Wednesday, April 30, 2014

More of the same...

To the surprise of just about everyone, but especially right-leaning economists, a lumbering economics book has zoomed to the top of the Amazon best-seller lists. The success has irritated many in the profession because 1) they didn't write it and 2) the research is very impressive even if you disagree with his conclusions and prescriptions.

I will try to link to the helpful reviews and commentaries I used to form my first opinions, but if you want to save a LOT of time on a topic that is important but hard to grasp, I will offer this very brutal and necessarily incomplete summary, along with expert opinions.

Capital in the 21st Century by Thomas Piketty first accumulates the most extensive database of income, wealth, and inequality ever done. His premise is the data show that capitalism fosters wealth and income inequality for the simple reason that the rate of return on capital tends to be greater than the economic growth rate. This is the meaning of the "r>g" you will see scattered about the reviews. As societies advance, more income shifts to capital and away from wages. The result is a strong case for expecting the  rich to get richer. Forever. There are simply no market counter-forces or politically feasible ways to reverse this accumulation of wealth and power, short of wars, in his opinion. This truly uncomfortable assertion has left free market believers floundering because it closely matches what we are seeing right now in the global economy: that vast bulk of economic growth accrues to a tiny number of uber-wealthy.

Here's Jared Berstein's take on why the book matters.
As the US recovery proceeds into late middle age, the benefits of growth are heavily skewed toward the top.  Wall St. is once again way ahead of Main St.  In many other advanced European economies, recession-like conditions persist, in no small part resulting from first reckless finance and then from contraindicated austere fiscal policy.So even if you’re not reading Krugman and others regularly, there’s a sense among many people of many different political stripes that something is structurally wrong with both the economy and the practice of economics.   Between financial bubbles and busts, the macro-management seems inept and even once the economy starts growing again, the benefits accrue narrowly to the top.In part, it’s a sense that “the fix is in” when it comes to the distribution of growth.  In this regard, Piketty’s r>g (see herefor a very cogent explanation) can be viewed as the economic mechanics of the fix.  Moreover, especially given the uniquely pervasive money-in-politics problem in the US, it’s a self-reinforcing fix.Against that backdrop, we get a long, carefully researched tome with literally centuries of data across numerous countries showing a pretty inexorable trend of income and wealth concentration and providing a cogent analysis of the mechanics behind those dynamics.  At the same time, though Piketty clearly knows his economics, he is quick to dismiss a knee-jerk elevation of assumption-based economic analysis that has led so many policy makers astray in recent years.  Moreover, he is not a known partisan who can quickly be compartmentalized and thus distractingly plugged into the existing debate that tends to generate more heat than light.So, summing up, I think at least part of the reason for the book’s big splash is the intersection of a) timing and a latent demand for an explanation of what’s really going on, b) the weight of its scholarship and credibility of its evidence, and c) the unique attributes of the author. [More]

On the other side, the brilliant , but ever more self-impressed (IMHO) Tyler Cowen reluctantly admits his conclusions are not beyond reason and could even refute one of more treasured myths about the American Way.
 Whatever the debate over the book’s claims, it may be forcing Americans to admit that their revolution has failed and that the founders’ fight against the European tradition of inherited aristocracy and rented wealth will have ended up a noisy defeat. Hard work and dedication are platitudes, not practical advice, in Mr. Piketty’s America. Whether or not you agree with such a message, America — not France — is where that is news. [More]
Piketty is depressingly thorough in detailing how modern economic forces, especially globalized finances, deregulation, the ability of wealth to buy political power, technology substitution for labor, decline of unions, etc. are virtually insuring a future where the current share held by the very rich just keeps on growing. Free market defenders have been caught flat-footed because everything we are currently observing - greater shares of income and wealth flowing to a tiny top layer, stagnant median wages, lower income mobility, greater inequality - seem set to continue ad infinitum.

Krugman describes the right's response accurately.
Mr. Piketty is hardly the first economist to point out that we are experiencing a sharp rise in inequality, or even to emphasize the contrast between slow income growth for most of the population and soaring incomes at the top. It’s true that Mr. Piketty and his colleagues have added a great deal of historical depth to our knowledge, demonstrating that we really are living in a new Gilded Age. But we’ve known that for a while.No, what’s really new about “Capital” is the way it demolishes that most cherished of conservative myths, the insistence that we’re living in a meritocracy in which great wealth is earned and deserved.For the past couple of decades, the conservative response to attempts to make soaring incomes at the top into a political issue has involved two lines of defense: first, denial that the rich are actually doing as well and the rest as badly as they are, but when denial fails, claims that those soaring incomes at the top are a justified reward for services rendered. Don’t call them the 1 percent, or the wealthy; call them “job creators.”But how do you make that defense if the rich derive much of their income not from the work they do but from the assets they own? And what if great wealth comes increasingly not from enterprise but from inheritance? [More]
The best overall summary for laymen, as pointed out be right and left economists, could be Robert Solow, who has great "econ cred" (and a Nobel). He nails the important implication of r>g for us today, I think:
There is yet another, also rather dark, implication of this account of underlying trends. If already existing agglomerations of wealth tend to grow faster than incomes from work, it is likely that the role of inherited wealth in society will increase relative to that of recently earned and therefore more merit-based fortunes. Needless to say, the fact that the aggregate of wage incomes grows only at a relatively slow rate does not exclude the possibility that outstandingly successful innovators, managers, entrepreneurs, entertainers, and others can accumulate large amounts of wealth in a lifetime and join the ranks of the rentiers. But a slower rate of growth certainly makes such success stories less likely. There will be more to say about this. Yet the arithmetic suggests that the concentration of wealth and its ability to grow will favor an increasing weight of inheritance as compared with talent. [More]
How inevitable is this outcome? This is where the brawl is beginning to form. Prediction for both the rate of return (r) and economic growth rates (g) are notoriously inaccurate, so insert your own views here. Personally, I think rates r will drop as accumulated wealth exceeds the sum of possible places to invest. We are seeing that now in bond prices. 

With the vast majority of incomes stagnant, demand grows sluggishly, if at all. "Safe" investment opportunities are swamped by available capital. Diverting into riskier investments has its own hazard: loss of capital. So, I think Piketty's weakest point may be his predictions about r. I am oversimplifying his arguments, so check for yourself.

At the same time, economists are puzzled over the slowing global economy, so g may not be as large as we imagine either. Combined, the ratio of r/g could vary wildly. Ryan Avent has a complete review that may be better than the book, and also notices this.
Third, "Capital" provides a framework for thinking about how inequality might evolve in future. Mr Piketty's data give us a view of the past. He also gives us his thoughts on how things might unfold in future (albeit with plenty of caveats). But even if readers doubt his forecasts for the rate of return on capital or for economic growth, they will have a way to think about how key distributions will change, thanks to this book. Among pundits, policy discussions have already begun to reflect this: the distributional effects of possible policy changes are beginning to be discussed in terms of how the policy might shift r or g (or s, the savings rate, or other key variables). [More]
Piketty's fiercest criticisms are aimed, deservedly so, for his politically impracticable solution to growing inequality, namely a global wealth tax. This would be an annual, progressive tax on your net worth. I know, I know - I'm just telling you what he wrote.

Like virtually all commenters, I don't see that happening anytime soon - even in Europe. Nor has anybody else offered any way to slow the inequality juggernaut that seems likely to continue. 

Here in the US, our belief in the free market system (including me) is nearly sanctified. We truly believe the Invisible Hand will eventually work things out better than any other possible human action. What Piketty has done is provide a very strong case the global economy has pushed beyond the point where the Hand is effective. After a certain level of global wealth, free markets lose their magic, if you will. 

I find this suggestion persuasive, especially because the needs for raw labor are dropping everywhere, severely damaging the "hard work" route upward. Try to think in terms of your grandchildren. I look at mine and wonder how best to equip them to be successful. Of course, I could hope they would be brilliant and simply invest the next Twitter, but that's a lottery-odds outcome. 

But as you search to identify career ladders that will offer them a path upward, the landscape is remarkably bare. College degrees - even in STEM areas - are no guarantees. In fact, people skills to help them survive in a service economy might have a greater return.

For farmers, I think Piketty has just identified what has been an instinctive farmer urge to prepare for this unequal future: own land. We are betting that r>g, every time we pay "too much" for land. Capital (land) is the single best way to provide economic stability in the future. Simply being a good farmer won't make you stand out in the crowd.

I have imagined leaving my children at least, sufficient wealth to backstop them against any contingency. While this may be a delusion I use to justify my own avarice, it still seems like a good idea. In other words, I am betting on Piketty's future, and that the odds of a meritocratic route to wealth are much lower than inheritance. 

Piketty's analysis could be completely wrong. If so, nobody really has strong proof to refute his picture now.  Meanwhile, economic data on inequality pour in to substantiate his predictions. So much so that in the end, we are left with a fairly grim outlook (Felix Salmon):
The many reviews of Piketty’s book are surprisingly unanimous on one point: that the weakest part of the book is the final part, where Piketty moves away from diagnosis and starts attempting to formulate a solution. Piketty’s rather French idea of a global wealth tax isn’t getting nearly the same amount of acclaim as the rest of the book is, and is very unlikely to happen: countries will always compete with each other to attract the stateless rich by not taxing them.Which means that my reading of Piketty is ultimately pessimistic. The dynamics of the world economy are bad, and they’re getting worse; inequality is natural in human history, and right now we’re reverting to a state of affairs which is highly unfair but also both sustainable and, in its own way, unsurprising. Piketty has diagnosed a nasty condition. But I don’t think there’s a cure. [More]
What he said.

Monday, April 28, 2014

Amazingly, I lived...

In what can only be described as a medical miracle, I survived my near death experience with the stomach flu. Thanks to all who shared their over-the-hill-upchucking perspectives. My fertilizer dealer told me he had something similar last year and took 6 months to finally get straightened out.

I think he's a topper.

During my convalescence, I worked on Piketty's book. That is not going to be a happy post, folks.


Thursday, April 24, 2014

It should be illegal...

For people over 65 to have to throw up. As best Jan and I can recollect, it's been at least three decades since such an event.

Not nearly long enough. At least I bailed out on USFR. The timing would have been right during recording Joh's World. Luckily, I fired off a homemade version before I get to feeling really, really bad.

In fact, my statement immediately before the Tragic Event was: "Nobody in the history of the world has ever felt this bad."

Unlike Jan, I don't do "sick" very manfully.

Grandson John and Jan both had this stomach flu, but I decided I was invulnerable. I did bounce across new tile lines to level them out this morning. I know we'll regret it later as the trenches collapse, but spring installation doesn't give you many options.

Right now, I have to be frank - I am unsure of recovery. I'm not whining, just being realistic.

The first commenter with kind words gets my power tool collection after my expiration.

Be sure to watch what will likely be my last commentary and mailbag on this week's show. And in case of a miracle, I will be Mike Adam's Agritalk tomorrow morning, probably reading selections from Poe and Dante's Inferno.

Hey - nobody said you HAVE to be brave just because you're a mature male.

Or is that an oxymoron?

Tuesday, April 22, 2014

This complicates predictions...

For China's ag production. 
Under the smoggy sky, another environment hazard is brought into the spotlight in China as an official report confirmed Thursday about 16.1 percent of its soil is polluted.Alarmingly, about 19.4 percent of the farming land is polluted, said the report issued jointly by the Ministry of Environmental Protection and the Ministry of Land and Resources. ( The general condition of the land is "not optimistic" as the quality of farming land is worrying and deserted industrial and mining land suffers serious pollution, according to the report.It was based on a survey conducted from April, 2005, to December last year on about 630 square km of land across the country, except Hong Kong, Macao and Taiwan.The pollution has been caused by complicated factors over a long period of time. "The main pollution source is human industrial and agricultural activities," the report said.Industrial waste contaminates land around factories and mines while automobile exhaust pollutes air along the country's main highways.Irrigation by polluted water, the improper use of fertilizers and pesticides and the development of livestock breeding cause pollution to farming land.Chen Tongbin, research fellow with the Institute of Geographic Sciences and Natural Resources Research with the Chinese Academy of Sciences, told Xinhua that the report set off "a loud alarm" for the country's economic development pattern and environmental protection system."Compared with air and water pollution, soil pollution is more difficult to control and remedy, taking a much longer time and needing more resources," Chen said.In addition to reduced quality and quantity of crops that threaten people's health upon consumption, such pollution might also result in health hazards for people living in areas where there is polluted soil after breathing in or having skin contact with pollutants.While affecting the normal growth of plants and microbes and damaging the soils' function to preserve nutrients, these pollutants are likely to permeate into underground layers and contaminate drinking water sources.In breakdown, 11.2 percent of the country's surveyed land suffers slight pollution, while 1.1 percent is severely polluted.About 2.3 percent of the land is lightly polluted and 1.5 percent suffers medium pollution.Some 10 percent of woodland and 10.4 percent of grassland is polluted, the report added.About 82.8 percent of the polluted land is contaminated by inorganic materials and the top three pollutants are cadmium, nickel and arsenic. [More]

Those three are bad news, both physiologically and agronomically. They are one reason I have always been leery of gypsum from power plants as a fertilizer, despite federal limits. Once it's in your fields, it's there forever.

You never know when future research could lower the allowable limit for heavy metals, and I can imagine the effect on the land value.

Anyhoo, while we seem to be constantly surprised by the often unexpected amount of Chinese buying, maybe one reason is we are starting with an domestic acreage estimate too high.

Sunday, April 20, 2014

All ahead full...

To my surprise, the tile we've been putting in for a decade seems to work.  We got started Friday and have been applying NH3 and working chiseled ground at flank speed.  I tried posting from my iPhone, but that was a bumpy failure.  I will be tweeting (@jwphipps), so you can follow my assorted thoughts there.

But this one thought that I pondered yesterday: The Great Interest Rate Panic.
Such forecasts of a federal debt disaster depend on an assumption that is rarely mentioned: that interest rates will normalise even though economic growth will not. Combine decades of tepid expansion with traditional real interest rates, and an unsustainable debt burden quickly comes into view. But that combination would represent a dramatic break with history. It goes against everything we know about the mechanisms that determine real interest rates. It is, therefore, a slim reed on which to base a radical departure for economic policy.In its February report the CBO serves up the consensus view in elaborate detail. Deficits swell over the decades ahead and the debt climbs to 100 per cent of gross domestic product. The subsequent discussion centres on how best to rein in these fiscal excesses.This is strange. The fact is that federal deficits have fallen precipitously over the past few years. In 2011 the watchdog projected that government spending (excluding interest payments) would exceed receipts by 7 per cent of GDP in 2038. It now states that this “primary deficit” will instead be 1.6 per cent of GDP, hardly cause for panic.Yet despite this relatively sanguine view of the deficit, the CBO continued to sound the alarm about an incipient US debt crisis. Why? Because it believes that rising interest rates will amplify the debt burden at the same time as a weak economy saps the country of the strength needed to service the growing debt. [More]

I am more persuaded each year, the conditions for high interest rates simply aren't present. There is a surfeit of liquid wealth, a top-heavy demographic in the developed world, and incalculable productivity thanks to technology - all of which lower the demand for capital.

Meanwhile the Farm Credit System is having collective flashbacks to the '80's
Real farm incomes this past decade never quite broke the all-time highs of 1973 when adjusted for inflation, said Jennifer Ifft, an ERS economist and one of the study's authors. But farm leverage peaked in the middle 1980s and has been on a downward trend ever since: The average full-time farm operator's debt-to-asset ratio hovered near 13% in 1992, but slid to 9% by 2011, the most recent data in USDA's study. That's less than half the 22% rate farmers averaged at the peak of the farm credit crisis in 1985, before years of loan write-offs and debt pay-downs began in earnest.Even the nation's most potentially risky farm borrowers -- those full-time operators with debts 40% or more of their assets -- are shrinking in numbers. In 2011, only 5.3% of farm businesses held that leverage level, down from 9.5% in 1992, said Ifft. What's more, that highly leveraged category accounts for a shrinking share of total farm business debt compared to 20 years ago.At least two potential trouble spots still exist should the farm economy take a prolonged tumble. Ifft worries most about young farmers whose numbers have shrunk drastically over the past two decades: Because they rent the bulk of the operations, young operators didn't benefit as much from the windfalls that accrued to landowners during this era. In fact, leverage levels for full-time farmers under age 35 remain as high today as they were 20 years earlier, about 19%, Ifft said.Another potential concern is large-scale family farms -- defined as those with sales in excess of $1 million. They acquired 70% more debt during this period, the largest gains of any sized operations. While they borrowed an average of $684,400 in 1992, their total debt ballooned to $1.165 million in 2011 inflation-adjusted dollars. Increasing cash rents, land purchases and machinery costs contributed to those debt loads, burdens that may be hard to shed if commodity prices and repayment capacity shrink.READY FOR $3 CORN?Many forecasters predict leaner farm incomes and a return to much higher interest rates in the decade ahead, both of which have implications for land values and borrowers' repayment capacity.Allen Featherstone, a Kansas State University economist, agrees farmers are on excellent footing at the moment, but cautions not to become complacent."We're probably in as good a position as we've been in the last 20 years, but in some respects they were in good shape in 1979, too. Then things changed very quickly," he said. [More]
These oracular warnings, which have become the constant refrain from FCS for several years now, may be aimed at themselves, not farmers.  After all it was the FCS that wrote some really poor loans (especially on hog expansion) and needed the bailout in the '80s. This latest warning lloks like an effort to shift their institutional memory from "the bad loans that we made" to "the bad loans farmers took", as if farmers can make lenders hand them money.

You don't get to say "I told you so" if you say it all the time. Enough already.  What the FCS might do is get their CEO compensation under control.

I'm wading my way through the book of the year in economics - Thomas Piketty's Capital in the 21st Century. There are several reviews out, the best, albeit longest, IMHO, the Economist.  This is one of his premises as well. I hope to add to my own tiresome rebuttal to the warnings of imminent farmland price collapse and the End of Life As We Know It when I'm done.

It's a tough read on chiseled stalks, however. 

In the meantime - Happy Easter!

Thursday, April 17, 2014

No PSA, please...

I have tried to avoid difficult conversations with friends and family about my conviction we are over-screening for cancer, especially breast and prostate. While I have numbers on my side, people do not want rational discussions - they want to live, and almost always at any cost (which they do not know) or any effort or even if the odds of successful treatment are small.

Mostly they embrace the idea that more screening can only be a good thing. The "Save Just One Life Standard" is a powerful calculus and frankly exploited by our medical industry. What is not understood is that to save that one life other lives are damaged or even sacrificed due to false positives, treatment consequences, and other unadvertised complications.

More evidence continues to pile up to illustrate how unreasonable our expectations from screening are.

The bottom half of this pic shows the actual effect of mammography. If we take 1000 women age 50 and watch them for 10 years, and don’t screen them, 5 will die of breast cancer, 44 will die of other causes, and 951 will be fine. If we do screen them, then 4 women die of breast cancer, 44 or 45 die of other causes, and 951 or 952 are fine. This is why the effects seem to be negligible.But if you ask women to estimate how well mammography works, then you’re in for a whole different ballgame. They think that without screening, of those 1000 women, 160 are going to die from breast cancer in the next 10 years. They way, way, way overestimate the danger. They also overestimate the effectiveness of mammography. They think that it will halve the rate of death, so that only 80 of the 1000 women will die from breast cancer.Therein lies the problem. If you think that breast cancer is going to kill 16% of all 50-year-old women in the next 10 years and that mammography makes a huge difference in the mortality rate, then you’re going to demand a universal screening program. Hell, I’d demand it if that were the case. Until we can change the perception of the public to more closely match reality, and make them realize that the harms may outweigh the benefits, we’re going to get nowhere in trying to make changes. [More]

Along those same lines, someone I know recently was diagnosed with prostate cancer, and promptly underwent a prostatectomy. After the operation, he was told his prostate and the lymph nodes removed showed no trace of cancer. His original biopsy was mixed up with another patient at the lab. While he did have symptoms it could have been benign BPH. I do not know all the facts, but often in these cases the urge to "cut that cancer out of me" is overwhelming and surgeons rarely suggest watchful waiting. (My physician brother always considered a surgeon as a doctor who believed there was nothing wrong with you that an expensive operation couldn't prolong.)

Many things went wrong - no second opinion and biopsy is one obvious fault. But our system refuses to accept that aggressive treatment is not always the answer, so there was no established procedure to slow the rush to surgery. Nor does a hyperactive litigation system offer real compensatory relief, IMHO.

I have always expected to talk a good game, but in the end melt down to a passive victim should I face such a diagnosis. But after simply telling my doctor to not check my PSA because I'm over 60 and have no risk factors or symptoms, I think I will be able to deal with the next level of decisions should the occasion present. Multiple experiences of friends and family with difficult treatments and dubious benefits reinforces my inclinations. Getting older also helps anchor our cost/benefit calculations, I think.

There is something about the process of learning and taking small steps that enables us to gain control of our lives. And we will never control health care costs until we control our own health care.

Wednesday, April 16, 2014

Empowering killing...

