our own decisions: The “risk-aptitude” of investors is significantly shaped by how well the risky decisions of a stranger turned out. If you bet the farm on some tech IPO and did well, then I might, too.
There are two important takeaways to this research. The first is that neuroscience might soon be able to help make macroeconomic diagnoses, allowing us to better distinguish between booms and bubbles. For instance, one could have subjects “play” the current gold market in a scanner, if only to see how their brain activity compares to that of people playing previous market bubbles.
The second is that speculative bubbles are rooted in a very adaptive learning mechanism, which is probably why they’re so hard to prevent. The only way to keep us from bidding up LinkedIn stock and tulips is to keep us from learning through counterfactuals. Of course, that means we’d be cut off from a crucial means of self-improvement, a way of benefiting from mistakes we didn’t actually make. In other words, the reason we sometimes make such stupid investment decisions is because we’re so damn smart. [More worth reading]
For those who demand only the best of what life has to offer, the Visa Black Card is for you. The Black Card is not just another piece of plastic. Made with carbon, it is the ultimate buying tool. [More]So carbon is the ultimate now. Forget platinum and titanium and those two new ones to be named later.
The last thing farmers should hope for is conservative groundswell forcing an ill-timed plunge into austerity and recession. Meanwhile, right-wing think tanks from Cato to Heritage hate our farm policy, and are prodding politicians on the right fiercely. And making progress: the Coburn ethanol coup, for example.The Department of Agriculture no longer serves as a lifeline to millions of struggling homestead farmers. Instead, it is a vast, self-perpetuating postmodern bureaucracy with an amorphous budget of some $130 billion -- a sum far greater than the nation's net farm income this year. In fact, the more the Agriculture Department has pontificated about family farmers, the more they have vanished -- comprising now only about 1 percent of the American population.Net farm income is expected in 2011 to reach its highest levels in more than three decades, as a rapidly growing and food-short world increasingly looks to the United States to provide it everything from soybeans and wheat to beef and fruit. Somebody should explain that good news to the Department of Agriculture: This year it will give a record $20 billion in various crop "supports" to the nation's wealthiest farmers -- with the richest 10 percent receiving more than 70 percent of all the redistributive payouts. If farmers on their own are making handsome profits, why, with a $1.6 trillion annual federal deficit, is the Department of Agriculture borrowing unprecedented amounts to subsidize them?
At least $5 billion will be in direct cash payouts. Yet no one in the USDA can explain why cotton and soybeans are subsidized, but not lettuce or carrots. In fact, 70 percent of all subsidies go to corn, wheat, cotton, rice and soybean farmers. Most other farmers receive no federal cash.
Yet somehow peach, melon and almond growers seem to be doing fine without government checks in the mail. Then there is the more than $5 billion in ethanol subsidies that goes to the nation's corn farmers to divert their acreage to produce transportation fuel. That program has somehow managed to cost the nation billions, send worldwide corn prices sky-high, and distort global trade in ethanol at the expense of far cheaper sugarcane. And while the Obama administration discourages new production of far cheaper transportation fuels derived from natural gas, oil, shale oil and tar sands, it is borrowing billions to pay farmers to grow uncompetitive fuel.
About every 10 years or so, public outrage forces Congress to promise to curtail the subsidy programs. But when the deadline arrives, our elected officials always find a trendy excuse like "green energy" or "national security" to continue welfare to agribusiness.
Free-market conservatives don't dare touch the Department of Agriculture, given the senatorial clout of Midwest farm states and the mythology of the independent American yeoman farmer. Don't expect left-wing Democrats to object, either. In a brilliantly conceived devil's bargain, the Department of Agriculture gives welfare to the wealthy on the one hand, while on the other sending more than $70 billion to the lower-income brackets in food stamps. [More]
The two had already sold slightly more than 300 acres outside Chicago, at an average of $25,000 per acre.
They took those proceeds and bought 4,000 acres, in 17 downstate counties, that they rented to other farmers. That left them 1,800 acres to farm corn and soybeans in Chicago's exurbs, including fewer than 1,000 acres they owned.
That's when fate smiled on them.
During the past year, corn prices have doubled on increased demand for use as livestock feed and biofuels, and soybean prices have risen by more than 50 percent.
As those prices rose, the Baltz brothers began selling their fertile land downstate that they paid $2,500 to $4,000 an acre for and which is valued at as much as $8,000 an acre. During the past 12 months alone they've sold more 2,000 acres. Now they are more active farmers in their own backyards.
During the past three months, they've purchased from lenders almost 1,000 acres of farmland in Will and Kendall counties that were once scheduled for homes, paying a fraction of what developers paid years ago.
"A lot of (banks) just want it off their books," Ed Baltz said. "We got a little more power because we got the cash to spend."
On a recent warm afternoon, the brothers stood behind a weathered, vacant white-frame home and barn north of Black Road in Shorewood, on 246 acres that, at their peak, sold for $65,000 an acre and in 2005 were annexed by the village and zoned for more than 400 single-family detached homes.
The Baltz brothers paid $3.6 million, or about $14,500 an acre, for land that already has subdivision utilities brought to the property line. This year, though, the only thing rising out of the dirt will be the corn that Bob Baltz planted last month. [ More]
This isn't the first time ole Chicken Charlie, named after the food trailers he trots around to California fairs, has gotten ink for his culinary experiments. One LA Weekly article calls him "the inventor of the deep-fried oreo" (though this seems like a controversial title, given that other people have laid claim to "beignets' country cousins"). The same story details his previous deep-fried feats:
In 2007, he gave the world deep-fried Coca Cola, frog legs, and Elvis' favorite peanut butter banana and honey sandwiches; in 2008, it was deep-fried White Castle burgers, spam, and pop tarts. This year, he did it again: a hot dog inside a hollowed-out zucchini boat, battered, deep-fried and served on a stick -- a creation he affectionately calls the zucchini-weeni; and a classic s'more, deep-fried in pancake batter.That, folks, is a man living his version of the American dream. Oh yeah.
The latest jolt though, was President Bush’s 2005 budget. My position on the political chart has always been in the conservative Republican camp. This is where I thought the guy I voted for was anchored as well. But if planning more tax cuts in the face of $500B deficits, erecting trade barriers for politically powerful industries, attacking sincere dissent as craven disloyalty are the beliefs of conservative Republicans today, then I must be something else. Maybe I’m a liberal…Republican. I’ve heard there may be as many as 6 or 7 of us. Now all these perceptions could simply be fusty middle-aged crankiness. Perhaps I am just not well-informed or smart enough to understand my principles are outdated. Regardless, my painfully-acquired intellectual tools and moral compass are all that I have to guide my decisions. [More]Meanwhile, I have taken comfort in similar, though not identical adventures recounted by bloggers and commentators I admire, and who have vastly greater audiences than mine.
Back in the 1980s, conservatism was a thrilling empirical, reality-based challenge to overweening government power and omniscient liberal utopianism. Today, alas, it has become a victim of its own success, reliving past glories rather than tackling current problems. It is part secular dogma - no taxes, no debt, more war - and part religious dogma - no Muslims need apply; amend the federal constitution to keep gays in their place; no abortions even for rape and incest; more settlements on the West Bank to prepare for the End-Times. Although there were inklings back then - Stockman was right; Iran-Contra should have been a warning - they were still balanced by empiricism. Reagan raised taxes, withdrew from Lebanon, hated war, and tried to abolish all nuclear weapons on earth. The first Bush was an under-rated deficit-cutter and diplomat, a legacy doubly squandered by his son.
Now it's Levin-land: either total freedom or complete slavery and a rhetorical war based entirely on that binary ideological spectrum. In other words, ideological performance art: brain-dead, unaware of history, uninterested in policy detail, bored by empiricism, motivated primarily by sophistry, Manicheanism, and factional hatred. This is not without exceptions. Douthat, Brooks, Zakaria, Bacevich, Bartlett, Frum, Manzi, Salam, Lomborg, Mac Donald, et al. are still thinking. It's just that many of them are now deemed - absurdly - to be liberals. And none will have or does have any real impact on the base of the party.
