What not to expect...  

As the world gets bored with the "Great Stagnation", I think many of us simply assume a more robust economic period is due. After all, we've slogged along for what seems like 127 years with mediocre growth and high unemployment.

But what if that is the best we can look forward to?

Of course, just as it was inappropriate to extrapolate from the previous decade of strong growth, one should not read too much into short-term fluctuations. Nevertheless, there are strong reasons to believe that rapid growth will prove the exception rather than the rule in the decades ahead.

To see why, we need to understand how “growth miracles” are made. Except for a handful of small countries that benefited from natural-resource bonanzas, all of the successful economies of the last six decades owe their growth to rapid industrialization. If there is one thing that everyone agrees on about the East Asian recipe, it is that Japan, South Korea, Singapore, Taiwan, and of course China all were exceptionally good at moving their labor from the countryside (or informal activities) to organized manufacturing. Earlier cases of successful economic catch-up, such as the US or Germany, were no different.

Manufacturing enables rapid catch-up because it is relatively easy to copy and implement foreign production technologies, even in poor countries that suffer from multiple disadvantages. Remarkably, my research shows that manufacturing industries tend to close the gap with the technology frontier at the rate of about 3% per year regardless of policies, institutions, or geography. Consequently, countries that are able to transform farmers into factory workers reap a huge growth bonus.

To be sure, some modern service activities are capable of productivity convergence as well. But most high-productivity services require a wide array of skills and institutional capabilities that developing economies accumulate only gradually. A poor country can easily compete with Sweden in a wide range of manufactures; but it takes many decades, if not centuries, to catch up with Sweden’s institutions. [More]

This is my concern as well. The advance of technology is ending the path of progress for nations with even ultra-cheap labor. The result is fewer South Koreas, more Nigerias.

The best guess is that the idea of economic catch-up has changed, which means that politics in developing nations could change, too. Just as inequality in income and wealth has been rising in the United States, newly growing nations find themselves in a more stratified world, without developing their own strong egalitarian histories to undergird political institutions or economic expectations. Many of the wealthy may produce their public goods — like secure streets and clean, beautiful parks — in gated communities.

In some countries, there may be a de facto “rule by consent” from abroad — if, for instance, you are an African working in a Chinese-owned mine and living in a company town, while receiving your vaccines from a Western nonprofit organization. Those phenomena might not fit our current notions of national pride very well — and might mean further splits within developing nations.

Indeed, the future path of developing countries could be much different from that of recent, high-growth success stories. The next set of emerging-market winners, for example, may retain very large pockets of poverty. And as the expectation of a single, common path for economic development fades, governments may need to rethink what they can accomplish — and how.

In any case, we should be prepared for the possibility that, while Seoul now looks a fair amount like Los Angeles, perhaps La Paz, Accra and Dhaka will never look much like Seoul. [More]

It is informed opinions such as these that lead me to think world GDP growth will not see the heights it did in the Aughts again for a long time.

 FOUR years after the worst of the financial crisis and the world appears to be faltering again. According to The Economist's calculations, world GDP grew by just 2.1% during the first quarter of 2013 compared with a year earlier. Just 12 months ago, output was growing at a reasonable clip of 3.1%. The European Union, the world's second-largest economy, which welcomes its 28th member on July 1st, is back in recession.

[Source]

So the question before us is: What if this is as good as it gets? What if we only gain by taking someone else's share of the pie?

In other words, what if it's all like farming?

Another clue...  

About the world we live in.

It is World Water Day, and time for the United Nations to remind us how many people in developing countries still lack basic sanitation.

Surprisingly, the UN reports there are now more people with mobile phones (six billion for world population of seven billion) on earth than there are with access to clean toilets (4.5 billion).
That phenomenon is easily visible in Indonesia, for example, where it is common to see people who live in metal roofed shacks without bathrooms surfing Facebook on their smartphones or feature phones. And it shows how, in the developing world, multinationals are often better at responding to peoples’ needs than governments are. [More]

It also explains why the health worker I interviewed in Mozambique in the isolated village of Ruasse listed his two greatest needs not as medicines or equipment, but clean water supply and sanitary toilets.

Iglesias add more:

In rich countries we tend to think about technologies in terms of their order of adoption and it seems obvious that plumbing is more basic. But from an infrastructure investment standpoint, it's easier to build a mobile phone network than a sewer system. For that same reason, even though there tends not to be all that much competition in wireless telephony it's a lot less monopolistic than electricity. In other words, part of what makes the mobile phone a great technology is that it's useful to people even in parts of the world where the basic institutions of governance are really bad. [More]

I think it is difficult to overestimate the ability of technology to circumvent bad governance and physical problems.

Since discovering there are...  

More Muslims than Methodists in IL, I guess I have been sensitized to mentions of what's happening in the Islamic world. Frankly, it's not a whole lot clearer than the confusing internecine Christian squabbles.

IT SEEMED historic. Muslim scholars, 170 in number and representing nine schools of legal thought (including four main Sunni ones and two Shia), gathered in Amman and declared that, whatever their differences, they accepted the others’ authority over their respective flocks. Implicitly, at least, they were renouncing the idea that their counterparts were heretics. Some called that meeting in Jordan in 2005 the biggest convergence since 969, when a Shia dynasty took over Egypt.
Many of the globe-trotting greybeards who met there, and at a similar gathering in Qatar in 2007, remain actively and optimistically engaged. But seen from the outside, feuds between Sunnis, who make up roughly 80% of the world’s Muslims, and the Shia minority (most of the rest), remain savage and are, in some ways, worsening. [More, along with the helpful chart below]

For most of us, the Islamic culture is just too much work to understand and too alien to be attractive, so we marshal our ignorance when the issues arise between cultures. I know I find little attractive about the theology and practices, but at the same time my lack of person-to-person contact with Muslims makes me uneasily aware of my ignorance, and hence, poor judgements.

Partly it's because of the factionalism and clear terrorist ties to some of the sects. But then you look at the largest Muslim country (any guesses?*) and think "they're not so weird".

[Click to enlarge]

Well, we may be getting some help bridging this gap. One of the biggest cultural differences with the West has been Islamic problems with capitalism. Due to Sharia usury laws, Islamic entrepreneurs have had to devise some, umm, innovative workarounds to help capital flow.

The chief loophole was murabaha. Let’s say that you, a small businessman, wish to go into business selling cars. A conventional bank would examine your credit history and, if all was acceptable, grant you a cash loan. You would incur an obligation to return the funds on a specific maturity date, paying interest each month along the way. When you signed the note and made the promise, you would use the proceeds to buy the cars—and meet your other expenses—yourself. But in a murabaha transaction, instead of just cutting you the check, the bank itself would buy the cars. You promise to buy them from the bank at a higher price on a future date—like a futures contract in the commodities market. The markup is justified by the fact that, for a period, the bank owns the property, thus assuming liability. At no point in the transaction is money treated as a commodity, as it is in a normal loan.
But here’s the catch: most Muslim scholars agree that there is no minimum time interval for the bank to own the property before selling it to you at the markup. According to Timur Kuran, the typical interval is “under a millisecond.” The bank transfers ownership of the asset to its client right away. The client still pays a fixed markup at a later date, a payment that is usually secured by some sort of collateral or by other forms of contractual coercion. Thus, in practice, murabaha is a normal loan.
Since murabaha must be asset-based, however, it can’t help a small businessman who needs a working-capital loan, for example, to provide cash on hand to meet payroll or other expenses. To get such capital from an Islamic financial institution, an entrepreneur would have to sell the bank an equity interest in his business. This is far riskier for the bank and thus much harder to obtain. [More interesting background]

Let's face it, it's no worse than say grain loans/PIK/LDP contortions at the FDA, IMHO. Anyhoo, these types of financial sidesteps are gaining ground, especially in countries just beginning to taste some economic wiggle room. After all, it doesn't take long to adopt a "It's about the economy, stupid" mentality when you are suddenly having to actually pander for votes, instead of arranging the elections.

Islamist parties are increasingly becoming "service" parties: an acknowledgment that political legitimacy and the likelihood of re-election rests on the ability to deliver jobs, economic growth, and to demonstrate transparency. This factor introduces a huge degree of pragmatism in their policies. The example of Turkey, especially its economic success, has had a major impact on Arab Islamists, many of whom would like to emulate the Turkish model. The Arab Islamists have, in other words, understood the truth of the slogan, "It is the economy, stupid!" The Turkish model, with the religiously observant provincial bourgeoisie as its kingpin, also acts as a reminder that Islam and capitalism are mutually reinforcing and compatible.
It is notable that the Islamists' economic agenda does not espouse a distinctive "Islamic" economic model. This is unsurprising, however, as an Islamic economic model does not exist. Islamists suffer from a paucity of original ideas on the economy and have not even developed a blueprint to tackle the structural socioeconomic crisis in Arab societies.
Nevertheless, what distinguishes centrist religious-based groups from their leftist and nationalist counterparts is a friendly sensibility toward business activities including wealth accumulation and free-market economics. Islamism is a bourgeois movement consisting mostly of middle-class professionals, businessmen, shopkeepers, petty merchants and traders.
If there is a slogan that best describes Islamists’ economic attitude, it would be: "Islam-is-good-for-business". Many Arab Islamists admire and wish to imitate the example of Turkey, even though they know little about the complexity of the country’s economy and lack Turkey’s strategic economic model. What impresses them is Turkey’s economic dynamism, especially the dynamism of the religiously observant provincial bourgeoisie who have turned Anatolian towns such as Kayseri, Konya and Gaziantep into industrial powerhouses driving the growth of the Turkish economy. [More]

In fact, keeping our eye on Turkey (which is becoming a more reliable US partner, as those things go) or Indonesia instead of Saudi Arabia and Iran might help us coexist a little more anxiously with the enormous Muslim world.

Nothing fosters bonding like griping about government economic policies together.


* Indonesia

This is the competition...  

In an amazing and slightly horrifying article, the NYT details why the iPhone is made in China. And it's not just low wages - it's simply incredible organization and speed. The most jaw-dropping revelations:

Apple executives say that going overseas, at this point, is their only option. One former executive described how the company relied upon a Chinese factory to revamp iPhone manufacturing just weeks before the device was due on shelves. Apple had redesigned the iPhone’s screen at the last minute, forcing an assembly line overhaul. New screens began arriving at the plant near midnight.

A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.

“The speed and flexibility is breathtaking,” the executive said. “There’s no American plant that can match that.”

Similar stories could be told about almost any electronics company — and outsourcing has also become common in hundreds of industries, including accounting, legal services, banking, auto manufacturing and pharmaceuticals. 

...

The company disputed some details of the former Apple executive’s account, and wrote that a midnight shift, such as the one described, was impossible “because we have strict regulations regarding the working hours of our employees based on their designated shifts, and every employee has computerized timecards that would bar them from working at any facility at a time outside of their approved shift.” The company said that all shifts began at either 7 a.m. or 7 p.m., and that employees receive at least 12 hours’ notice of any schedule changes.

Foxconn employees, in interviews, have challenged those assertions.

Another critical advantage for Apple was that China provided engineers at a scale the United States could not match. Apple’s executives had estimated that about 8,700 industrial engineers were needed to oversee and guide the 200,000 assembly-line workers eventually involved in manufacturing iPhones. The company’s analysts had forecast it would take as long as nine months to find that many qualified engineers in the United States.

In China, it took 15 days. [More of what should be mandatory reading to understand globalization]

Just like the old basketball saw, "You can't teach height", we still struggle in the US to grasp what millions of motivated low-wage workers can allow in terms of flexibility and market response. As manufacturing increasingly depends on shorter time horizons and being first to market, the ability to move literally hordes of people around to fit the task is a dominating advantage.

But just as we have centers for specific business activities (Silicon Valley, Motor City, Wall Street) it might be that we are moving to global focal points for manufacturing, finance, technology, etc. For us in agriculture we need ot work to make sure we are the leading location for agriculture.

I'm not sure that is our goal right now, and the sacrifices (less subsides for production, more for research, education, for example) needed to make it happen aren't being asked or made.

Update: For a refreshingly upbeat case that clearly articulates the other side of the story for the US, read this gem by Dan Dresner.

Back in the saddle again...  

If I can remember how to do this, I'm going to ease back into posting.

For Gary who asked for an updated state-country GDP map:






[Here for the interactive source]

While you were trying to plant corn...

This forecast was quietly issued.

According to the latest IMF official forecasts, China’s economy will surpass that of America in real terms in 2016 — just five years from now.Put that in your calendar.It provides a painful context for the budget wrangling taking place in Washington right now. It raises enormous questions about what the international security system is going to look like in just a handful of years. And it casts a deepening cloud over both the U.S. dollar and the giant Treasury market, which have been propped up for decades by their privileged status as the liabilities of the world’s hegemonic power.According to the IMF forecast, which was quietly posted on the Fund’s website just two weeks ago, whoever is elected U.S. president next year — Obama? Mitt Romney? Donald Trump? — will be the last to preside over the world’s largest economy.Most people aren’t prepared for this. They aren’t even aware it’s that close. Listen to experts of various stripes, and they will tell you this moment is decades away. The most bearish will put the figure in the mid-2020s. [More]

For help with the idea of Purchasing Power Parity:

In its "absolute" version, the purchasing power of different currencies is equalized for a given basket of goods. In the "relative" version, the difference in the rate of change in prices at home and abroad—the difference in the inflation rates—is equal to the percentage depreciation or appreciation of the exchange rate. [More]

This is not the shocker it may seem, IMHO. Other than simple bragging rights, this crossing of trends was clearly indicated years ago.  The date is mildly startling, but my guess is many will simply dismiss the idea of PPP, and then resort to per capita GDP in turn to satisfy their search for a number that keeps the US on top.

Kind of like the curious "jobs that depend on agriculture" number that FB arbitrarily trumpets.

Moreover, we really don't know how this will affect our lives. My guess is not much, as our fortunes will be made or undone at home by our own policies.

Not the only hot land market...

I have written before about the interest in Africa by nations looking to secure food supplies, but the speed of the acquisitions is accelerating, it seems.

A World Bank study released in September tallied farmland deals covering at least 110 million acres — the size of California and West Virginia combined — announced during the first 11 months of 2009 alone. More than 70 percent of those deals were for land in Africa, with Sudan, Mozambique and Ethiopia among those nations transferring millions of acres to investors.
Before 2008, the global average for such deals was less than 10 million acres per year, the report said. But the food crisis that spring, which set off riots in at least a dozen countries, prompted the spree. The prospect of future scarcity attracted both wealthy governments lacking the arable land needed to feed their own people and hedge funds drawn to a dwindling commodity.
“You see interest in land acquisition continuing at a very high level,” said Klaus Deininger, the World Bank economist who wrote the report, taking many figures from a Web site run by Grain, an advocacy organization, because governments would not reveal the agreements. “Clearly, this is not over.” [More]

While we are fixated on Asia the real frontier could be the dark continent.  Mostly because we are so poor at geography as an inward-looking profession, we miss how big a deal developing Africa could be.  Maybe this map will help.

[Click to enlarge] [Source]

I also keep in mind that woefully underdeveloped land often experiences enormous productivity gains with the first application of ag technology. Global production will get far more lift from taking Africa to say, 50 bpa corn than the US to 200 bpa.  Not too mention the millions lifted from subsistence lives.

[Source]

This type of development is uncomfortably close to colonialism, but I am having a harder and harder time to decide whether a colonial period is the worst outcome from countries who cannot rise above tribalism to advance.  To be sure some native culture is trampled, but any advancement would necessarily mean some losses.

It can't be any worse than the extraction industries that dominate too many poor countries.

Market plan first, crop plan second...

The fallout from growers' love affair with n-stacked corn continues around the globe.  No matter how much we like them, it's customers who count in the end.  And this is what "the end" can look like.

Favorable weather and genetically modified seeds have given South African corn farmers their biggest harvest since 1982. If only it could be sold.

Dilapidated rail lines and a surging currency are trapping a record corn surplus within the country’s borders. The buildup may force growers out of business and cut jobs in agriculture, the biggest employer in a nation where one in four is without work. And it has caused the benchmark corn price in Johannesburg to slump 19 percent in dollar terms this year, while its U.S. equivalent has risen by 34 percent.

“They can’t get it out because of the rand, because of infrastructure, because some countries don’t want it,” Henk van de Graaf, assistant general manager of the Pretoria-based TLU SA farmers union, said in an interview. “It impacts the economics of the little farming towns who live off the farmers. Businesses in the towns close down, there is a real snowball effect.”

Competition authorities are considering a request by Grain SA, the Bothaville-based growers’ organization, to allow it to hold the surplus off the domestic market to support prices. The government has tried, and failed, to find buyers in China, Egypt and Tunisia, Tina Joemat-Pettersson, the country’s agriculture minister, told lawmakers in Cape Town on Nov. 9.

The country reaped 12.82 million metric tons of corn this year, the government’s Crop Estimates Committee said today in its final crop assessment. That could result in a 4.5 million ton surplus, according to Joemat-Pettersson, triple last season’s exports. At current prices that could be worth at least $818 million.

Bumper Harvests

South African farmers have compounded their difficulties by using genetically modified seeds, disliked across much of Africa, while at the same time allocating three-fifths of their crop to the white variety of the grain, popular on the continent but not in Europe or Asia. This year’s surplus comes after large harvests in 2009 and 2008.

Shipments have been further hindered by bumper harvests in southern African countries, where South Africa has traditionally trucked excess grain. While corn has been exported to South Korea, Kuwait, Spain and Japan, an inability to transport significant amounts of grain to ports has thwarted previous efforts to develop new markets.

“It’s been an absolute disaster,” said John Gordon, who retired last year as chairman of the South African Cereal and Oil Seed Traders Association, from Johannesburg. “It’s the rail system that’s the problem. Grain is not profitable for them.”[More]

So, let's review: Verify your market first, and if you can't easily export, plant stuff you can sell locally.

Actually, I have some neighbors who are putting SmartBoxes on their planter and using their last three years of results (in our admittedly atypical growing seasons) as justification to plant all conventional corn. While I expect seed companies to squeeze our choices by offering fewer and older conventional varieties compared to stacked seed, the burden of proof of trait value has become heavier for many of us.

Many of us remember SA as a significant corn export competitor back in the day. Blunders like this could prompt them to reconsider building ethanol plants. Of course, sitting on enormous gold deposits which make your currency really strong, doesn't help either. Yet another surprising version of the Resource Curse.

It's not QE2...

It's China.  As we see today, the Fed announcement of a second (and bigger) quantitative easing is perking up commodity markets.  Economist had expected it, except that may not be what is really happening.

So which kind of rise are we observing? James Hamilton credits QE2 with lifting commodity prices and posts charts tracking price rises across a range of commodities:
But what's interesting about his charts is that the steady upward trend common to all of them starts around the beginning of July—not the beginning of September, as we'd expect if QE2 were the causal factor. What happened around the first of July? Well, China's government, which had grown concerned about the too-rapid slowdown in its economy, paused or reversed some of the steps it had taken to dampen activity. This included restrictions on bank lending and a temporary halt to appreciation of the yuan. And what followed, we now know, was a remarkable resumption in Chinese industrial activity. To me, the steady climb in commodity prices over the past four months seems indicative of the surprisingly strong performance of emerging economies.
That doesn't mean that Fed activity has had or will have no effect. I'd be surprised if commodity prices didn't go on rising. But much of that rise will be an unavoidable knock-on effect from the collision of soaring global demand for commodities with lagging global supply. [More]

If you have entertained any doubts about the leading global economy right now, this might shift your gaze from Washington much further east. Despite our overwhelming lead in actual GDP size, it is the growth rate differential that will make China the mover and shaker.

Add in what will surely be a push for austerity measures which could well stop our feeble recovery in its tracks, and we'll be checking the overnights more assiduously than the noon prices.

This changes everything...

There are 5 BILLION mobile phones in the world.  With our population of  6.8B, this is very impressive. (Note that some folks have more than one, of course).

There are now more than five billion connections worldwide.
In many regions, penetration exceeds 100%, where there is more than one connection per person in the country.
Ben Wood, mobile phone analyst at CCS Insight said the mobile phone may be "the most prolific consumer device on the planet".
"If you just take the UK in 1987, when the first mobile companies launched, an industry insider predicted a maximum of 10,000 phones.
"Now almost every adult, child and domestic pet seems to have one, given that 30 million phones are sold every year in the UK," he said.
Rapid growthThe four billion connections mark was surpassed at the end of 2008, and analysts at Wireless Intelligence predict six billion connections worldwide by the middle of 2012. [More]

What this means to me is you can throw predictions about the future out the window.  Never have so many had access to so so much information. 

We are about to unleash more global brain power than we have ever imagined.

