Thursday, May 24, 2007

The metaphor at the end of the rainbow...

I'm not crazy about Tom Friedman's book, "The World Is Flat". It turns out I'm not alone, but other critics have other reasons. Edward Leamer meticulously deconstructs the metaphor of worldly flatness and finds it unhelpful.

In the process, he refreshes my memory on one agricultural example (assuming I ever knew it in the first place).
The German farmer Johann H. Von Thünen noticed that farmland closer to the towns
where the produce was sold commanded a premium price, and he is credited with being
the father of economic geography because in 1826 he postulated a featureless (flat) plane
of land with a town in the center. Crops shipped from farm to town had different ratios
of transportation cost to value. Fertilizers and farm implements were shipped the other
way. These assumptions create a sequence of “Von Thünen” concentric rings of
farmland around the town center, with the land rents highest near the center, with
“heavy” crops that need fertilizers produced close to market. (A modern version of this
idea is the micro-economic exam question: “Why does the State of Washington ship its
best apples to other states, not its worst?”) [More]

This is what I was awkwardly trying to get to when I posted that warnings of high-priced land in the path of development were meaningless. That's where high-priced land should be.

No comments: