The ITC appeal...

I have been scanning furiously for some validation of my hope for an investment tax credit (ITC) and found it here:

It looks like we will get some fiscal stimulus, despite my cogent objections (I know, big surprise.) One part of the stimulus package will probably be an investment tax credit which does have some good properties. Unlike traditional fiscal policy an investment tax credit cannot be fully crowded out and it works best when it is expected to be temporary.

Cuts in income taxes and increases in spending must be paid for somehow, so traditional fiscal policy can be crowded out by declines in private spending (My colleague Russ Roberts says fiscal policy is like trying to raise the water level by dipping a bucket in the deep end of a pool and dumping it in the shallow end.) But an investment tax credit works through a change in incentives - it increases the incentive to invest now, when times are tough, at the expense of less future investment when times are better.

Also, cuts in income taxes stimulate the least when they are expected to be temporary. But in contrast, an investment tax credit stimulates the most when it is expected to be temporary. (A temporary credit must be used now or lost while a permanent credit gives you the option to wait).

Thus, a broad-based, temporary investment tax credit has some appeal as fiscal stimulus.

[First, an apology for lifting a post from MR whole-hog, but it was so brief and cohesive, I thought it best.]

Second, I agree that the ITC is the fastest way to spur business spending. For example, a 10% credit immediately makes all assets covered "on sale" - regardless of depreciation spans. Of course, here in agriculture it would simply be more icing on the legislative cake, as we are already buying everything available (that meets Sec 179 criteria).

....

Yikes - after checking the open, maybe our party is winding down as well.

Ah, yes - the fine print...

As focused as I was on the biofuels mandates portion of the Energy Bill, I missed some of the interesting little tidbits that are only adding to the biofuel optimism.

But, wait, that’s not all. Car companies in America get a fuel-economy credit for every flex-fuel vehicle they sell. The government rates the fuel economy of flex-fuel vehicles at about 165% the miles per gallon (mpg) they would get on straight petrol. In reality, vehicles running on E85 get 25-30% fewer mpg than their petrol equivalents.

As it costs only $200 to turn a conventional car or light truck into a flex-fuel vehicle, the industry can save itself billions in potential fines that would otherwise accrue for failing to meet the government’s CAFE (corporate average fuel economy) requirements. CAFE is the sales-weighted average mpg figure for all the cars or light trucks a manufacturer sells in any given model year.

The current CAFE of 27.5 mpg for cars and 21.6 mpg for light trucks is set to rise to a combined 35 mpg by 2020. Subsidised corn-based ethanol is therefore a nifty way of meeting America’s mandatory fuel-economy requirements without having to invest billions in new technology. Between them, General Motors, Ford and Chrysler now offer over three dozen models that can run on E85 as well as petrol. [More][my emphasis]

While I have serious reservations about being able in the long run to mandate market forces to obey political will, the wide spread of regulatory tools deployed to push biofuels consumption seems to be working [from a corn farmer's point of view].

My fear is we may later, and at length regret having so cavalierly run rough-shod over the market rights of our customers.

We need some new old sayings...

And here's your chance to say 'em. Rules of Thumb is a new website that solicits, lists and allows comments on folk wisdom.

Most of them are unadulterated hogwash. An example:

A curdly sky never leaves the ground dry.

Say what??

Check out the entries on farming.

I think this is all part of the anti-technology backlash that fuels agrarian agriculture and seeks to re-establish experiential wisdom over technological discovery.

Good luck with that.

Build your own wooden computer...



This looks like a third-grade science fair project to me. Plus it would be a lot of fun to build with your budding computer engineer.

[via DumpTrumpet]

What was that about?...

This is how weird rumors get started.

Shares of farm equipment-maker Deere & Co. fell hard for a second straight session Thursday as investors, after driving agribusiness stocks to astronomical heights over the past several months, reversed course and launched a sell-off of companies that produce products used down on the farm.

Until the reversal, Wall Street had been treating ag-related stocks as if the sector, which is benefiting from high grain prices sparked by the ethanol boom, would remain largely immune from the economic turbulence that has pulled down some parts of the economy. But suddenly, and with no obvious triggering event, companies that serve the farm sector have lost their luster.

Of course, the overall stock market stumbled badly Thursday, with the Dow Jones industrial average falling more than 300 points, but for Deere and other farm-oriented companies such as Monsanto Co. and CNH Global NV, the damage was several times as bad. [More]

Pick your favorite conspiracy theory. I made these up myself. You try, too - with a little luck you could be on CNBC. (Call me, Maria!!):

1. Commodity index fund managers also have big agribusiness holdings, and they know they are going to lighten up soon on their heavily long position.
2. The checks from the Russians bounced.
3. Wildcat strikes are being whispered as machinery factories run full out, and UAW workers finally smell leverage.
4. Several thousand investors made simultaneous foolish decisions in the ag sector.
5. Investors are wisely monetizing their biggest profit positions.

The strange thing is nobody seems to have a plausible story, let alone a verifiable cause for the sell-off. How bad must it be when you can force TV experts to say "I don't know"?

One parting note: If the US stock market matches the plunge today in the non-MLK-celebrating world, stocks could drop 600-700 points tomorrow.

Anybody besides me gonna check how grains open this evening?

Count the spoons*...

I spoke today with a reader about the possibility of grain heists in farm country. But the ag boom is world-wide and so is the ag crime boom.

An international criminal gang is believed to be behind the theft of £3 million ($A6.69 million) worth of tractors, diggers, trailers and quad bikes a year.

Police believe thieves have routinely been stealing two vehicles a night from either farms or dealerships, The Times reported.

They then wait a few days before breaking into a different dealership where they steal identification documents and electronic vehicle management boxes, or "black boxes", from similar but unsold vehicles.

In one case a John Deere 6920 tractor and telescopic handler, which works in a similar way to a forklift, worth £115,000 ($A256,639.14) were stolen from a farm in Leicestershire.

Both vehicles were given new identification numbers and electronic boxes stolen from another dealership.

They were then shipped to Sydney and Rotterdam in the Netherlands, with the proceeds split between criminals in Australia and Britain, the newspaper said. [More]

It's strange actually having stuff other people want for a change.

*I guess this reference is a little obscure.

Has "organic" jumped the shark?...

Despite fervent support and frenzied efforts, the basic concept of what "organic" means has fallen prey to food politics. Like a candidate vying for national popularity it has striven to be all things to all eaters, and has been misportrayed by proponents and critics alike.

There is, therefore, huge potential for disappointment. When you buy an organic egg you are not just buying the means to make an omelette, you are buying a dream. It is the dream of something delicious, which will simultaneously be good for your body and good for the hens and people who produced and packed it. It is the dream of being self-indulgent and virtuous at the same time – which essentially encapsulates the main yearning of our consumerist world. As Lynda Brown says: “Everybody wants an organic egg to come from a chicken that has led an idyllic life. But most people don’t actually want to pay for it.” The result is that when you look behind the dreamy label of much organic food – as with Soren the pig – you find it is not so very different from the industrial, compromised food you were trying to buy your way out of. The yolk is still pallid. The workers are still underpaid. The hens are still crowded – just a bit less than for conventionally farmed eggs. [More of a very thoughtful essay]

I still think the core of the problem with organic is non-differentiability - at the consumer level there is no test to prove any of the alleged attributes of "organic" production. Absence of residues, chemical composition, color, size, etc. - all these characteristics can be duplicated by non-organic, industrial farms. And humane production methods or harvesting techniques (slaughter) can only be witnessed to - not verified in a lab.

This simple fact leads me to suspect the "organic" label has lost cachet in the marketplace. This could be the reason for rush to "local" food. Although only slightly more verifiable, it does have one stunning aspect that I think contributes to its attraction for upscale consumers: it's hard to get and/or expensive.

I support the right of growers to market into whatever consumer niches they think will be profitable. But I still wait for any proof that whatever the consumer fancies in food production cannot be supplied cheaper and more reliably by industrial farms.

The slow rejection of rBGH use should hearten food worriers that consumers still are in the driver seat. And the rapid advance of analytical technology may yet identify characteristics in agrarian production that industrial farms cannot duplicate. Or we may invest in a certification process that will be expensive and intrusive to guarantee non-measurable qualities. (Like the Chinese are doing with kosher inspection)

But I think this isn't where the real battle to change our food will be fought. Instead it will be changing our social/family values to elevate the status of preparing food to earning sales bonuses. When eating better at home is finally recognized as source of immense joy and health protection, and our lives and values are rearranged to respect both food and its consumption, the food industry will scramble to supply the very ingredients so difficult to source today.

One giant leap for man-drinks...

I was two years old when this life-changing technology was spawned.


I think my new combine has 37 cupholders and a cooler.

Science - ya gotta love it.

Second-wave ethanol complaints...

Ethanol proponents have been vociferous in their counterarguments to corn prices and food price inflation linkage. The arguments are sly, pointing out the price of corn has less effect than the price of oil. (Boy, they better hope oil doesn't drop drastically to test this theory.)

But somewhat harder to refute is the acreage shift ethanol politics are forcing.

Efforts to work out which crops are most environmentally friendly have, until now, focused only on the amount of greenhouse gases a fuel emits when it is burned. Scharlemann and Laurance highlighted a more comprehensive method, developed by Rainer Zah of the Empa Research Institute in Switzerland, that can take total environmental impacts - such as loss of forests and farmland and effects on biodiversity - into account.

In a study of 26 biofuels the Swiss method showed that 21 fuels reduced greenhouse-gas emissions by more than 30% compared with gasoline when burned. But almost half of the biofuels, a total of 12, had greater total environmental impacts than fossil fuels. These included economically-significant fuels such as US corn ethanol, Brazilian sugar cane ethanol and soy diesel, and Malaysian palm-oil diesel. Biofuels that fared best were those produced from waste products such as recycled cooking oil, as well as ethanol from grass or wood.

Scharlemann and Laurance also pointed to "perverse" government initiatives that had resulted in unintended environmental impacts. In the US, for example, farmers have been offered incentives to shift from growing soy to growing corn for biofuels. "This is helping to drive up global soy prices, which in turn amplifies economic incentives to destroy Amazonian forests and Brazilian tropical savannas for soy production." [More]

I wonder how the studies will proceed now that the livestock sector is finally coming to grips with the very real possibility of high corn prices for a relatively long time. If we constrict the meat supply to raise prices necessary for feeder profitability, food inflation could significantly surpass the mild expectations noted in the studies.

Few disagree that corn prices have little direct impact on food prices (except corn farmers a few months ago when arguing that the farm program was a "cheap food" program benefiting consumers.) But we already have seen price spikes way beyond our forecasts .

Of course, all this carping is way too late. But if the dour forecasts I heard today on the talk shows is any indication, corn farmers rolling in the dough might be advised to speak softly and hide the big lobby stick. A looming recession combined with food inflation and high unemployment isn't the time to demand a government safety net other sectors are perishing without.

You're not depressed...

It's too early.

In the digital age we're likely to turn to search engines just as often as we would confide in friends and medical professionals to gauge our psychological state. If we think we're suffering from a real bout of the blues or a mental crisis, we're likely to Google the symptoms or find a chat group in the hopes of performing a self-diagnosis. In fact, online searches for "depression" are among the most popular searches sending traffic to the 5,900 sites that we track in the Hitwise Health and Medical category — but the peak is not in January. According to our Internet behavior, our depression spikes reliably in mid-November every year, right in time for Thanksgiving, the launch of the holiday season. [More]

The results of Internet info-mining are starting to creep me out just slightly.

Oh sure, but then the guy next door gets a bigger one...

The farm horsepower race is about to get personal.

Behold, the farmer robot suit.

The "farming robot suit," developed by a team of researchers led by Shigeki Toyama, a professor in the graduate school of the Tokyo University of Agriculture and Technology, has been tested on farms. Researchers hope to have the technology in use in 2 years and develop it into a product and begin selling it in four years.

The suit, which is secured with belts, consists of a resin framework with eight motors to assist the movements of the knees, elbows, lower back and shoulders, making farm work easier.

When pulling out a Japanese radish, for example, about 20 kilograms of instantaneous pressure is exerted on the knees and lower back, but when using the robot suit, only about half the force is used. [More]

Some helpful conversion factors: 20 kilograms equals about 42 furlongs.

(Just how big are Japanese radishes, anyway?)

Carry your part...

By now even I realize I see the beginnings of trends that never happen. I link a few anecdotes together and bless it as data, but on rare occasions I see a pattern that actually emerges later. Here is one that should seem familiar to long-time readers:

I think choral singing - or group singing, or whatever label - is being revitalized or rediscovered in many different forms both sacred and secular to feed a hunger for connectedness with a purpose. Sure, you can rack up friends on "MyFace" websites and party hearty with whoever shows up at the bar. But if you have the slightest appreciation for music, few experiences can touch you as emotionally or command your concentration or provide instantaneous joy like singing in a group. And I further suggest the effects are powerfully long-lasting.

So even while my small choir struggles, I find hope for the future in events like these.

• Choral socialism. Even if it is the flaky LaRouchies.
• Choral history. The search for historic movie music uncovers a powerful old American choral tradition.
• Choral political movements.
• 
  
• 

Music has been central to Estonian culture for centuries. Although Estonia is one of the smallest countries in the world, it nonetheless has one of the largest collections of folk songs. But Estonians have historically used music as a political weapon as well. It is said that song was used in protest of the German invaders of the 13th century, and also in resistance to the Russian occupation under Peter the Great in the 18th century.

In the 19th century, Estonians started a song festival tradition called Laulupidu, where choirs from around the country come together to sing for days. 25,000 to 30,000 people sing on stage at the same time. But the founding of Laulupidu was as much an expression of the desire for self-determination and independence as about song. In the late 1980’s music was once again used as a unifying force when hundreds of thousands gathered to sing forbidden Estonian songs, demanding their right for self-determination from a brutal Soviet occupier.

To truly understand Estonia, one must understand Estonian music. [More]

It's hard to picture Americans unplugging their iPods to un-electronically join together for home-made music, but that's approximately where I think we could be heading. I know I have found few life experiences which provide the joy and team spirit of group singing.

I also think this could be one part of the rebuilding of social capital around the world.

Gaming the farm program: In the beginning....

As negotiators work to make payment rules we sneaky farmers can't (with ample professional help) subvert, we could be simply echoing ancient rituals from very, very early "farm programs".

Shmita (Hebrew: שמיטה, literally "release"), also called the Sabbatical Year, is the seventh year of the seven-year agricultural cycle mandated by the Torah for the Land of Israel.

During Shmita, the land is left to lay fallow and all agricultural activity—including plowing, planting, pruning and harvesting—is forbidden by Torah law. Other cultivation techniques—such as watering, fertilizing, weeding, spraying, trimming and mowing—may be performed as a preventative measure only, not to improve the growth of trees or plants. Additionally, any fruits which grow of their own accord are deemed hefker (ownerless) and may be picked by anyone. A variety of laws also apply to the sale, consumption and disposal of Shmita produce.

A second aspect of Shmita concerns debts and loans. When the Shmita year starts, personal debts are considered nullified and forgiven.

The Book of Leviticus promises bountiful harvests to those who observe the shmita and makes observance a test of religious faith.

The rabbis of the Talmud and later times interpreted the Shmita laws in various ways to ease the burden they created for farmers and the agricultural industry. The Heter Mechirah (leniency of sale), developed for the Shmita year of 1888-1889, permitted Jewish farmers to sell their land to non-Jews so that they could continue to work the land as usual during Shmita. This temporary solution to the impoverishment of the Jewish settlement in those days was later adopted by the Chief Rabbinate of Israel as a permanent edict, generating ongoing controversy between Zionist and Hareidi leaders to this day.[1]

The current Shmita year began on Rosh Hashanah of the Hebrew year 5768, and extends until 29 Elul 5768 (September 13, 2007-September 29, 2008). (However, fruits which are harvested in the spring and summer of 2008 must be treated as Shmita produce well into the first year of the new agricultural cycle.) [More]

Seemingly arbitrary rules deigned for religious or (in our case, political reasons with economic pretensions) are tough to enforce at the lowest level. The belief in enforcement without full buy-in by the people involved is, I think, proving to be ill-founded. Despite setbacks here and abroad individual freedom and empowerment are on the rise, and both the size of populations and technology (abetted by no small amount of truculence) has made the threat of punishment pretty laughable.

Shmita occurs every seventh year, as a kind of sabbatical for the land, and it is mandated in the Torah. In Exodus 23:10-11, for instance, shmita precedes the injunction for individuals to rest on the seventh day. “Six years you shall sow your land and gather in its produce, but the seventh year you shall let it rest and lie fallow, that the poor of your people may eat; and what they leave, the beasts of the field may eat. In like manner you shall do with your vineyard and your olive grove.”

That presumably worked fine in a primitive economy before decent fertilizer, but shmita presented problems for the new Jewish state. Zionism was founded on the notion of a return to the land, but a modern country cannot live on what falls to the ground.

So respected rabbis from both the Ashkenazic and the Sephardic communities compromised. Charged with interpreting religious law, or halacha, they devised the “heter mechira,” or sale permit, which allows Jews to temporarily “sell” their land to non-Jews for the shmita year, so the land may be cultivated.

It is similar to the practice during Passover, when lawyers do a big business “selling” leavened products to non-Jews, so they need not be discarded.

In largely Arab East Jerusalem, the manager of Jafar’s Super Market and Sweets describes shmita this way: “It’s all about fooling the man upstairs.”[More]

I have written about the hypocrisy of soon-to-be-meaningless refuge rules and as I suspected, farmers are already validating the illogic with their planters.

The principle lesson here (IMHO) is that few laws work well all of the time. Which is why we need fewer laws.

Let's assume this is close to truth...

Allegedly, power companies have been under attack and blackmailed by hackers who are able to and have threatened power outages by manipulating the grid via the Internet.

In recent months, security researchers have emphasized long-standing security vulnerabilities in the Supervisory Control and Data Acquisition (SCADA) systems that control U.S. critical infrastructure systems ranging from power plants to dams to public transit (See " America's Hackable Backbone").

At the DefCon hacker conference in August, researcher Ganesh Devarajan of the security firm Tipping Point gave a presentation showing techniques that hackers can use to find points in SCADA systems that are vulnerable to hijacking and sabotage. The next month, the Associated Press obtained a U.S. Department of Homeland Security video, known as the "Aurora Generator Test," demonstrating how a cyber-intrusion could be used to physically destroy a large power generator.

In the past two years, hackers have in fact successfully penetrated and extorted multiple utility companies that use SCADA systems, says Alan Paller, director of the SANS Institute, an organization that hosts a crisis center for hacked companies. "Hundreds of millions of dollars have been extorted, and possibly more. It's difficult to know, because they pay to keep it a secret," Paller says. "This kind of extortion is the biggest untold story of the cybercrime industry." [More]

While this is more than a little unsettling, having been on a few boards of directors, I have to wonder: How do you hide that type and size of extortion payments on your financial reports?

And how incompetent/crooked must your auditing company be to sign off on it? Or is that an allowable business practice nowadays?

Kinda explains how nobody on Wall Street knows what their assets are worth lately, doesn't it?

Whaddaya think?...

I deployed my entire arsenal of art skills, my feeling for color and sense of texture and VOILA!
Version 3.2 of John's World.

It only took 4 hours and several close calls where I almost lost the whole dang blog.

About the Civil War video...

A loyal reader helps out:

The short video of the civil war battles is located at the new Abraham Lincoln Pres. Library and Museum in Springfield, IL. The video is shown on a large screen ( 10' X 12') and it is moving!!! Right behind where you stand to watch the video, is a large display of pictures of the civil war.
If you and Jan haven't seen the Abe Lincoln Pres. library and museum, you should. Like all museums there are weak areas, some look like a Disney project, but over all it is a good one from my viewpoint. It is a popular place for school kids.

Maybe it's the music that gets to you. It could be related to a Time article I just read about "Sacred Harp" music and its revival. (Listen to the podcast)

Stand by for rough seas...

I'm fooling around with new template for JWorld. Things could be funky for a while.

Thanks for reading.

For USFR viewers wondering about locusts...

The following was my TP review of the book that solved the riddle of ...

Locust

By Jeffery Lockwood

Inside many big books is small book trying to get out. Inside Jeffery Lockwood’s Locust, an account of the insect “that shaped the American frontier” is a term paper trying to escape. Your first clue should be the jacket blurb that proclaims it to be an “entomological thriller” – how long is that shelf at Barnes and Noble?

Still, after listening to stories about chinch bugs from my Dad and enjoying soybean aphids myself, I thought this might be an interesting story. Especially since mystery hung over the whole story: Where did they come from? Where did they go? Why? Will they return? Will there be a DVD version?

It starts with promise. The stories of unbelievable swarms of grasshoppers (locusts) documented from the pioneers homesteading the Great Plains are gripping and full of enough gory details to satisfy a fifth-grader: “The Great Salt Lake pickled them in its briny waters by the hundreds of thousands of tons then cast their carcasses ashore until a great wall of these inanimate pests was formed for miles along the lake’s shore”

Cool!

Indeed, the Rocky Mountain locust was a menace of apocalyptic proportions. Billions of insects would blot the sun before descending to devour every scrap of plant material on the ground. Repeated invasions in the 1870’s abruptly declined to erratic outbursts until, by the turn of the century, the locust hordes disappeared altogether.

Lockwood goes on the fill in enough background information on the Rocky Mountain locust to satisfy the most trivial questions. Historical information about the government’s response, gadgets and tactics futilely employed by the besieged farmers, religious implications thundered by church leaders – all are chronicled with precision.

The author saves his most detailed prose, however, for the entomologists involved. With respect bordering on reverence, he fills readers in on more details than we really need to know about the men who studied the problem. At the same time, he insinuates two tedious references: 1) nobody funds bug studies (such as this one) nearly enough, making it hard for noble researchers like himself, and 2) “You won’t believe why the Rocky Mountain locust suddenly disappeared!!”

While attempting to extract some drama from the historical research into why the locust came and went so suddenly, Lockwood overplays his hand. When the jaded reader finally slogs through to the answer, it is hard not to respond, “That’s IT? You gotta be kidding me!” And no, I’m not telling. Read it yourself. [Or check this book review on Amazon.com]

Along the way we have learned more than enough about trekking through glacial valleys identifying Rocky Mountain locust remains by examining the male locust sex organs. (Even I couldn’t make that up). Readers have mumbled through arguments about how to spell the scientific name. On top of everything, we get a sense of the intensity of the entomological researcher in-fighting and social structure. Zzzzzzzzz…

Nonetheless, I’m glad I read the book, if for no other reason than to stun dinner companions with statements like, “The Rocky Mountain locust would eat the handles off pitchforks”.

FUI (Farmer Usefulness Index 1= low, 10= high) 6
Buy or borrow? Borrow

I'm not sure why...



but I found this powerfully moving.

I'm watching you , dude!...

I had read about this psychological phenomenon, but this certainly illustrates it well.

It’s no surprise that people are more honest when they know that they’re being watched. But what about just reminding them of the idea of being watched, without them actually being watched? For years, people at the University of Newcastle’s Division of Psychology have an honor (or trust) system where they are requested to deposit payment for coffee in an "honesty box." There was a note saying how much they should pay. In 2006, Melissa Bateson and colleagues decided to do a little experiment: they placed an image above the note. They alternate between two pictures: one week they would use a picture of eyes and the other week, flowers. After 10 weeks, they plotted the amount of money received versus drinks consumed and found that people paid nearly three times as much for their drinks when eyes were displayed! [More]

Now consider how ubiquitous closed-circuit TV's are. H.G. Wells [Correction: George Orwell was the author. Actually, Jan and I argued about this. I was about to put Orson Welles! (Thanks, Brian) Hey, I was close...] was eerily prescient.

Nineteen Eighty-Four introduces the intercontinental nation of Oceania, one of the world's three superstates, which is run by an oppressive totalitarian government. The setting of the story is specifically the island of Great Britain, which has been renamed Airstrip One—a place similar to early twentieth century England. Throughout urban areas are large two-way telescreens as well as posters of "Big Brother", the supposed leader of Oceania (although the man himself is never seen in the flesh), with captions reading "BIG BROTHER IS WATCHING YOU". [More]

Now add in the power of Google Maps Street View.


Finally, now do you understand why some people will spend enormous amounts of money and commute for hours just to live out where we do?