Why? Because these thinkers are prepared to believe that the conservatism of the 1980s might have run its course, that new times might require new ideas, that we have been wrong in some areas, while right in others, that it is not a crime to reverse course when events encourage it, that we have to live in the world as it is, rather than as we would like it to be, that we can learn from mistakes and base policy on shifting reality.
In contrast, today's unconservative "conservatism" is a movement held together by cultural resentment and xenophobic panic. Until it wrests free of this trap, it deserves its Palinesque fate: an ideology wrapped in anachronism, and laced with venom. [More]
At issue is language regarding the legal rights of creditors vis-à-vis debtors. The United States has long had a body of law regarding this issue. A few years ago, for instance, the real estate speculator Sam Zell bought the Chicago Tribune in a debt-leveraged buyout. The newspaper soon went broke, wiping out the employees’ stock ownership plan (ESOP). They sued under the fraudulent conveyance law, which says that if a creditor makes a loan without knowing how the debtor can pay in the normal course of business, the loan is assumed to have been made with the intent of foreclosing on property, and is deemed fraudulent.This law dates from colonial times, when British speculators eyed rich New York farmland. Their ploy was to extend loans to farmers, and then call in the loans when the farmer’s ability to pay was low, before the crop was harvested. This was indeed a liquidity problem – which financial opportunists turned into an asset grab. Some lenders, to be sure, created a genuine insolvency problem by making loans beyond the ability of the farmers to pay, and then would foreclose on their land. The colonies nullified such loans. Fraudulent conveyance laws have been kept on the books since the United States won its independence from Britain. [More]
The headline says it all:House keeps farm subsidies, cuts food aid
Here are some of the other provisions which seem designed just to be ridiculed by Jon Stewart:Directs the Agriculture Department to rewrite rules it issued in January meant to make school meals healthier. Republicans say the new rules, the first major overhaul of school lunches in 15 years, are too costly.Don’t get me wrong, I’d probably do away with a number of these rules as well. But anyone who argues against making school meals healthier because it’s too expensive at the same time as they vote for keeping billions of dollars in farm subsidies is not concerned about expenses. What unites the bill is not ideology but protection of agribusiness.
Forces USDA to report to Congress every time officials travel to promote the department’s “Know Your Farmer, Know Your Food” program, which supports locally grown food, and discourages the department from giving research grants to support local food systems. Large agribusiness has been critical of the department’s focus on these smaller food producers.
Prevents USDA from moving forward with new rules that would make it easier for smaller farmers and ranchers to sue large livestock companies on antitrust grounds. The proposed rules are meant to address the growing concentration of corporate power in agriculture.
Delays for more than a year new rules for reporting trades in derivatives, the complex financial instruments blamed for helping precipitate the 2008 financial crisis. A Republican amendment adopted Thursday would require the Commodity Futures Trading Commission, which funded in the bill, to first have other rules in place to facilitate its collection of derivatives market data.
Prevents the FDA from approving genetically modified salmon for human consumption, a decision set for later this year.
Questions the scope of Obama administration initiatives to put calories on menus and limit the marketing of unhealthy foods to children.
Perhaps the most outrageous provision was one the good guys won:Critics of farm subsidies did score one victory: The House voted to block a $147 million annual payment to Brazil’s cotton industry. The United States agreed to make that payment last year after Brazil’s industry complained to the World Trade Organization that Washington unfairly was subsidizing U.S. cotton farmers. The United States lost the WTO case and agreed to make the payments to Brazil as a settlement.So not only have we been subsidizing cotton farmers but we have been paying Brazil to allow us to keep subsidizing cotton farmers. Incredible. I wonder whether this provision will make it into the final bill.
[With apologies for excerpting the whole post.]