Think about cell phones raised productivity in rural America.  Now add in the "first-pound-of-fertilizer" effect for places like India and Africa. As the market information finally penetrates to every corner of of the world, and information flows essentially unfettered, several business plans built on the ignorance of customers will fail.

Stop and think how much of your farm profits are based on folks (especially landowners) not knowing current market dynamics.  Put that on your "to-be-fixed" list.

They aren't making any more...

But they are finding more farmland.  In a striking example of a nation with a clear national policy and plenty of hard-pressed citizens to put it into practice, China is slowly working to secure food by acting like the BTO for the world.

China's Ministry of Commerce triumphantly announced this month that its bilateral trade with the continent is set to hit $100bn (£67.8bn) by the end of 2008, two years ahead of schedule. Africa's plentiful oilfields and rich mineral deposits are top of China's imports, and in return the world's most populous nation is exporting tens of thousands of its countrymen.
By some estimates, 750,000 Chinese people have spent time on the continent or have moved to Africa permanently to do business and take advantage of the natural resources. And Hebei, the province from where the middle-aged Mr Liu hails, is no exception. He reckons 10,000 farmers from Hebei alone have gone to 18 African countries in the past few years.
They work in "Baoding villages", named after the dusty township where Mr Liu lives; he likes to point out that Baoding means "Protection and peace". The villages, ranging in size from 400 to 2,000 Chinese, have been set up across the continent, from Nigeria to Kenya, from Sudan to Zambia.
Mr Liu started the Baoding villages when he was head of Hebei province's foreign trade bureau in 1998 and was seeking ways to boost the local economy, which had been dampened by the Asian financial crisis. He discovered Africa.
"We found Africa was not affected by the crisis, and we went there, and found that local people were short of food, even though there was lots of land not in use for farming and plenty of animals," he says. "So I decided to switch from exporting goods to exporting agricultural expertise."

It is a winning formula for China, which has more than 20 per cent of the world's population but only 7 per cent of its arable land. "China has too many people and too little land," Mr Liu ponts out. "In Africa, they have plenty of land and too few farmers. Places such as Ivory Coast are short of 400,000 tonnes of food a year, and the local people cannot farm enough to feed the population. Local farming skills are not developed." [More]

While this certainly looks like a mashup of colonialism and outright invasion, as long as Africans welcome the immigrants, who is to say they are imperialists?  It certainly offers a stark comparison with our military-based nation building.  And China is hardly alone in this strategic effort.

From a long term perspective, our ignorance of Africa prevents much understanding of the possibilities for farming there, given the right people in charge.

For instance we have little appreciation for how enormous the continent is.

I remember joking about Brazil would never realize its agricultural potential only to have to eat those words a few years later. We may be ignoring the same or even larger competitive emergence when the energy of Chinese farmers is coupled with underutilized resources.

The Italian garment industry certainly found this out when they began importing cheap Chinese labor. To their consternation, the workers rapidly became managers and then owners.

But most brands aren't so straightforward. To please customers looking for the "Made in Italy" label, several luxury companies now have their goods made in Italy by illegal Chinese laborers. The Tuscan town of Prato, just outside Florence and long the center for leather-goods production for brands like Gucci and Prada, today has the second-largest population of Chinese in Europe, after Paris. More than half of the 4,200 factories in Prato are owned by Chinese entrepreneurs, some of whom pay their Chinese workers as little as two euros an hour. [More]

Undoubtedly this global recession will change attitudes about immigration. Already our inflows of Hispanis workers have slowed dramatically, and perhaps even reversed.  We may yet look back on the good old days of immigration problems becuase they were clear evidence of a growing economy.

The power of China is people, something generally not recognized in the west, where we see population as a problem. One reason I tend toward occasional optimism about the global economy is we now have several  hundred million more minds engaged in finding answers, instead of the few in the developed world.

China's other people problem...

Too many of them are males. I posted about this long ago, I think, but here is an update.

By the time these newborns reach puberty, war games may seem like a quaint relic. In the 2020s, Chinese Academy of Social Sciences researcher Zheng Zhenzhen, estimates in a People's Daily interview that 10 percent of Chinese men will be unable to find wives, which could have a huge impact on Chinese society. Historian David Courtwright suggests in Violent Land that sexually segregated societies in the United States--frontier towns flush with unmarried men, immigrant ghettos in early twentieth-century cities, mining camps--are behind our propensity toward violence. The immigrants and westward migrants who shaped early America, Courtwright says, were largely young single men, who are-- today as well as then--disproportionately responsible for drug abuse, looting, vandalism, and violent crime. A long-term study of Vietnam veterans in 1998 may explain exactly why: The subjects' testosterone levels, which are linked to aggression and violence, dropped when they married and increased when they divorced. Eternally single men, by extension, maintain high levels of testosterone--a recipe for violent civil unrest.

The one-child policy was instituted in an attempt to hamper the wild growth of the Chinese population. But, in the process of plugging one hole, the government may have left another open. The coming boom in restless young men promises to overhaul Chinese society in some potentially scary ways.

Lianyungang, a booming port city in a Jiangsu province economic belt, is ground zero for some of these changes. According to the China Family Planning Association, it's the city in China with the most extreme gender ratio for children under four--163 boys for every 100 girls. One sunny Saturday morning at verdant Cangwu Park, I count six boys and three girls bouncing on the inflatable castle. Near the ice-cream stand are a dozen sticky-faced kids, seven boys and five girls, feeding pigeons. The children running after kites adorned with Olympics mascots and China's Shenzhou VII spaceship: three and two. The drivers of the cheerful little tanks circling an electric track: three and one.

These numbers work fine on the playground, but, for China's many match- making services, they may prove troublesome. At the Good Luck Marriage Introduction Agency, in a town a few hours' drive west from Liangyungang, two whiteboards mounted on the wall advertise the age, height, and income of available singles. On the day I visit, founder Tao Hui, a fortysomething woman with a bouffant, is watching soap operas in her sweatpants. She hasn't felt the shortage yet, she says. On the whiteboards, a few dozen nameless men line up nicely to a few dozen nameless women. For now, many in the early wave of surplus men are marrying younger women.

"We'll see real problems in eight or ten years," Tao predicts. Her 17-year- old son, she assures me, has good prospects. But she already turns away a lot of single males from outlying villages with no money or education. "If they're ugly and can't find work, there's nothing I can do. No one wants them." [More]

My first reaction to this article was "Marriage lowers your testosterone??"

But enough about me. 

It would not be good to be a neighbor to China in the next few decades.  It also sheds new light on their aggressive foreign worker program in Africa and Italy for example.  While we see it as leaving home, they may see it as a chance for a wife.

How quietly, how quietly...

Major changes in our lives sometimes come with little fanfare. The globalization of information flow means many of us will check the e-CBOT prices on Sunday evening. Meanwhile, as Europe and the rest of the developed world wakes up before us, oil prices, stock markets, and business begins while we are still on our weekend break.

We have become citizens of a larger world - voluntarily. It matters what happens in Beijing and Warsaw and Wellington, and thanks to modern communications we can have it at our fingertips. While many farmers find this TMI (Too Much Information) , we nonetheless have unconsciously adapted to this connectedness, I believe. Farmers reach for cell phones at their belt now as unconsciously as they do pliers.

News from a far country is no longer a novelty. In fact, many of us are startled to learn the latest local developments, since new information streams often crowd out the old. I know I am unsurprised when producers speak knowledgeably of economic and financial affairs from other sectors and other nations.

But we didn't and aren't preparing for this aspect of our career. That's what Joe Prochaska discovered.

Where do they expect to get this information? Formal management education or training is all over the board with this group, and even a couple with college business degrees noted this took place so long ago it doesn’t seem to give them the tools to deal with today’s management issues. What is the issue? The biggest one mentioned is that farming is becoming very complex and they sense an operation has to be brought to a business level with financing and marketing issues in the drivers seat. Any new production technologies are adopted only when they complement the business objective, not the other way around as it used to be. [More]

Somehow, somewhere this educational need will be met. And my feeling is it will occur outside our own profession - either business schools will develop short courses or on-line educators will provide similar training. Ag colleges will be hard pressed to stretch into information management, for example.

Meanwhile, the solution may occur organically, as producers discover what the rest of the world is discovering. You can do it on your own now. Concerted effort online can provide all kinds of information, experts to follow, and bloggers who help explain. This diversity of responses could be the optimal answer for a profession facing a wild array of challenges.

Globalization: The Early Years...

Archaeologists have unearthed the earliest evidence of farming in Egypt.

The crops and animals—and techniques for raising them—were all introduced to Egypt from the ancient Middle East, where domestication of plants and animals is known to have existed as far back as 9000 B.C. It came together as a "package" around 7000 B.C., according to Zeder, an expert in Middle East domestication.

"An increasing area of study is looking at how this package diffused out of its homeland into other areas," Zeder said. We now have "really good prima facie evidence of some of the earliest movement of that technology into Egypt."

It's not clear whether the crops and animals were brought to Egypt by ancient mariners on the Mediterranean Sea or overland through the rugged Sinai desert or both. The presence of Red Sea shells at the site could indicate that the trading routes cut through the Sinai Peninsula.

As the new evidence is studied further, it could help experts iron out those details and also map the initial spread of farming across the African continent.

Faiyum "really is the beachhead front now in the movement of agriculture and the increase in trade into Africa," said Zeder, who added that the movement of agriculture may be the first example of globalization. [More]

It's hard to keep a good idea to yourself, especially when it's literally out in the open. One of the great strengths of our profession is its operational transparency - we can watch what the competition is doing and usually come close to duplicating it on our own farms.

That's about the only upside to farming next to really great operators.

They are under your bed right now...

The response e-mail address for US Farm Report (info@usfarmreport.com) gets an enormous amount of spam - hardly a surprise with a public address. As I sift through the hundreds of messages each week, I do get a sense for the latest angle is and what topics must be provoking the strongest responses.

You can guess the top categories, of course. What is becoming embarrassing to me is I no longer recognize the names of the (I assume) celebrities who have been photographed nude. But then I couldn't name 5 hip-hop artists if they held a gun on me.

Wait - that could actually happen.

Anyhoo, my favorite themes are the conspiracy-mongers. I spoke about the NAIS mail I get on the show (11/17-18) in Mailbag segment. (Watch here). There are some very intense opponents of this effort to track animals.

But every few days I get an update about the North American Union. And for those of you too young to remember the Soviet troops living under Detroit, here is an introductory course to this persistent fear.

The North American Union is a supranational organization, modeled on the European Union, that will soon fuse Canada, the United States, and Mexico into a single economic and political unit. The details are still being worked out by the countries' leaders, but the NAU's central governing body will have the power to nullify the laws of its member states. Goods and people will flow among the three countries unimpeded, aided by a network of continent-girdling superhighways. The US and Canadian dollars, along with the peso, will be phased out and replaced by a common North American currency called the amero.

If you haven't heard about the NAU, that may be because its plotters have succeeded in keeping it secret. Or, more likely, because there is no such thing. Government officials say a continental union is out of the question, and economists and political analysts overwhelmingly agree that there will not be a North American Union in our lifetimes. But belief in the NAU - that the plans are very real, and that the nation is poised to lose its independence - has been spreading from its origins in the conservative fringe, coloring political press conferences and candidate question-and-answer sessions, and reaching a kind of critical mass on the campaign trail. Republican presidential candidate and Texas congressman Ron Paul has made the North American Union one of his central issues. [More of an even-handed report]

One of the supposed pieces of evidence is the NAFTA Super-highway. This monumental undertaking is perhaps the outgrowth of the Trans-Texas Corridor.

Add up all the above ingredients--NASCO, SPP, Lázaro Cárdenas, the Kansas City SmartPort, the planned pilot program allowing Mexican truckers to drive on US roads--and you still don't have a superhighway four football fields wide connecting the entire continent. Which is why understanding the persistence of the NAFTA highway legend requires spending some time in Texas, where Governor Rick Perry and his longtime consigliere, Texas Department of Transportation commissioner Ric Williamson, are proposing the $185 billion Trans-Texas Corridor (TTC), 4,000 miles of highway, rail and freight corridors, the first of which would run up from the border through the heavily populated eastern part of the state. Plans for the TTC call for it to be up to four football fields wide at points, paving over as much as half a million acres of Texas countryside. The first section will be built and operated by a foreign enterprise, and when completed it would likely be the largest privatized toll road in the country.

And unlike the NAFTA highway, the Trans-Texas Corridor is very, very real. [More of a must read for non-Texans]

The interesting thread weaving all these fears together is simply xenophobia - our growing distaste for foreigners. The TTC would be built and operated for 50 years by a Spanish concern (with US partners). This foreign ownership really riles up some people.

In my conversations with people in Texas, it seemed that the privatized nature of the road was what got folks the angriest. Bad enough that drivers would face tolls, that ranchers would have their land cut out from under them, but all for the financial gain of a foreign company? "If you liked the Dubai ports deal, you'll love my TTC land grab," taunts an animated Rick Perry on one anti-TTC website. The cartoon goes on to portray Cintra as conquistadors clad in armor riding in to steal Texans' treasure.

"What really drives this is economic," activist Terri Hall told me. "It's about the money. We're talking about obscene levels of profit, someone literally being like the robber barons of old. And this is one thing that government actually does well, build and maintain roads."

That is the curious fact. While our government debt is in Chinese/Japanese hands, and our financial institutions glad to be acquired by Mideastern governments, why the uproar over highways?

I think it's the simple obviousness of the deal - and the fact that writing to your legislator can affect it. After all, nobody took a poll of farmers to see if they wanted Case combines to be built by an Italian company.

But the other influence, I believe is the residue of America's late entry into global living. For most of my life we were large enough and diversified enough to ignore international business as a curiosity. Unlike countries in Europe, we didn't need to learn to tolerate and conduct commerce with people unlike us. Heck - it was bad enough doing biz with people from a different region.

And while many view the current interdependence as a slide downward, it strikes me more as the logical outcome to economic advantage. While we don't mind strangers being dependent on us for feed grains, we cannot yet embrace the obverse of that exchange: we become dependent on outsiders for some good/service they provide really well (shoes).

Nor will we be convinced otherwise, I think. Globalization will continue to irritate many Americans until they are gradually displaced by children who have grown up with a different business and social climate.

So I'm expecting a steady stream of NAU warnings.

Any guesses as to the next great threat to America?

[Return to AgWeb]

I don't know art...

But I know what I like. This ain't it.

After trekking for hours across a stark, lunar desert landscape awesome in its harsh beauty, our bus rolled into a former Silk Road waypoint where today's craftsmen still specialize in hand-knotted rugs. We passed through a beaded curtain to see, on the place of honor on the main wall, this: [More]

Woven proof globalization has gotten out of hand.

The protectionist tide gets noticed...

Even while I support globalization on the whole, I have become convinced that we could do better the alleviate the misfortune of the biggest losers in the changes. Telling a 55 year-old autoworker to become a RN is no help, and rhetoric like that is one big reason many are no longer listening to rational arguments about the manifold benefits of greater world trade and integration.

Surprisingly, many of America's financial leaders are agreeing.

More striking are the report’s recommendations. It makes a strong case for the benefits of globalization (no surprise), but goes well beyond the usual corporate pablum of needing to equip American workers through better education. Since upgrading skills is a process that takes generations, the report argues, it will do little to shore up political support for globalization now. Instead the focus should be on improving the distribution of globalisation’s gains and doing more to help the losers. And that requires… a more progressive tax code and more (and better) government schemes to help displaced workers.

I especially liked some of the suggestions in the report.

The report takes particular aim at the (enormously regressive) payroll tax. Either payroll taxes should be integrated into the ordinary income tax system or the wage-cap on payroll taxes should be lifted. It brims with ideas for government tinkering: trade-adjustment assistance and unemployment assistance should be morphed into a single programme that offers wage insurance, portable health insurance and retraining. Communities should be able to federally insure their tax base against sudden economic dislocation (when, say, a factory moved to Mexico). [More]

We can afford safety nets for people other than farmers. If we don't make the effort, many of our gains could be rolled back as trade barriers are rebuilt.

Sarkozy and farmers...

Although he made pleasing sounds about protecting French farming interests during the campaign, I think the conservative Mr. Sarkozy might be a disappointment to French agriculture.

One early signal might be the bizarre turn in the serious problem in France's wine industry.

Such frustration has now boiled over into the threats of violence by the Crav, made in a video message sent to France's new President, Nicolas Sarkozy.

In the video - shot in a secret location late at night - seven wine-makers, their faces hidden by black balaclavas, read out the spine-chilling warning that "blood will flow" if Nicolas Sarkozy does not act fast to raise the price of wine. [More]

The law-and-order issues like immigration as well as budget problems that brought Sarkozy election success may put ag support on back burner politically. French farmers have always tended to be demonstrative, so this will bear watching.

Even trickles can make a difference...

As the world quietly passes a milestone of becoming more urban than rural, the most rural of all - peasants in China - may slowly be gaining ground.

Most of the houses have obviously been newly rebuilt, with brick walls and higher roofs. (Feng Shui and the cost of land may explain why houses stay on the same plots.) This is entirely typical for the area. It's dangerous to generalise about a huge country from anecdotal evidence; still, it is evidence that at least one substantial group of Chinese peasants are doing absolutely better than before, whether or not they are falling relatively behind the city-dwellers. [More and great photos of stuff other than tourist sites]

The billions of trade dollars pouring into China are of course being sopped up mostly by a few entrepreneurs (to use the polite word) and a growing middle class in the cities, but to be fair, the Chinese government is taking some steps to help the vast countryside and rural population live better lives.

It is both sad and hopeful that only a few dollars can make such a big difference there.

A very quiet, very big step...

Economist Hernando de Soto captured it best (if over-emphatically) in his brilliant book, The Mystery of Capital: the biggest impediment for poor people around the globe in the lack of a system of property rights. Even as I wade through a legal morass of deeds, abstracts, and title insurance to rationalize my mother's estate, I recognize the power of this system whereby I can say with considerable assurance, "This is mine".

According to de Soto, the poor of Third-World countries are not victims of rapacious capitalism, but rather are wronged by the lack of property rights and with outright bureaucratic barriers that prevent the poor from gaining access to capital. Thus, they languish in the vast "informal sectors," or underground markets, that so characterize much of the Third World.
The elite of Third-World nations, he writes, have been able to use the Western systems of laws and property rights to participate in ownership of capital, which is why they are prosperous. Using Braudel’s (1992) analogy of the "bell jar," de Soto writes that the elite are inside this "jar" and take advantage of the blessings of capitalism, while the poor, who are "outside the jar," are left out. [More]

Such a fundamental and overlooked capacity here in the US. Yet this mundane paperwork jungle has unleashed the power of American innovation and hidden capital with astonishing results.

Now China is poised on the brink of unleashing this power in their communist country. Not all at once, of course, but it appears the first step has been taken. (For a semi-humorous, state-approved account of this development, check here.)

This latest law, likewise, will not bring the full property-rights revolution China's development demands. Indeed, it will not meet the most crying need: to give peasants marketable ownership rights to the land they farm. If they could sell their land, tens of millions of underemployed farmers might find productive work. Those who stay on the farm could acquire bigger land holdings and use them more efficiently. Nor will the new law let peasants use their land as security on which they could borrow and invest to boost productivity. Nor, even now, will they be free from the threat of expropriation, another disincentive to investment. Much good land has already been grabbed, and the new law will merely protect the grabbers' gains.

This law cannot in itself resolve the murkiest question: who owns what? This is especially true in the countryside, where the mass collectivisation during Mao's Great Leap Forward of half a century ago left farmland “collectively” owned. Peasants have since been granted short (30-year) leases. But even outside agriculture it is often unclear whether a “private” enterprise is really owned by individuals or by a local government or party unit. Conversely, some “collective” or “state” enterprises operate in ways indistinguishable from the private interests of their bosses. Moreover, should an underdog try to use the new law to enforce his rights, the corrupt and pliant judiciary would usually ensure he was wasting his time. Since the Cultural Revolution, when the NPC passed just one law between 1967 and 1976, the legislature has been legislating quite prolifically. But the passage of laws is not the rule of law.

Which leads to a final obstacle: without an accountable executive branch, the necessary reform of the legal system is not going to happen. As the passage of the property law itself demonstrates, the party is showing itself somewhat more responsive to public opinion than it was in the past. But it still runs a government that does its best to silence most dissenting voices, strictly controls the press, and lavishes resources on the best cyber-censorship money can buy. Property rights are a start; but only contested politics and relatively open media can ensure that they are enforceable. [More of a must -read article]

The implications are hard to overestimate. While making other steps toward free markets, The government action could be pivotal for millions of peasants. The industriousness of the Chinese is awe-inspiring. By coupling that with an ability control wealth and build on it, China may be on the verge of a long-needed transition to greater possibilities for all their citizens.