September 10, 2003

Enemies of the Future

Reason's Ronald Bailey bangs his head against the wall when he listens to "activists" like Vandana Shiva and Will Allen, and contemplates the policies of the EU and the Bush Administration:

Reason: The EU is far from alone in deserving blame for this trade tragedy. When crop prices sank, the Bush Administration dumped the Freedom to Farm program that was eliminating most US agricultural subsidies. To satisfy the electorally important US farm lobby, Bush bumped up farm subsidies by $175 billion over the next ten years.

The Washington, DC-based International Food Policy Research Institute recently concluded, "Protectionism and subsidies by industrialized nations cost developing countries about $24 billion annually in lost agricultural and agro-industrial income." To put this figure in perspective, WTO figures show that the world's 40 or so least developed countries exported a total of only $38 billion worth of all goods in 2002. This is a drop in the bucket; in 2002, total world merchandise exports were $6,240 billion (or $6.24 trillion in American English).

The CNE report concludes that Africa in particular suffers from the developed countries' agricultural subsidies. Just how desperate the situation is in sub-Saharan Africa is made clear by British demographer Angus Maddison's calculation that the average annual gross domestic product in the region is just $450 per person. Maddison points out that that was the average income of a citizen of the Roman Empire. In other words, sub-Saharan Africa has made essentially no economic progress in the past 2000 years.

Given this background, one would think that the environmental activists at the IFG meeting would join together with free trade activists in advocating that the trade ministers gathering in Cancun work to eliminate these harmful rich country subsidies. Instead, several participants in the IFG conference urged that the world move back toward low technology and subsistence farming. Indian political environmentalist Vandana Shiva insightfully told the IFG activists, "Domestic agriculture in India has been destroyed by developed country farm subsidies and dumping." Then she quickly veered from this reasonable observation to unthinking environmentalist dogma. Her solution is not to eliminate the subsidies and open up food trade. Instead she wants Indian farmers to reject the Green Revolution which boosted Indian grain production four-fold over the past four decades and move back toward small-scale agricultural production. This is a recipe for famine.

Will Allen, an American organic farmer, noted at the IFG meeting that in the United States, only 9 percent of the farmers receive nearly 80 percent of the subsidies, so the subsidies aren't really helping small farmers in the U.S. either. But instead of calling for the end of subsidies, Allen declared, "We advocate there be subsidies all over the world to convert agriculture into sustainable agriculture." Sustainable agriculture for Allen is organic agriculture, which is less productive than conventional or biotech farming. Lower productivity means more food insecurity and more natural lands like forests chopped down to create farm fields. According to the Consultative Group on International Agricultural Research, the chief factor that drives deforestation in developing countries is "poor farmers who have no other option to feeding their families other than slashing and burning a patch of forest... Slash-and-burn agriculture results in the loss or degradation of some 25 million acres of land per year."

Apparently, many environmental activists prefer that poor farmers and their families remain doing the backbreaking, mind-numbing labor of subsistence farming. U.S. organic farmer Allen recounted with evident nostalgia the fact that in 1848, when chemists had finally learned how to use fertilizers to boost crop production, 90 percent of Americans lived on farms. According to Allen, a century later, 37 percent of Americans still worked on farms. Today, only 1 percent of Americans are farmers. Did Americans become poorer because they fled the farm? Hardly. They moved up from farming to become the richest, most technologically sophisticated economy in history. It is past time that the richest countries remove the barriers that block the poorest countries from following this same trajectory to prosperity. The Cancun WTO conference is the place to begin...

I have an enormous amount of respect for the extremely knowledgeable and incredibly hard-working Angus Maddison, but his claim cannot be right: Africans today are much taller and--even with the AIDS epidemic--have much greater life expectancies than the subjects of the Roman Empire. Things in Africa are very, very bad compared to things in the world economy's post-industrial core, but they are not quite as bad as Maddison implies.

Posted by DeLong at September 10, 2003 07:01 AM | TrackBack

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http://www.nytimes.com/2003/09/10/international/africa/10COTT.html

Africans' Burden: West's Farm Subsidies
By MARC LACEY

KASESE, Uganda — Erikangin Thembo does not think much about agricultural policy as he farms. Sweating in the midday heat, he keeps his mind focused on the earth in front of him. He raises his hoe above his head. With a grunt, he sends it plummeting into the rich soil.

One of his two wives, pregnant with his fifth child, works by his side. His two youngest play on a blanket under a shade tree.

Mr. Thembo, 40, grows cotton on a rented acre in western Uganda, the way his father did and his grandfather before that. He farms barefoot, with a hoe, his large family assisting him. He barely makes ends meet.

Mr. Thembo is not sure how cotton prices are set but he knows he has as much control over them as he does over the rains. All he can do, he figures, is hoe.

"It's not easy," he said during a break. "If everything goes well, if I get the best harvest I've ever gotten, I'll just get by." ...

Posted by: anne on September 10, 2003 07:45 AM

http://www.nytimes.com/2003/09/09/international/europe/09FARM.html

Western Farmers Fear Third-World Challenge to Subsidies
By ELIZABETH BECKER

AIX-EN-PROVENCE, France, Sept. 8 — Christian Vachier, the last sheep farmer in his small commune north of here, is wondering whether his pastoral life in the Lubéron mountains is about to end.

Halfway across the world, Dean Argotsinger, who raises corn and soybeans on nearly 2,000 acres of land once cultivated by his father and grandfather outside Denison, Iowa, has the same worries.

Mr. Vachier grazes his flock on 36 acres of pasture and sends them off in the summer to wild mountain meadows, a land-intensive and expensive method underwritten by checks from the European Union and the French government. His lamb is never sold outside the region, much less overseas.

Mr. Argotsinger is a very different kind of farmer. He considers himself modern and efficient. He uses chemical fertilizers and receives more than $336,000 from the government every four years and sells his grain in the global marketplace....

Posted by: anne on September 10, 2003 07:54 AM

Remember the stakes in Africa are so high. AIDS is creating havoc with agriculture in southern Africa, and Africans could sorely use trade help. The Administration AIDS assistance to Africa will not begin till 2004, and will be a third less than was set forth. We should be quite worried about conditions in southern Africa.

Posted by: anne on September 10, 2003 08:09 AM

Almost all of the difference in life expectancy between Africa and Rome can be explained in the first five years of life. Roman life expectancy at birth was about 25. At age 5, one could expect to live to 50. In Namibia, life expectancy at birth is about 50, while at age 5 it is about 55. In Namibia, 71 out of 1000 die before age 5, in ancient times, that would have been more like 250 out of 1000 dead before age 1.

Posted by: rvman on September 10, 2003 08:16 AM

Note my "life expectancy" for Namibia is actually "average age at death" - the same statistic I used for Rome. "Life expectancy" as normally defined is " mean number of remaining years" which in Namibia doesn't change from age 0 to age 5 - it stays at 50, while in Rome it increased from 25 to 45 between ages 0 and 5.

Posted by: rvman on September 10, 2003 08:21 AM

http://www.cepr.net/false_trade.htm says:

To put the problem in perspective: the World Bank, one of the world's most powerful advocates of removing most trade barriers, has estimated the gains from removing all the rich countries' remaining barriers to merchandise trade -- including manufacturing as well as agricultural products -- and removing agricultural subsidies. The total estimated gain to low and middle income countries, when the changes are phased in by 2015, is an extra 0.6 percent of GDP. In other words, an African country with an annual income of $500 per person would then have $503, as a result of removing these barriers and subsidies.

Interesting if true?

Posted by: Gabriel on September 10, 2003 08:37 AM

"[Much] of the difference in life expectancy between Africa and Rome can be explained in the first five years of life."

Really the first year of life. This is most important, but again do not forget that AIDS is a young person's disease. We are recording demographic patterns in southern Africa that have never been recorded before. The death of a 20 year old or 30 year old or 40 year old from AIDS related causes should not be.

Posted by: anne on September 10, 2003 08:45 AM

The reason for the small gain (and "welfare triangles" calculated in this way are always counterintuitively small) is that Africa and the rest of the developing world gets a partly-offsetting benefit from rich-country agricultural subsidies: food is cheaper. Were the subsidies eliminated, developed country food production would fall, and global grain and other food prices would rise. Urban consumers in Africa would pay more for imported foodstuffs, or switch to more expensive local foodstuffs.

Posted by: Matt on September 10, 2003 08:45 AM

The reason for the small gain (and "welfare triangles" calculated in this way are always counterintuitively small) is that Africa and the rest of the developing world gets a partly-offsetting benefit from rich-country agricultural subsidies: food is cheaper. Were the subsidies eliminated, developed country food production would fall, and global grain and other food prices would rise. Urban consumers in Africa would pay more for imported foodstuffs, or switch to more expensive local foodstuffs.

Posted by: Matt on September 10, 2003 08:47 AM

The problem is not trade barriers. The problem is productivity. Subsistence farming cannot achieve the level of productivity to earn more than a few hundred dollars per year salary. The problem is lack of resources for job training in more productive endeavors. Yes it was sad when the Okies were run off their farms in The Grapes of Wrath. However, those of the next generation that made the jump in education profited greatly from the dislocation.

Posted by: bakho on September 10, 2003 08:56 AM

With the notable exception of cotton and maybe peanuts, Africa has not much to gain from a lowering of farm subsidies, and probably much to lose because of the end of preferential treatments for its agricultural products (Lome convention).
Lowering agricultural proctectionnism in the EU and the US would be a very good thing for New-Zeland, Australia, Argentina or Brazil (and of course consumers in the EU and the US) but not for Africa.

Posted by: Skeptical on September 10, 2003 09:05 AM

Actually, Africa is a major producer of flowers and would produce far more were is not for European trade limits. Do not underestimate how competitive African agriculture could be. Kenyans grow wonderful flowers.

Posted by: anne on September 10, 2003 09:11 AM

why not phase out subsidies over a few years to give producers time to react, if things start to go badly, slow down the changeover,(or maybe speed it up).

Posted by: big al on September 10, 2003 09:41 AM

Bailey's assessment of "sustainable agriculture" should not go uncommented.

There are farming systems (e.g., biointensive) that produce more per acre than either current conventional or biotech systems. While they are more labor-intensive than conventional Western systems, the labor productivity is significantly higher than under standard 3rd-world subsistence technologies, while the costs for capital and other inputs are only slightly higher than what poor 3rd-world farmers incur now. The key is in finessing the "agroecosystem" to get nature to do as much of your work as possible: good soil structure to make best use of any available water, beneficial microorganisms to occupy niches that could be filled by pests and to make whatever nutrients are present maximally available to plants (this reduces the cost of buying nutrients externally), and so on.

Bailey implies that the only alternative to conventional Western farming or its new incarnation with biotech is additional acreage under the plow and/or slash-and-burn. This conclusion simply does not consider the full range of technologies available to farmers, even poor ones.

If we were really interested in helping the poor, trade might help, but our ag missions might also promote those techniques that are both low-impact on the environment and far more productive than what poor farmers are using now. The techniques exist and our official helpers don't advocate them.

Posted by: karl on September 10, 2003 09:52 AM

http://www.pbs.org/now/transcript/transcript233_full.html

MOYERS: The global economy is also changing the lives of women in a community called Mbao, just up the coast from Pikine. Here, foreign fishing trawlers now dot the horizon. A European consortium has bought the rights to fish Senegal's waters for four years. The price: 63 million dollars. And there is no limit to their catch.

SECK: My great grandfather and my grandfather were fishermen. The men fish and the women sell the fish, fresh or dried or salted.

1st FISHERWOMAN: This is our job. May God help us! This is our way of supporting our family.

2nd FISHERWOMAN: We get the fish from the boat and we bring it here. Then we smoke the fish.

ANA: The government knows we depend on fishing, but now these other fishing boats have come. So I think they must have signed some sort of agreement with other countries. And that makes it very difficult for us.

MOYERS: The women have always sung songs to pass the long hours it takes to salt and smoke the fish. But now there are fewer fish, and so fewer days when they salt and smoke — or sing.

SECK: There used to be regulation of fishing. The holes in the nets had to be made to let the small fish escape. That the fish stock could regenerate. Because of the fishing agreements, the big fishing boats come from other countries and take everything. And when the little Senegalese boats go out to sea, they find nothing. And the women don't have any fish to sell in the market. And it's not only Senegal. It's all of west Africa's Atlantic coast....

Posted by: anne on September 10, 2003 11:03 AM

A lot of culture surrounds production, preparation and eating food. Culture is deeply ingrained in human societies and is difficult to alter or change, even when the external environment makes the culture no longer viable. Can cultures be sheltered from change? Attempts so far have not succeeded. Still, abandoning old culture and developing new is difficult and sometimes painful. Will the people anne writes about have help in finding a new line of work? or will they be abandoned to their own devices? This is a key to the outcome.

Posted by: bakho on September 10, 2003 11:29 AM

"Can cultures be sheltered from change? Attempts so far have not succeeded. Still, abandoning old culture and developing new is difficult and sometimes painful. Will these peoples have help in finding a new line of work? or will they be abandoned to their own devices? This is a key to the outcome.


Bakho as usual makes a superb point and asks the key question.

Posted by: anne on September 10, 2003 11:37 AM

Brad, I'm surprized that you would confuse life expectancy with GDP?

Matt, 0.6 percent of GDP is not a small amount.

Karl, farmers generally are extremely conservative. The fear of starvation makes them so. Introducing new farming technologies is not easy or cheap. We can always do more, but when do developing nations/communities take responsibility?

Anyhow, Bailey's basic point was that sustainable farming as currently practiced is less productive per acre. Thus, more acres are needed if everything else remains equal.

I believe India looses much of its crops in storage. Increased refrigeration and better distribution would greatly increase the usable production without any changes in acreage or production methods.

Ms. Shiva is a sick individual. She is advocating killing tens of millions of people in pursuit of a fantasy. Ignorance can kill.

Posted by: Stan on September 10, 2003 11:45 AM

The problem in India is not general farm production but adequate employment and food distribution to the poor. Amartya Sen wrote that food distribution should not be a problem in a democracy, but it is now a fierce problem in India.

Posted by: anne on September 10, 2003 12:00 PM

http://www.pbs.org/now/transcript/transcript233_full.html

MOYERS: In Senegal today, the optimism has evaporated. There is a crisis in the farmlands. And women here bear the brunt of the changes that began more than two decades ago.

WOMAN: I only harvested 5 bags of millet which we ate in 2 days. Now, if I don't ask my neighbors for millet, my family doesn't eat.

MOYERS: What little millet they can grow, girls grind into couscous by the traditional method of pillaring.

WOMAN: We have nothing to eat, let alone money to pay for school, $180. Without school, my kid's life will be just like this.

MOYERS: There is also a crisis in the cities. Twenty per cent of Senegal's population lives in the capital city of Dakar. More than one million people are crowded together in just one suburb, Pikine.

1st PILLAR: I've been here close to ten years. I spend all the money I make. How would I save anything? I send all the money I make to my children. I send them clothes, shoes, money, whatever I can afford.

2nd PILLAR: I support my children, my husband, and my mother. My mother doesn't have anybody to support her but me....

Posted by: anne on September 10, 2003 12:01 PM

The key question in the fishing interview is whether the new nets really do catch too many small fish to allow regeneration. If so, inefficient traditional fishing would be preferable, judged over not-many generations.

Karl was right, subsistence vs. industrial agriculture is a false dichotomy and one that's mostly proposed by industrialists hoping to preserve their subsidies. Intensive farming can have very high net output of calories, while improving the soil. More knowledge input, less material input.

Posted by: clew on September 10, 2003 12:17 PM

Just a question about the literal question of annual earnings in sub-Saharan lands. The target suggests that Africans now have incomes identical to that of ancient Romans, and infers that they have made no progress in that respect. Not to be a pedant, but wouldn't you need to know the incomes of the Roman era Africans to make that statement? And the reason I ask is that I think it is likely that *some* sub-Saharan nations have actually moved backwards since Roman times, while others (incredibly perhaps) may have gained substantially. This doesn't make the current situation any less brutal, of course, but the history could be valuable.

Posted by: Jonathan King on September 10, 2003 12:30 PM

"In other words, sub-Saharan Africa has made essentially no economic progress in the past 2000 years."

This is an absurd statement. Quite meaningless to any African, and I suggest we ignore the comparison completely.

Posted by: anne on September 10, 2003 12:52 PM

There are 47 countries in southern Africa, and distinct societies within each country and distinct social-economic-ecological conditions. There are deep problems, there are problems overcome, there is loveliness, there is happiness. Imagine the life and likes of a Nelson Mandela and there is limitless accomplishment and hope.

Posted by: anne on September 10, 2003 12:54 PM

Stan wrote, "Matt, 0.6 percent of GDP is not a small amount."

But it *is* small compared to the qualitative picture painted by practically evenyone in the mainstream press and in trade economics.

Furthermore, the same economist that Matt quotes, Dean Baker, claims that developing nations lose/stand to lose much more to intellectual property rights extensions to trade agreements than they do due to ag subsidies in the first world.

"Ms. Shiva is a sick individual. She is advocating killing tens of millions of people in pursuit of a fantasy. Ignorance can kill." And what would similar language say about the economists at the IMF, the economists who helped design Russia's privatization scheme, and so forth?

Posted by: Stephen J Fromm on September 10, 2003 01:04 PM

"There are farming systems (e.g., biointensive) that produce more per acre than either current conventional or biotech systems. "

Karl do you have a link referring to this?

Posted by: james on September 10, 2003 01:50 PM

If the WTO would draw up plans that included sustainability and decent labor conditions, then there would be something to talk about; as it is, there's good reason to believe that abolishing trade barriers in agriculture would be an ecological negative just the way it as proven in manufacturing. Even socially, the case has to be made; the "Bill Gates in a bar effect" can make a nation rich on paper but, for generations, poor in reality.

If the the WTO cares about democracy--or even just having a future for humans on earth--it has to make its case in life as well as dollars. If they're not serious about democracy or a human future, I want to see them reformed, and I will oppose them until that time.

Posted by: Randolph Fritz on September 10, 2003 02:14 PM

Stephen, I cannot speak to the IPR comparison although nothing I've read would lead me to believe its true. 0.6 percent of GDP of that many countries IS a substantial amount of money.

What am I the IMF? Even if I where, would an IMF privatization plan designed to prevent ongoing declines in production somehow legitimize a plan to permanently reduce food production by 75%? You appear to want to claim that the IMF recommended Stalin's forced collectivization in Russia. This women is recommending a permanent Great Leap. She is sick.

Posted by: Stan on September 10, 2003 02:33 PM

Stephen:

Daniel Davies more or less answers your question:

"Me: What the hell happened? How did you f*** up Russia so badly? People call Art Laffer a crap economist, but he never starved a million people to death! What were you guys smoking?
Harvard Institute type: Oh it was terribly sad...."

http://d-squareddigest.blogspot.com/2002_09_15_d-squareddigest_archive.html#81786856

Posted by: JRoth on September 10, 2003 02:38 PM

James,

I don't have a link, but I can recommend "How to Grow More Vegetables" by John Jeavons (available at good bookstores, or probably through Amazon etc.)

Stan,

Many farmers are indeed conservative, sometimes to their own detriment, sometimes for damn good reasons. In the 1970s, Wendell Berry observed the effects of USDA extension agents in Peru who were encouraging local farmers to plant advanced potato varieties from the US in place of their varied locally developed strains (the Andes being the home of the potato, they've got more varieties there than you can shake a stick at). The hi-tech potatoes yielded more per acre, but most of that gain was water, not nutritionally useful dry-weight mass. The farmers either dried their potatoes for storage or carried them by animal train to market; in either case, extra water was a huge burden, making the advice from our experts downright harmful. Run into stuff like that enough times and you'll have plenty of reason to be conservative.

Regarding your read on Bailey's point, if he really means "sustainable ag as currently practiced" then he has a point, but since other technologies are out there, why is that the only relevant option? Also, I think he's up to more than that. He's the editor of the book "The True State of the Planet." The book has some useful insights on the "State of the Planet" reports that Lester Brown puts out, but the chapter on ag technology doesn't pass muster. It traces back to a report from the 1970s (can't lay my hands on it right now) that uses as its hypothetical alternative a world where ag without modern fertilizers and pesticides would have the same yields per acre as American ag in 1912, and then figures out how many acres we'd need to feed ourselves our current diet (along with all the horses we'd need to farm, because the hypothetical alternative also does away with tractors). This may have been respectable as a first crack at the problem, but it should hardly be the last word on it.

Posted by: karl on September 10, 2003 06:44 PM

before you run any scheme, I few pilot plant tests might show the faults. A rich american like Bill Gates say, could easily run a few acres, with different scenarios, and see what will work.

Posted by: big al on September 11, 2003 03:39 AM

before you run any scheme, I few pilot plant tests might show the faults. A rich american like Bill Gates say, could easily run a few acres, with different scenarios, and see what will work.

Posted by: big al on September 11, 2003 03:42 AM

Stan wrote, "I cannot speak to the IPR comparison although nothing I've read would lead me to believe its true." Well, find a figure.

0.6% of GDP is, in a sense, a lot of money, but there's no *a priori* reason to think that it's any bigger than the loss developing nations would suffer from extension of intellectual property rights. Given the stupendous efficiency losses *at the margin* represented by any form of government imposed (dare I say "socialist"?) monopoly, there's no reason to think that such loses wouldn't be comparable. And I thoroughly maintain that 0.6% isn't nearly as bad as the *qualitative* picture being painted.