 The demand for "kill switches" on smartphones has prompted an about-face by manufacturers and carriers to offer an opt-in capability on new phones starting in 2015.
CTIA-The Wireless Association, a wireless communications trade group, said on Tuesday that smartphones manufactured after July 2015 for sale in the US will include "a baseline anti-theft tool" that is either preloaded or can be downloaded. The voluntary agreementalso stipulates that mobile carriers will support the availability and use of this tool.The anti-theft software will be capable of: remotely wiping data from the device in the event of loss or theft; rendering the smartphone inoperable to unauthorized users, except for emergency services calls and, if available, user-defined emergency phone numbers; preventing unauthorized reactivation "to the extent technologically feasible"; and restoring operability and user data if possible and desired by the authorized user. [More]

At first blush, this appears to be a reasonable step to addressing the increasingly troublesome smartphone theft problem in major cities. (Here in the farm we're wrestling with the smartphone-tilled-in problem, of course).  Some don't think this goes far enough, however.
“The wireless industry today has taken an incremental yet inadequate step to address the epidemic of smartphone theft,” Mr. Leno said in a statement. “Only weeks ago, they claimed that the approach they are taking today was infeasible and counterproductive. While I am encouraged they are moving off of that position so quickly, today’s ‘opt-in’ proposal misses the mark if the ultimate goal is to combat street crime and violent thefts involving smartphones and tablets.” [More]
But after all the anxiety of bad guys taking your phone and doing naughty things with it dies down, and adding the troubling alleged linkage of the NSA to the Heartbleed virus, I'm thinking how easy it will be for smartphones to be rendered pocket junk by the government.

Maybe this possibility already exists at the carrier level and we just aren't aware of it, but even from my distance of the libertarian fringe, easier communications shutdown can be seen as a bug, not just a feature.

Tuesday, April 15, 2014

This happened to me once...


Canada corn...

While most American farmers are debating climate change, neighbors to the north are trying to cash in. Here is where there are now enough GDU's to grow corn.

[Much better bigger - click]
Growing seasons on the Canadian prairie have lengthened about two weeks in the past half-century. The mean annual temperature is likely to climb by as much as 3 degrees Celsius (5 degrees Fahrenheit) in the region by 2050, according to Canadian researchers.In Canada, that means amber waves of wheat are giving way to green fields of corn. Farmers sowed a record 405,000 acres of corn in Manitoba, Saskatchewan and Alberta last year, double the amount two years earlier and almost eight times what it was 20 years ago. That compares with an estimated 95.4 million acres sown in the U.S. last year. [More]
One key is crop insurance, which as we all know now determines how we will farm. And insurers are on board.
Improvements to the Crop Insurance Program for 2014 include a pilot program to provide yield-loss coverage for corn in the east central and southeast areas of the province.  In addition, the establishment benefit feature has also been expanded to include coverage for corn of $65 per acre. [More]
In the words of economist Kevin Costner, "If you cover it, they will plant." - or something like that.

All over the world, businesses large and small are spending billions to mitigate (more likely) profit from global warming and other climate changes. Watching these unfold is probably more useful than trying to sway public opinion to the latest IPCC conclusions.

[Unreadable unless you click it]

As minimal as it is for North America (except the West), it's pretty bad news for India,China, Africa, and Australia. So we're talking ~7 billion folks with very probable food supply issues in the future.

Sunday, April 13, 2014

For those who thought...

My fondness for xkcd was weird:

[Click to embiggen]

Not the only one...

Ezra Klein's essay in Vox that I found dismaying affected others in similar and divergent ways.  This is Will Wilkinson (I think) from the Economist*.
So we're screwed? Mr Klein offers only this cryptic sign off: "If American politics is going to improve, it will be better structures, not better arguments, that win the day".The outrage of gerrymandering, of the filibuster, of the overrepresentation of thinly-populated states in the Senate, of lax campaign-finance regulations, are all preoccupations of Mr Klein and others similarly taken by the romance of ideal democratic procedures, and there is certainly a great deal to say in favour of "better structures". But is there a path to "better structures" that does not run through "better arguments"? Alas, no. My sense is that the impulse behind Vox is a profoundly honourable one based on what Mr Klein at the outset of this piece calls the "More Information Hypothesis". The hypothesis is that in the presence of more, better and more lucidly presented information, the democratic public will improve the performance of its signature deliberative tasks. The design of Vox, especially its innovative use of evergreen explanatory "cardstacks", would seem to be the More Information Hypothesis embodied. Yet Mr Klein's introductory essay at the helm of his new publication appears to debunk the hypothesis on which the entire enterprise seems to be founded. If it's really true, as Mr Klein would have us believe, that we are basically deaf to information we'd rather not hear, no matter how clearly and colourfully conveyed, then what's the point of Vox?  'Vox' is of course Latin for 'voice'. Mr Klein's strange inaugural essay may seem an inauspicious beginning, but I detect a note of hope. If there is one force capable of combating "identity-protective cognition" it is the rare and precious disposition Keats called "negative capability"—"when man is capable of being in uncertainties, Mysteries, doubts, without any irritable reaching after fact & reason..." Politics makes us stupid in no small part because of its incompatibility with negative capability—with the tolerance for ambiguity, uncertainty, and simple not-knowing that earnest truth-seeking requires. Now, there is more than a hint of "irritable reaching" in Mr Klein's call for "better structures"; he can't seem to reside wholly comfortably in the realm of uncertainties. Still, Mr Klein did have the audacity to launch a new publication presumably meant to shore up American democracy through access to better information with a lengthy meditation on the pointlessness of doing just that. That's negative capability! Coming as it does from our nation's capital—that dark eye of "a perfect storm for making smart people very stupid"—Mr Klein's unexpected plunge into the bracing waters of self-doubt comes as a bright and promising sign for Vox and its audience. [More]
I realize this has ever been thus, and appreciate your historical references, but what may be different this time is our ability to reinforce irrational thinking is getting a big assist from the self-definable information flows, from specific reliably biased TV channels to one-note websites.

Friday on Agritalk for example, Jim Weisemeyer and I joined Mike for a free-for-all discussion that, of course, leaned to Jim's expertise - politics. Jim is not a big Obama fan, and opined the big problem with Congress was the President's "failure to lead".  That like Clinton, he should be talking to congresspersons across the aisle.  When I asked him who would possibly be interested in going behind GOP leadership backs to craft a deal, he replied vaguely, "northeastern moderates" 

Seriously - Olympia Snow came to mind, but that's where it stops.  The list of moderate Republicans is not long. He mentioned PA congress members, but I checked the list and didn't see any reps who wouldn't immediately face a TP challenge if they tried that, and Pat Toomey doesn't strike me as someone ready to take on McConnell to deal with the Pres.

Moreover, when did it become the president's job to make congress do their job? Better still, how's that going to happen 'zactly when we don't have any money to throw around, because Congress is deeply concerned about the deficit and making it one of the minor issues (after Obamacare, Obamacare, and Obamacare) in this election. He used Clinton as an example, but that was long ago and far away politically. There are no "Bob Doles" or "Richard Lugars" under the dome. You might as well cite LBJ for an analogy.

Moreover, Obama's low approval is the central tool in the entire Republican strategy this year. I can't see anybody in their right-wing mind wanting to be seen shaking hands with Obama. 

Then it struck me, I'm probably missing some facts because of my filtering system, just like Ezra described in the essay. And for the life of me, I can't argue the other side. Can anybody else outline a scenario where the president crafts a deal with congress on say, immigration, that would last longer than the Camp Tax Reform plan?

How good is my information biasing mechanism?

*Yeah - I coughed up for a digital subscription.

Saturday, April 12, 2014

Are farmers committing suicide more often?...

