Thursday, December 17, 2009

Where wealth comes from...

I read Steve Cornett's blog religiously.  But then, I'm a Methodist.  He may think he's fooled everyone with his folksy delivery and ham-fisted humor, but I can spot a true intellectual a mile off.  His latest seems like a slab of red meat (heh) for the beef sector but you can tell most commenters didn't pay attention to the last few lines.

Our protein marketing problem is similar to another economic problem I have been droning on about: maldistribution of income.  When the people who really want and need meat can't afford it, we're stuck with trying to argue with vegans to expand our market.

There is a questionable future for that business plan.

"Comfort food is trendy for students because familiar favorites can alleviate stress linked to studying and being away from home," said Tom Post, Sodexo president of campus services. "The biggest change we're seeing is that students are expanding the category of feel-good foods to include comfort world cuisine, such as a Mexican stew or a Vietnamese noodle soup and they are more open to vegetarian dishes with a flair." [More]

Trying to poke more meat down American throats will require overcoming economic, fashion, and medical resistance, as too many of us cholesterol-laden veterans can testify after our annual checkup.

Steve nails this precisely.

This is not going to go away, folks. These new evangelicals are going to keep hammering on these themes in the developed countries.  The beef industry’s future in these countries—with stagnant income growth, nearly stable populations and affluence-guilt—is limited. The future must be in building and serving the broader, worldwide market. 
Vegan Katie isn’t where it’s at. Statistically, she will probably backslide some day, but she will never be a true meat eater. For that matter, neither will her children.
The future is in China and Indonesia and all the places crawling out of poverty doing the jobs Americans used to do. That market is increasing in affluence, but still protein-deficient. And huge. [More]
Meanwhile his fans seem to fixate on his taking on the lefty antiprotein faction.

But I digress, as usual.

It was one comment in particular to Steve's post that arrested my attention.
I'm an Ag consultant, travel all over North America doing seminars--have met in person many of the people you speak of in generalities. These wonderful, but misquided folks have never been in poverty, missed a meal or been denied food..they think it is a right. They are so surprised to find out that food actually comes from the largest industry in the world...agriculture...and they are astonished to find that wealth only comes from Agriculture, Forestry and Mining...the three industries these folks want to see destroyed. What a paradox..the three industries we should be taking the most care are the three most hated and maligned by today's spoiled citizenry. [My emphasis]
I don't mean to pick on this person - his words have been echoed in other comments I see from farmers.  This is an old idea given second life: wealth must be tangible.

The reason it tripped my trigger is I have just finished listening to Niall Ferguson's "The Ascent of Money"(Another "boomerang" gift from my son who knows he'll get to listen to it as soon as I'm done.  Oh, well - it's the thought...)

It is also one of the the emotive factor behind the rush to gold.  Well, along with the huckstering of the Konspiracy King, Glen Beck.

For farmers, the axiom of wealth being something you can hold is a powerful aphrodisiac.  After all, we take a small amount of seed and produce a thousand fold.  It is visible, it is obvious and it is immensely self-aggrandizing:  I AM THE PHIPPS, CREATOR OF WEALTH.  The rest of you are pathetic parasites.

The only problem is the same one that Ferguson describes with mercantilism.  No economy can grow to its potential if it is limited to a physical basis for wealth. 
The Austrian lawyer and scholar Philipp Wilhelm von Hornick, in his Austria Over All, If She Only Will of 1684, detailed a nine-point program of what he deemed effective national economy, which sums up the tenets of mercantilism comprehensively:[5]
  • That every inch of a country's soil be utilized for agriculture, mining or manufacturing.

  • That all raw materials found in a country be used in domestic manufacture, since finished goods have a higher value than raw materials.

  • That a large, working population be encouraged.

  • That all export of gold and silver be prohibited and all domestic money be kept in circulation.

  • That all imports of foreign goods be discouraged as much as possible.

  • That where certain imports are indispensable they be obtained at first hand, in exchange for other domestic goods instead of gold and silver.

  • That as much as possible, imports be confined to raw materials that can be finished [in the home country].

  • That opportunities be constantly sought for selling a country's surplus manufactures to foreigners, so far as necessary, for gold and silver.

  • That no importation be allowed if such goods are sufficiently and suitably supplied at home. [More]

The idea of tangible-only forms of wealth seem reasonable until you need a tumor removed or crop insurance. Suddenly the value of knowledge or a legal contract is apparent. In difficult times, the urge to go back to basics is understandable, but we needn't move back to the wheel to regain our footing, surely.

Wealth, as our GDP figures indicate, is increasingly created by the minds of people, not their hands. Those who think that such wealth is illusory have never watched their farm sell to a lawyer from Tacoma.

Neo-mercantilism is simply the latest effort to make extraction industries or farming the Center of the Universe.  I'm not sure we farmers want to be there, even if we could convince the world we are the only creators of wealth.

1 comment:

Anonymous said...


Yeah the physiocrats in France like Quesnay in the 1700s also thought that all wealth came from the land. It is a pretty obsolete notion. I don't think Bill Gates made his fortune by growing software on the back 40.