There may also be a medical reason for the decline in crime. For decades, doctors have known that children with lots of lead in their blood are much more likely to be aggressive, violent and delinquent. In 1974, the Environmental Protection Agency required oil companies to stop putting lead in gasoline. At the same time, lead in paint was banned for any new home (though old buildings still have lead paint, which children can absorb).Tests have shown that the amount of lead in Americans' blood fell by four-fifths between 1975 and 1991. A 2007 study by the economist Jessica Wolpaw Reyes contended that the reduction in gasoline lead produced more than half of the decline in violent crime during the 1990s in the U.S. and might bring about greater declines in the future. Another economist, Rick Nevin, has made the same argument for other nations. [More]
The short run picture is more complicated. Avoiding default is presumably the main concern, but if that could be achieved by a Dem capitulation to demands for large spending cuts, so much the better. On the other hand, maintaining any kind of credibility requires a downgrade well before default actually takes place, and probably a series of downgrades as the deadline approaches. Even a single downgrade would throw financial markets into disarray (among other things, investors who are required to hold AAA assets would have to dump Treasuries and, presumably, buy the bonds of other governments). That in turn would place huge pressure on the Republicans. While the idea of “not raising the debt ceiling” polls pretty well, the reality of “destroying the US credit rating” probably won’t. [More]This is the wrinkle that makes blither about "technical default" so misleading, methinks. The debt market is poorly understood and badly predicted in relatively placid times. Debauching the benchmark debt instrument could provoke little or horrifically concatenated reactions, as outlined above. It seems foolish to find out which for very little gain.
But there continues to be resistance to the idea that expertise itself has been called into question, and we can expect that resistance to continue. Experts, understandably, are apt to be annoyed by their devaluation, and are liable to make their displeasure felt. And the thing about experts is that a lot of people still feel disinclined to question them.Experts, geniuses, authorities, "authors"—we were taught to believe that these should be questioned, but until now have not often been given a way to do so, to seek out and test for ourselves the exact means by which they reached their conclusions. So long as we believe that there is such a thing as an expert rather than a fellow-investigator, then that person's views just by magic will be worth more than our own, no matter how much or how often actual events have shown this not to be the case. For us to have this magic thinking about "individualism" then is pernicious politically, intellectually, in every way. That is not to say that we don't value those who can lead the conversation. We'll need them more and more, those "who are able to marshal the wisdom of the network," to use Bob Stein's words. But they might be more like DJs, assembling new ways of looking at things from a huge variety of elements, than like than judges whose processes are secret, and whose opinions are sacred.And there's so much more to this. If my point of view needn't immediately eradicate yours—if we are having not a contest but an ongoing comparison, whether in politics, art or literary criticism, if "knowledge" is and will remain provisional (and we could put a huge shout-out to Rorty here, if we had the space and the breath) what would this mean to the quality of our discourse, or to the subsequent character and quality of "understanding"?Maybe disagreement doesn't have to be a battle to be fought to the death; it can be embraced, even savored. Wikipedia as it is now constituted lends enormous force to this argument. The ability to weigh conflicting opinions dispassionately and without requiring a "decision" is invaluable in understanding almost any serious question. That much is clear right now. There are many, many practical political, pedagogical and epistemological benefits yet to be investigated."Learning" no longer means sitting passively in a lecture hall or on in front of a television or in a library and waiting to receive the "authoritative" version of what the experts think is up as if it were a Communion wafer. For nearly 20 years we have had the Internet, now grown into a medium of almost infinite paths, where "learning" means that you can Twitter directly to people in Egypt to ask them what they really think about ElBaradei (and get answers), ask an author or critic to address a point you feel he may have missed (ditto), or share your own insights in countless forums where they will be read and admired (and/or savaged.) Knowledge is growing more broadly and immediately participatory and collaborative by the moment.The results of these collaborations, like Wikipedia, represent not just new methods of packaging knowledge, but a new vision of what might come to be meant by "knowledge": something more like what Marshall McLuhan called "a galaxy for insight.""The sadness of our age is characterized by the shackles of individualism," Bob Stein said. But are we throwing off those shackles, even as we speak? [More of a superb essay]
Electronic collectivism has very quickly gone from being a sci-fi imagining to being a plausible scenario that more and more people, at least those active in the computer-culture, would endorse for us all. It will be objected that the ambitions of the cyber-sector don’t have that much to do with the life of the culture at large. But one could similarly say that the decisions made by a few thousand members of the investment banking community don’t affect us either. In fact, there is a connection between the ideas held by that minority and the lives that the rest of us live. [More]I am excited to be witnessing these new forms of arbitration of competitive views, and their deployment by individuals all across the social spectrum to build new things for humanity. but more than that, the excitement of the possibilities these new tools create is the most effective counterbalance to my occasional bouts of despair over our current management of human affairs.
But the reality may be even more chilling: Perhaps U.S. business is learning to get by just fine, thank you, without middle-class U.S. consumers. And while that may be good news for chief executives and shareholders, it could be the beginning of a new and socially wrenching political logic that leaves the great American middle behind.Wall Street, which is paid for smarts, not sentiment, has this figured out. In a newspaper interview this month, Robert C. Doll, chief equity strategist at BlackRock, the largest money manager in the world, pointed out that the fortunes of U.S. companies and the fortunes of the country as a whole were diverging: “The U.S. stock market and the U.S. economy are increasingly different animals.”Mr. Doll’s explanation for the shift was the increasing importance of international markets rather than the domestic one — of the rising middle class in emerging markets, rather than the stagnating one back home. He said that over the next five years, 70 percent of the incremental earnings of S.&P. 500 companies would come from outside the United States.Among the most high-ranking executives, capitalizing on that shift has become standard operating practice. Speaking this week in Washington at an Ernst & Young conference on emerging markets (disclosure note: I moderated some sessions), Steve Taylor, a senior executive at the energy and water company Nalco, explained, “In most cases, it is dismantling something you have in mature markets to build in emerging markets. So you have to take that step. It is very painful, but you have to take that step.”The move to consumers from emerging markets is just part of the story. Within the United States, the advertising agencies on Madison Avenue are discovering that the age of the American mass consumer may be drawing to an end. Instead, a new white paper by Ad Age, the industry’s trade journal, argues that growing income inequality means the only buyers who count are those at the top.“Simply put, as the discrepancy between the rich and poor has become more and more stark, a small plutocracy of wealthy elites drives a larger and larger share of total consumer spending,” the paper concludes, citing research that shows the top 10 percent of U.S. households account for nearly 50 percent of all consumer spending. “It appears that mass affluence may be a thing of the past — and that luxury marketers should reconsider how their products appeal to elite consumers.” [More]
History suggests that such faith may prove to be misplaced in the long run. A study of 116 financial crises in 25 countries found that rates had a poor track record in foreshadowing financial difficulties, said Carmen Reinhart, a co-author of the analysis and the female economist whose work is most frequently cited by other researchers. European debt markets were “complacent” about the growing repayment risks there “even three years ago,” James Bullard, president of the Federal Reserve Bank of St. Louis, said in a May 18 interview.“People don’t worry about credit risk very much until suddenly they worry about it a lot,” said Jay Mueller, senior portfolio manager in Menomonee Falls, Wisconsin, for Wells Capital Management. “Then you can get a panic.” [More]
On February 18, Republicans in the House of Representatives defeated an obscure amendment to the House Appropriations bill by a 2-to-1 margin. The Kind Amendment would have eliminated $147 million dollars that the federal government pays every year directly to Brazilian cotton farmers. In an era of nationwide belt tightening, with funding for things like education and the U.S. Farm Bill on the chopping block, defending payments to Brazilian farmers may seem curious.This is why I get peeved with the NCGA occasionally. Why can't they get the CCC to pay my tech fees?
In order to understand this peculiar political move, one has to look all the way back to 2002, when Brazil filed a case in the WTO challenging U.S. cotton subsidies. In 2004, the Dispute Settlement Body of the WTO found in favor of Brazil, ruling that government subsidies afforded U.S. cotton producers an unfair advantage and suppressed the world market price, which damaged Brazil's interests. After multiple appeals the WTO upheld the original ruling, and by 2009 the U.S. still had not reformed its cotton programs. Brazil then asked the WTO for permission to retaliate against the U.S. by imposing trade sanctions. The WTO decided that Brazil was entitled to impose 100-percent tariffs on over 100 different goods of U.S. origin. Even more importantly, however, Brazil was entitled to suspend intellectual property rights for U.S. companies, including patent protections on genetically engineered seeds.
In WTO language, Brazil was allowed to suspend its obligations to U.S. companies under the Trade-related Aspects of Intellectual Property Rights (TRIPS) agreement. This constituted a major threat to the profits of U.S. agribusiness giants Monsanto and Pioneer, since Brazil is the second largest grower of biotech crops in the world. Fifty percent of Brazil’s corn harvest is engineered to produce the pesticide Bt, and Monsanto’s YieldGard VT Pro is a popular product among Brazilian corn farmers. By targeting the profits of major U.S. corporations, the Brazilian government put the U.S. in a tough spot: either let the subsidies stand and allow Brazilian farmers to plant Monsanto and Pioneer seeds without paying royalties, or substantially reform the cotton program. In essence, Brazil was pitting the interests of Big Agribusiness against those of Big Cotton, and the U.S. government was caught in the middle.
The two governments, however, managed to come up with a creative solution. In a 2009 WTO “framework agreement,” the U.S. created the Commodity Conservation Corporation (CCC), and Brazil created the Brazilian Cotton Institute (BCI). Rather than eliminating or substantially reforming cotton subsidies, the CCC pays the BCI $147 million dollars a year in “technical assistance,” which happens to be the same amount the WTO authorized for trade retaliation specifically for cotton payments. In essence, then, the U.S. government pays a subsidy to Brazilian cotton farmers every year to protect the U.S. cotton program—and the profits of companies like Monsanto and Pioneer. [More]
Three Southern Illinois University professors have written a letter to President Obama asking him to leave the Birds Point Levee breach open, turning 130,000 acres of productive farmland into a permanent wasteland, er, wetland.In my view, the U.S. Army Corps of Engineers should rebuild the Birds Point levee if only to spite these three self-important individuals, who either don’t know, or don’t care, that they are rubbing salt in a very fresh wound and offending every hard-working farmer in America.Blake Hurst, president of the Missouri Farm Bureau Federation had this to say about the trio of egotists. “Those of us who remember the great flood of 1993 can write the script from here; environmental groups will use Mississippi County’s misfortune to attempt a land grab of massive proportions. “The professors, without bothering to provide any evidence, claim that 200 square miles of fertile farmland would better serve mankind as a swamp, instead of producing food the world so desperately needs. I’m not sure how big the ‘I Miss Malaria Caucus’ is, but it’s imperative we drown this foolish idea in its infancy. The levees must be repaired as soon as it dries enough for dirt to be moved.”Hurst noted that professors “are not only deluded, but self serving as well. The lack of concern they show for the families affected by the flood is breathtaking, the arrogance shown by their cavalier disregard for the efforts of generations of farmers is shocking. People are suffering, and the best that the academics can do is to propose a plan that will make the suffering permanent.”Hurst says the U.S. government “has a moral obligation to help those in the path of this man-made flood. The levees must be repaired, the ground must be restored, the roads, bridges, and homes replaced. [More]
But the problem is one no one should be surprised about, experts said, and there is no easy solution.The leveesThe very things that protected Vidalia and thousands of other river residents up and down the Mississippi last month — levees — are part of the problem, according to Karen O’Neill, associate professor in the human ecology department at Rutgers University and author of a book focused on flood control, “Rivers by Design.”“The question is always ‘Where can the water go?’” O’Neill said.If levees force rising waters into a smaller area, she said, the water rises only within that area.“At some point, it’s just a question of volume,” O’Neill said. “Levees closer to the river give the river less room to spread at flood time.”Historically, she said, people built their houses on relatively higher land and planted crops in the low areas, taking the risk that those areas would be flooded at times whether they were protected by the levee or not.Now, though, as the design of levees becomes more advanced, O’Neill said, there’s a temptation to build them closer to the river to protect farmlands.“Private individuals and county and state government cut off some of the historic natural outlets, (as well),” she said. “The floodways that have been built since then do not replace the functions of these outlets.”Franklin Heitmuller, an assistant professor in the Department of Geography and Geology at the University of Southern Mississippi said, too, that levees are part of the problem.“The bad comes with the good,” he said.“Flood-control levees are absolutely critical in this day and time to protect lives, communities and properties,” he said. “If (the levees) were absent — or poorly built — we would have a big mess on our hands.”However, Heitmuller said, unintended problems arise.“At locations where flood-control levees reduce the area (for floodwater), the floodplain can build up more rapidly than would otherwise be expected if floodwaters and sediment were distributed across a larger area,” he said. [More]