This is exactly the kind of sloppy statistical writing that drives me nuts.  The topic (farmer suicide) looked (and is) serious, but as I read it became apparent the writers weren't interested in framing the numbers in a way that would be helpful to readers.
Since that crisis, the suicide rate for male farmers has remained high: just under two times that of the general population. And this isn't just a problem in the U.S.; it's an international crisis. India has had more than 270,000 farmer suicides since 1995. In France, a farmer dies by suicide every two days. In China, farmers are killing themselves to protest the government's seizing of their land for urbanization. In Ireland, the number of suicides jumped following an unusually wet winter in 2012 that resulted in trouble growing hay for animal feed. In the U.K., the farmer suicide rate went up by 10 times during the outbreak of foot-and-mouth disease in 2001, when the government required farmers to slaughter their animals. And in Australia, the rate is at an all-time high following two years of drought.Robert Fetsch, a retired professor of human development and family studies at Colorado State University, says there are profound social reasons farmers are reluctant to seek help. "Farmers are extremely self-sufficient and independent," he says, "and tend to work around whatever they have, because they are so determined to keep moving."One factor disputed among agricultural and mental health professionals is the connection between pesticides and depression. A group of researchers published studies on the neurological effects of pesticide exposure in 2002 and 2008. Lorrann Stallones, one of those researchers and a psychology professor at Colorado State University, says she and her colleagues found that farmers who had significant contact with pesticides developed physical symptoms like fatigue, numbness, headaches and blurred vision, as well as psychological symptoms like anxiety, irritability, difficulty concentrating and depression. Those maladies are known to be caused by pesticides interfering with an enzyme that breaks down the neurotransmitter that affects mood and stress responses."A lot of farmers are very familiar with the pesticides, so they sort of take it for granted," Stallones says. "It's an invisible kind of thing, so if you can't actually feel it, taste it, touch it, you might not believe it's an issue."Not everyone is sold on the link between pesticides and depression. "I don't think there's firm data on that yet," says Jill Harkavy-Friedman, senior director of research at the American Foundation for Suicide Prevention. A greater contributor to suicide in rural areas, she says, is the easy access to guns. According to the Centers for Disease Control and Prevention, most suicides in America involve firearms, and more than half of all firearm deaths every year involve suicide. Harkavy-Friedman points to a 1998 study published in The British Journal of Psychiatry that showed the most common means of farmer suicide in England and Wales from 1981 to 1988 was guns. Following firearm legislation in 1989 that reduced access to guns, the total number of farmer suicides went down. [More]

I should have seen it coming from the extravagantly photoshopped cover, but it really begs to be given context.  Which is why God gave us Google.

First off, the article tells a few stories about tragic suicides.  Fair enough, but those anecdotes prime us for interpreting any numbers as pessimistically as possible. The note the comparisons without any total. 
  • "the rate for suicide for male farmers has remained high: just under two times that of the general population"  Let's unpack that.  To begin with, the male rate is always higher than the general population - men kill themselves more often.

  • So if they were talking about the true general rate, male farmers could be expected to have about twice the rate just because they are male - 20:12

  • But if they meant twice the rate for other males, let's see what that looks like. Looking at white males in the US, it turns out the rate for farmers is not so out of line. In fact, it's lower than the rate for physicians, dentists, veterinarians, finance workers, chiropractors, heavy contruction operators, urban planners (?), handmolders (??), real estate sellers, electrical assemblers, lawyers, and lathe operators.
  • Look at the above numbers from NIOSH on occupational deaths. They cover a period from 1984 to 1998. For farmers that added up to 94 suicides out of 4984 deaths. That's a little over 6 per year. When the numbers get this small annually even one or two deaths can bump the rate up dramatically.
What are the most recent numbers for farmer suicide?  Amazingly enough, it's hard to find out.  I use "The Straight Dope" as a kind of "Snopes" for these questions. Here's what they found out.

Well, it hasn't been easy to track this one, and I'm not sure I've got a definitive answer. Let's start by noting that suicide statistics are questionable at best. Many suicides are classified as "accident" to spare the family from publicity. So the statistics are only a rough indication.I easily found statistics on the Internet about suicides by age, region, gender, and race, but very little about occupation. Actually, since suicide is the second leading cause of death in the U.S. among those age 15 to 24, probably the answer is "student", but I don' t think that's what you're looking for.I called the library of the Society of Actuaries, thinking they'd know. The librarian said she used to work at a large psychiatric library, and that about 8 years ago, the answer was psychiatrists/psychologists/related. However, she couldnt quote me a source or cite a statistic, except what she says she knew. [More]
In fact, I spent an amazing amount of time trying to nail this statistical jello to the wall. And largely failed.  All the articles I found were slanted to assess blame, attack GMO's or Big Ag or pesticides, raise sympathy for (usually) smaller farmers, or persuade readers to support some cause.

Every now and then you would find a real number (I think) like this:

Still, Colorado state health officials recorded 4,012 suicides in the past five years; 53 were farmers, mostly men, who shot themselves. Bankrupt farmers have sought government help as bankers press for payments, often triggering the suicides. [More]
So that would mean about 10 farmers per year in CO alone. But without historical or comparative numbers it doesn't tell us much. And it sure doesn't jibe with the national numbers from NIOSH above.

I'm not going to waste any more time on this since it looks somewhat futile, despite the tragedy it represents. My conclusions:
  1. All suicide stories evoke strong empathy, which primes our interpretation of data.
  2. Assume any farmer suicide story to be slanted for persuasive purposes unless proven otherwise.
  3. Suicide rates are distorted by low numbers, so disregard any claims of drastic rate changes. 
  4. If guns are mentioned, remember while guns are a factor, their biggest influence is effectiveness - suicide attempts by firearm have a much higher success rate than other methods. I don't want to be dragged into an NRA rebuttal rant about guns and suicides, so I'm leaving it at that despite my own aversion.
  5. What is happening in other countries, especially India, but also France and China, are largely cultural phenomena, and hard to apply to the US.

So when you read, as I did in Kevin Van Trump's daily newsletter, an account like this, note your reaction and don't leap to conclusions.
West Central Iowa - Two weeks ago my best friend and neighbor committed suicide. The whole community is in shock because this was one of the calmest, nicest guys I knew. He was a good farmer who had cattle and row crops. He worked harder than anybody I know. I talked to him almost every day. This past winter with all the snow and bitter cold for so long while having a lot of cattle, I think it just got to be too much. He knew it was going to be a late spring, had a ton of manure to get hauled because he didn't get much done during the winter, plus all the crops - just took a toll on him. So we all need to learn from this. If you feel stressed out, you either need to get more help or let some livestock or rented land go back. Also we need to watch out for each other. As I look back I could tell he was depressed but not in a million years I thought he would do something like this. There has been many times where I have thought instead of me owning the farm, that the Farm owns ME. Money isn't an issue, just too much work to get done, especially if you farm alone. Farming has changed so much since I started. Seems like the seasons were longer or something. People were more laid back. A lot more rush rush now. Anxiety can sure set in this time of year with looking ahead and so much to do.
Each event is a tragedy of its own, and thankfully, suicide is still rare enough to shock us each time. I don't think the link between suicide and farming is precisely enumerated nor well explained, just frequently spun. 

[A good (albeit troubling) thread on the aftermath of suicide is here.]

Thursday, April 10, 2014

Persuasion and other myths...

I have struggled with disappointment for years over my inability to find arguments to persuade farmers and others with logic to share my views on topics from subsidies to inflation to climate change. But new research suggests I was born too late (or early) for this strategy to have much of a chance. In our era, a different belief dynamic is at work.

As I have pointed out before, empirical (observed) evidence - facts, if you will - just don't seem to pack the persuasive power I believe they should.
Presented with this problem a funny thing happened: how good subjects were at math stopped predicting how well they did on the test. Now it was ideology that drove the answers. Liberals were extremely good at solving the problem when doing so proved that gun-control legislation reduced crime. But when presented with the version of the problem that suggested gun control had failed, their math skills stopped mattering. They tended to get the problem wrong no matter how good they were at math. Conservatives exhibited the same pattern — just in reverse.Being better at math didn’t just fail to help partisans converge on the right answer. It actually drove them further apart. Partisans with weak math skills were 25 percentage points likelier to get the answer right when it fit their ideology. Partisans with strong math skills were 45 percentage points likelier to get the answer right when it fit their ideology. The smarter the person is, the dumber politics can make them.Consider how utterly insane that is: being better at math made partisans less likely to solve the problem correctly when solving the problem correctly meant betraying their political instincts. People weren’t reasoning to get the right answer; they were reasoning to get the answer that they wanted to be right.The skin-rash experiment wasn’t the first time Kahan had shown that partisanship has a way of short-circuiting intelligence. In another study, he tested people’s scientific literacy alongside their ideology and then asked about the risks posed by climate change. If the problem was truly that people needed to know more about science to fully appreciate the dangers of a warming climate, then their concern should’ve risen alongside their knowledge. But here, too, the opposite was true: among people who were already skeptical of climate change, scientific literacy made them more skeptical of climate change.This will make sense to anyone who’s ever read the work of a serious climate change denialist. It’s filled with facts and figures, graphs and charts, studies and citations. Much of the data is wrong or irrelevant. But it feels convincing. It’s a terrific performance of scientific inquiry. And climate-change skeptics who immerse themselves in it end up far more confident that global warming is a hoax than people who haven’t spent much time studying the issue. More information, in this context, doesn’t help skeptics discover the best evidence. Instead, it sends them searching for evidence that seems to prove them right. And in the age of the internet, such evidence is never very far away. [More of a must-read]

My problem is exacerbated by being pretty moderate and therefore wishy-washy on many ideological issues.  I don't have nearly as much problem changing my mind on issues, and since I have been shown to be wrong so many times, it's not new to me. But the larger factor is the blessing of friends who cut me some slack.  Not everybody has that these days.
Imagine what would happen to, say, Sean Hannity if he decided tomorrow that climate change was the central threat facing the planet. Initially, his viewers would think he was joking. But soon, they’d begin calling in furiously. Some would organize boycotts of his program. Dozens, perhaps hundreds, of professional climate skeptics would begin angrily refuting Hannity’s new crusade. Many of Hannity’s friends in the conservative media world would back away from him, and some would seek advantage by denouncing him. Some of the politicians he respects would be furious at his betrayal of the cause. He would lose friendships, viewers, and money. He could ultimately lose his job. And along the way he would cause himself immense personal pain as he systematically alienated his closest political and professional allies. The world would have to update its understanding of who Sean Hannity is and what he believes, and so too would Sean Hannity. And changing your identity is a psychologically brutal process.Kahan doesn’t find it strange that we react to threatening information by mobilizing our intellectual artillery to destroy it. He thinks it’s strange that we would expect rational people to do anything else. "Nothing any ordinary member of the public personally believes about the existence, causes, or likely consequences of global warming will affect the risk that climate changes poses to her, or to anyone or anything she cares about," Kahan writes. "However, if she forms the wrong position on climate change relative to the one that people with whom she has a close affinity — and on whose high regard and support she depends on in myriad ways in her daily life — she could suffer extremely unpleasant consequences, from shunning to the loss of employment."Kahan calls this theory Identity-Protective Cognition: "As a way of avoiding dissonance and estrangement from valued groups, individuals subconsciously resist factual information that threatens their defining values." Elsewhere, he puts it even more pithily: "What we believe about the facts," he writes, "tells us who we are." And the most important psychological imperative most of us have in a given day is protecting our idea of who we are, and our relationships with the people we trust and love.Anyone who has ever found themselves in an angry argument with their political or social circle will know how threatening it feels. For a lot of people, being "right" just isn’t worth picking a bitter fight with the people they care about. That’s particularly true in a place like Washington, where social circles and professional lives are often organized around people’s politics, and the boundaries of what those tribes believe are getting sharper. [Same]
Outside a few close friends, I really don't have much of a tribe. In fact, you guys reading this are a big part of my community. Being a Methodist helps, as that group is certainly less concerned with orthodoxy. Working by myself on a farm is another stroke of luck since I don't have those links to damage.

I'm not blaming the rest of the world - those are just the ground rules now for policy debate, and after reading about it I have realized I've wasted a lot of breath/words. It's a good thing I enjoy the process, because measured by results, I don't have much to show for decades of lobbing my opinions out there.

I read this article right after it was published and frankly it bummed me out for days, but it also seemed to confirm suspicions already lurking in my mind. Tribalism rules.

The obvious follow on question is why is this true now?

Maybe we are all looking for community and a sense of belonging. We already know that is a key factor in happiness, long-lives and satisfaction. And old communities are struggling. The geographical community of proximity, especially in rural areas is depopulated and bifurcating into large farmers and lots of low-income residents. These two groups don't have much in common.

Our civic, fraternal, and recreational organizations are fading as well. Lions and Elks are endangered species. VFW is literally dying off. Masonic lodges are closing. Bowling leagues are lame. And all the time TV and Internet offer a pseudo-community without leaving home or risking the exact social problems Ezra details above. Even work has at best a more fragile sense of inclusion, as layoffs have made everyone anxious, and lifetime employment a joke from the past.

So any real-time, fact-to-face contacts we do have are extremely important. Why not arrange your beliefs to make sure those connections stay in place? After all, what will you replace them with?

The future has hazards ahead for many of us, as well. It appears white Americans get more conservative as we slip toward a minority. So will moderates and liberals bend to go along?
Near the top of the list, they found, was a deep consciousness of being “white in a country with growing minorities.” One participant described his town as such:
Everybody is white. Everybody is middle class, whether or not they really are. Everybody looks that way. Everybody goes to the same pool. Everybody goes—there’s one library, one post office. Very homogenous.
For most of their lives, these people could ignore the country’s demographic change. But the election of President Obama was a clear sign that things were different.The result was fear and anxiety. A fear, for instance, that comprehensive immigration reform would begin a tidal wave of dependency, as Democrats won their votes with the allure of government programs such as Obamacare. “Every minority group wants to say they have the right to something, and they don’t,” said one Tea Party participant. “There’s so much of the electorate in those groups that Democrats are going to take every time because they’ve been on the rolls of the government their entire lives. They don’t know better,” said another. [More]

These issues are magnified to extremes simply due to smaller numbers in our profession and rural life. The fact that farmers overwhelmingly agree on any number of arguably illogical political issues says far less about reasoning power, and far more about fear of loneliness, perhaps.

This too will pass, I think, for the reasons illuminated toward the end of the article. Convictions grounded in ideology eventually fail to cope with reality that doesn't care. I don't know how those moments will unfold - its been 20 years and people are still adamant rampant inflation is a threat. So that would suggest it won't be overnight epiphanies and conversions.

Maybe we will rebuild new communities I can only try to imagine to give us the social assurance to change our minds in the face of evidence. I know one thing for sure: the first step is to give friends slack to consider a new position. Dancing in the end zone after an undeniable election result, for instance, is not just rude, it is an unkindness that destroys connections we need to be happy and pollutes the atmosphere of social discourse.

I still think it all began with Cassius Clay and the death of the Good Winner, but that's a theory for another time.

Tuesday, April 08, 2014

Junkbox, Episode MMXIV ✈︎...

A confidential source reports the seed corn price war is alive in his neck of the woods, with a one Big Seed player offering the same discounts as last fall.  I think it's just getting started.

Less rain than expected - still not close to the field yet.

Monday, April 07, 2014

DIK has started...

This is my acronym: Discount-In-Kind.  If you haven't been offered a generous helping of free seed from a competitor, you're missing out. Of course, you can use that lever on your own dealer as well.

Seed companies are sitting on masses of 2103 production and acres seem to be down this year. The marginal cost of that inventory is way below the $400 list price, so you do the math.

This is a time honored end-around for marketing types to reduce prices without seeming to. You have to play the game, however.  Ask around, swap with your friends.

Sunday, April 06, 2014

The longer, the worser...

 Or something like that. There are several theories floating around about the enigma of the long-term unemployed. Tyler Cowen, whom I often struggle to follow, has a very interesting post and column that at least illuminates some of the possibilities.
Many of these labor market problems were brought on by the financial crisis and the collapse of market demand. But it would be a mistake to place all the blame on the business cycle. Before the crisis, for example, business executives and owners didn’t always know who their worst workers were, or didn’t want to engage in the disruptive act of rooting out and firing them. So long as sales were brisk, it was easier to let matters lie. But when money ran out, many businesses had to make the tough decisions — and the axes fell. The financial crisis thus accelerated what would have been a much slower process.Subsequently, some would-be employers seem to have discriminated against workers who were laid off in the crash. These judgments weren’t always fair, but that stigma isn’t easily overcome, because a lot of employers in fact had reason to identify and fire their less productive workers.In a nutshell, what we’re facing isn’t your grandfather’s unemployment problem. It does have something to do with modern technology, and it will be with us for some time. [More]

I find this pretty persuasive, but also think we are largely underestimating the effect of technology, even though it is getting attention. Perhaps it is not as obvious as robots on the assembly line, but more along the lines of me troubleshooting and sending my new iMac back (yes - total FAIL) without ever talking to another human. Even the tech support guys in India are losing out.
People with little economics training intuitively grasp this point. They understand that some human workers may lose out in the race against the machine. Ironically, the best-educated economists are often the most resistant to this idea, as the standard models of economic growth implicitly assume that economic growth benefits all residents of a country. However, just as Nobel Prize-winning economist Paul Samuelson showed that outsourcing and offshoring do not necessarily increase the welfare of all workers, it is also true that technological progress is not a rising tide that automatically raises all incomes. Even as overall wealth increases, there can be, and usually will be, winners and losers. And the losers are not necessarily some small segment of the labor force like buggy whip manufacturers. In principle, they can be a majority or even 90% or more of the population. [More]
Economists also constantly look back to data and anecdotes about past technology advance that spurred so much growth that displaced workers were easily absorbed into new industries, with even higher pay. I know we always think this time is different, but that cannot be ruled out either. A disruptive technology could wipe out whole sub-sectors, and recently has.

Farmers too often let their eyes glaze over on such subjects. But many will lose farms and careers as consolidation continues. More importantly, the job prospects of our children and grandchildren become much more arbitrary. 

TC's point about men and service jobs is chilling as well. 

[Good comments after the post about people like TC on tenure grasping the feeling of unemployment.]

Saturday, April 05, 2014

The computerectomy...

Is not going well.  Thank goodness for my iPhone and iPad or I'd be severed from the Collective.

Friday, April 04, 2014

Stalemate, mate...

While many Americans like to gripe about the lack of progress on, well, anything in Congress, few of us are particularly interested in looking beyond facile reasons why it exists.

For example, most of the outrage centers on the people of Congress and their character. This is too superficial by half, IMHO. We have had venal, self-serving political hacks in office for centuries and stuff still got done. I can't find much evidence our current crop of legislators is markedly different than previous members.

Sarah Binder has studied the phenomenon for years. Her take on gridlock:
Three forces fuel today's gridlock. First, divided party control of government raises the bar against major policy change. Parties are the only glue for bridging policy and electoral differences between the ends of Pennsylvania Avenue, meaning that more can be done in periods of unified party control. Just compare President Obama's first two years in office (with Democrats controlling both branches) with the second two years (after Republicans captured the House). Congress was remarkably productive under unified control, enacting numerous landmark accomplishments, from health care reform to Wall Street reform. Under divided government, only do-or-die deadlines brought the parties to the table. Divided government continues in the 113th Congress, handicapping Congress even before it gets underway.Second, legislative parties have polarized over the past half-century, even though Americans remain centrist in their policy views. Polarization increases deadlock, because our political system requires large coalitions to adopt major policy change. Such coalitions are harder to build when few legislators occupy the ideological center. Increased polarization reflects the parties' ideological differences over the proper role of government, plus a strong dose of sheer partisan team play. As a result, much of congressional disagreement is strategic: The parties hold out for a full loaf rather than compromise on a half. Not surprisingly, when deadlines forced parties to the table in the 112th Congress, they often kicked the can down the road. As a result, the 113th Congress starts with a huge plate of leftovers, leaving little room for new issues.Third, stalemate is fueled by bicameral disagreement. Even when a single party controls both the House and Senate, disagreements arise that reflect electoral and institutional differences between the chambers. Bicameral differences are compounded when the parties split control of the chambers, as Congress's recent record attests. Bicameral obstacles remain high this year, with a smaller and more conservative Republican House facing off against a larger and more liberal Democratic Senate. [More]
One analysis I do find worth considering is the fundamental philosophical differences between Republicans and Democrats. It turns out intransigence is not a half-bad way to fight political battles.
Republicans vote more or less exactly the same way, regardless of what kind of district they represent. The Republican representing the squishiest, most RINO-ish district in the country votes almost as conservatively as the one representing the most bullet-munching conservative district in the country. Republicans are voting in lockstep to defeat Mr Obama's legislative priorities; Democrats are showing nowhere near the same kind of discipline in supporting them.This doesn't predict what might happen if Republicans gained control of the Senate, or of the presidency. It's possible that with more power Republicans would feel freer to disagree with each other. With their backs to the wall, out-of-power Democrats might feel the need to present a more united front. But basically Democrats have less voting discipline than Republicans. George W. Bush was detested by Democratic voters every bit as much as Mr Obama is by Republicans, but Democratic legislators cooperated with him to pass major education and Medicare reforms; they negotiated an immigration-reform bill with him, and would have passed it, had he not been abandoned by his own party.In other words, if all else fails, the gridlock of the American government will probably end the next time the country elects a Republican president, since Republican legislators have the discipline to stonewall Democratic presidents while Democrats are more willing to compromise. That asymmetry is probably infuriating to Democrats, but unless their legislators adopt different voting behaviour, it's not going to change. [More]
But the driving force behind this discipline it the importance of gaining and holding political power as the paramount goal - not governing (getting stuff done).

One other theory about what could change this is also worth pondering.
“You should be depressed,” says Keith Poole. “It’s going to get worse.” Poole, a political scientist at the University of Georgia, has spent three decades studying congressional votes that stretch back to 1879. With collaborators Howard Rosenthal of New York University and Princeton University’s Nolan McCarty, he’s found that members of Congress are now less likely to vote against their party than at any time since the first decade of the 20th century.The small number of seats Democrats need to take the House (17) and Republicans to take the Senate (3) makes the problem worse, says Frances Lee of the University of Maryland. She argues a minority party with a plausible chance of reversing its fortunes in the next election has no incentive to cooperate with the majority to pass legislation. “They don’t want to cut deals that will blur the differences,” she says. From the 1950s to 1980, the Republicans couldn’t imagine a majority in Congress and settled for an ability to trade votes in exchange for altering Democrats’ bills. When Ronald Reagan won the White House, Republicans won the Senate and began to dream of the House, the beginning of an increasingly ruthless competition between the parties for control of the Capitol.McCarty is at least somewhat encouraged by the weakened filibuster. It may only address the symptoms of the larger problems, he says, “but some people can live fulfilling lives with illnesses, as long as they have the right drugs.” Lee is less optimistic. She says only one thing can force Congress to get back to legislating: One of the political parties must suffer a crushing defeat. [More]

It would be easy to despair of our future, but somehow in the midst of all this gridlock the country has emerged from a recession, ended two wars, and begun to address our health care problems. It could also be that freeing up unlimited outside money for candidates will have the effect of creating some free agents somewhat less tied to party discipline. I can see that helping compromise, but it will throw a new wrench in the works.

There is an economic question here: how much money can the political system absorb effectively? At some point, I would assume air-time commercials, robo-calls, mailers, GOTV volunteers ads, etc. reach a saturation point and produce few additional votes. Do we know where that level of spending is?  Could we find out?
For years, scholars of elections have argued about whether campaign finance limitations adversely affect electoral competition. In this article, we examine how the institutional campaign finance restrictions differentially affect the performance of incumbents and challengers. Using elections for the state high court bench between 1990 and 2004, we demonstrate that candidate spending in judicial elections has diminishing marginal returns, but that the returns to challenger spending diminish more slowly than incumbent spending. Since this is the case, campaign finance restrictions that limit candidate spending disproportionately harm challengers, increasing the incumbency advantage and decreasing electoral competition. More specifically, we show that states with more stringent contribution limits have lower levels of candidate spending, and these restrictions thus put challengers at a competitive disadvantage. [More]
I could see more Americans becoming more inured, even resistant, to campaign efforts.  We already dread the endless commercials and yard signs. While the big winner in unlimited contributions is those in the business of political campaigns and media, I could see a rapid decrease in bang for the buck.

Thursday, April 03, 2014

Psst, buddy - want some mangos?...

As horrified tequila, gin, and guacamole consumers are discovering, the price of limes has quadrupled due to disease, drought, and...organized crime.
As a result of high prices and rampant lawlessness in some Mexican regions, criminals who may be linked to drug gangs are plundering fruit from groves and hijacking trucks being used for export, said Bill Vogel, president of Vision Produce, a Los Angeles-based importer. A truck headed for Vision’s sister company in Texas was hijacked two weeks ago in Mexico, he said, and growers and shippers now are hiring armed guards to protect their green gold.The produce wars on the ground are not limited to limes. Criminal cartels now control, to a shocking extent, the growing and packing of much of the Mexican produce on which United States consumers depend. An article last November in the Mexican newspaper Vanguardia reported that the Knights Templar drug cartel has used kidnapping, murder, money laundering and terror to take over the lucrative avocado business in Michoacán, the top state for production and export of the fruit.Criminal elements also have significantly infiltrated the Mexican mango industry to launder money, said Richard Campbell, a horticulturist and mango expert who travels to Mexico several times a year as a consultant. “Many growers don’t go to their fields because they’re afraid,” Mr. Campbell said. “I’m sure that this has lowered the quality of the mangoes, because it’s harder to control quality.” [More]

As bizarre as it looks in print, US drug enforcement success is pressuring cartels to find new things to extort money from. But seriously, mangos and avocados?
The green citrus fruits are largely grown in one specific region: the state of Michoacán in the country's southwest. And that's where a cartel called the Knights Templar has been elbowing in.
Gustavo Arellano, a syndicated columnist and author who writes about Mexican cultural issues, says the Knights Templar have been making their presence known in an area called La Tierra Caliente for a few years now. 
"So what they've done over the last couple of years, is that, if they're nice, they put humongous taxes on the farmers. If they're not nice, they just kill farmers and take the land and take over lime production themselves." [More]
First off - Knights Templar Cartel???

There are all kinds of guessing as to the effect of creeping legalization in the US on the cartels' income. They don't exactly provide press release balance sheets, but all the models show significant losses.
However, experts and studies note that legalization in two U.S. states -- even if the federal government allows it -- probably won't put Mexico's drug cartels out of business.In the lead-up to the referenda in Mexico and Colorado, the Mexican Competitiveness Institute released a study estimating that Mexico’s cartels would lose $1.425 billion if the initiative passed in Colorado and $1.372 billion if Washington voted to legalize. The organization also predicted that drug trafficking revenues would fall 20 to 30 percent, and the Sinaloa cartel, which would be the most affected, would lose up to 50 percent. [More]
If legalization were to become national - which is increasingly being seen as inevitable -  I can't see Big Tobacco simply stepping aside from this lucrative business. Most experts disagree, but I think they underestimate the ability to of our domestic tobacco industry to change course and compete even with illegal challengers.
The only feasible way for Altria, Reynolds American, and Lorillard to compete against lower-priced competitors is to build premium brands that deliver consistent quality. Marijuana comes in all different varieties and potencies; the average consumer of legal marijuana may not want to get a surprise every time he or she inhales a new purchase. Big tobacco companies are in position to provide large-scale, consistent-quality marijuana cigarettes to an American public that wants to take the edge off.For instance, Altria's Marlboro brand already has a strong following of loyal cigarette smokers. Marlboro has a 43.7% share of the tobacco market. Reynolds' Camel and Pall Mall brands have a combined 17.8% market share. Lorillard's retail market share is nearly 15%, thanks to Newport's 12.6% market share. Although not all tobacco smokers will smoke legal marijuana, those that do may stick to their cigarette brand. So Newport marijuana cigarettes will have an advantage over some upstart brand. This gives tobacco companies a built-in advantage in the nascent market.Moreover, tobacco companies can leverage their current infrastructure and distribution channels to dominate the marijuana market. Altria lists $4.7 billion in land, machinery, buildings, and equipment on its balance sheet (before depreciation). Reynolds' fixed assets exceed $2.5 billion and Lorillard's cost nearly $800 million. Tobacco companies have already made the huge investments in infrastructure required to manufacture and distribute cigarettes; all they would have to do to enter the marijuana market is change the ingredients. No other group of companies in the U.S. is better-suited to dominate the marijuana market, which is why Altria, Reynolds, and Lorillard can do so if and when it makes sense.  [More]
But meanwhile, back in the orchards, how serious could this problem become if the drought continues in the Southwest? Mexico is already gaining serious market share of produce - thanks to NAFTA and the CA shift to tree nuts.

Also this excerpt from a supporting chart (same source):

[Click to enlarge]

I find myself growing more uneasy with the trends toward concentration of ag production - whether it's the corn monoculture in the Midwest or almonds in CA. This seems to be asking for a catastrophic failure. I think it is tied to what happens with capitalism after years of success: concentration of wealth. The problem with discussing this of course, is the economist who first postulated this problem. Recently, Marx has gotten some respect despite his failure to see the problems of communism. Free markets are a great answer for growing economies, but seem to have some problems with mature ones.

We may be about to see those problems face-to-face.