"What am I the IMF?" No, I'm merely pointing out that you're quick to jump on someone who's clearly a Luddite--and has probably no influence whatsoever. Whereas the Bretton Woods institutions have done real damage to the developing world. You allude to "...an IMF privatization plan designed to prevent ongoing declines in production..." But there's no *a priori* reason to think that IMF plans are designed to do anything more than carry out the nutty extreme free market ideology of the planners.

"You appear to want to claim that the IMF recommended Stalin's forced collectivization in Russia." No. I referred to "the economists who helped design Russia's privatization scheme", which appears to have resulted in a spectacular decline in longevity in an industrialized nation during peacetime. You're making the link to Stalin's collectivization because of your (not unreasonable) claim that "this woman's" plan would create far more economic havoc than the purveyors of the Washington Consensus. But *this woman has no power*. Any reasonable moral calculus would attend to plans, claims, etc in some rough proportion to the power of those making them, and the likelihood of their coming to fruition.

See JRoth's post and link there for further commentary on the Russian privatization debacle.

Posted by: Stephen J Fromm on September 11, 2003 06:55 AM

karl, I don't see a disagreement in what we are saying. We both believe there isn't necessarily a dichotomy. We don't show Bailey's assumption to be even slightly off base however. There are very good reasons to assume that current practices will in fact be quite long lived. Most of those reasons have absolutely nothing to do with first world ag agents though. Farmers are conservative because starvation isn't pretty. Consider it a form of natural selection.

DD's blame game with the "Harvard Institute Types" on Russia is pathetic. If the Russians had actually done what the Harvard Types recommended, they could take full blame for the results. But the Russians never came close to fully implementing the reforms. The whole point of "Shock Therapy" was that done individually and partially the reforms will lead to serious problems. Thus, they supposedly "had to be" instituted all at once.

I'm personally not convinced that there were any good solutions for Russia. The economy was already contracting and it had been for some 30-40 odd years. Given a slower reform process GDP could have easily slid the same 42% that Dsquared wants to lay at the feet of the Harvard Types. Frankly, why didn't Dsquared's kleptocratic flight theory work in Poland which actually came closer to fully implementing Shock Therapy? Probably because it isn't as explanatory as he wishes to portray it!

Posted by: Stan on September 11, 2003 07:09 AM

Stephen, I was quick to jump on Shiva because she is a utopian who hasn't taken the time to research her position. She is making policy recommendations that would be extremely calamitous and it is very easy to show those results without killing tens of thousands. Unfortunately, utopians with similar policy prescriptions abound.

As for your loose criticism of the IMF, no institution is above criticism. Nonetheless, I have a lot of respect for their economists. Since their basic task is dealing with government profligacy when corresponding tax bases do not exist, they make great political whipping boys. I'm sorry that you feel obliged to join in the party. Most of the specific criticisms I have seen are nothing but hot air. They all tend to shift local profligacy onto the rest of the world. Everybody can determine on their own how similar the IMF's research is to Ms. Shiva's.

Posted by: Stan on September 11, 2003 08:22 AM

Stephen, whether or not 0.6 percent of developing country GDP is a large number has nothing to do with IPR *a priori*. I was simply pointing out that 0.6 percent of developing country GDP is a very large number.

Second, counting the development costs of IPR as zero is an easy way to ignore them in your calculations. Of course the assumption is patently false (pun intended), but it usually shows up that way in these studies. (Yes, I recognize that the impact for developing countries might remain the same.) I really have not studied the issue enough to offer an informed opinion.

Third, wasn't the IPR agreement part of the Uruguay Round? If so, why is there a sudden tie between it and ag now? In other words, are you a Japanese farmer?

Posted by: Stan on September 11, 2003 08:56 AM

While I wish Mr. Thembo well, I just don't see how one can ever hope to provide for two wives and five children (for now) on one acre.

Posted by: alan aronson on September 11, 2003 08:59 AM

http://www.nytimes.com/ref/opinion/harvesting-poverty.html?pagewanted=all

Fine sources of developing country trade analysis....

Posted by: anne on September 11, 2003 09:22 AM

Thanks to JRoth for the DSquared reference. Quite apropos.
On rereading, I notice a similarity to a Stiglitz (and a collaborator whose name I don't recall) paper (but I think D^2 was first) about a "market for chaos" to allow time for asset stripping by the new owners. This was in contrast to a hypothetical "market for law and order" that the Harvard types hoped would result from privatization. The paper formalizes these notions and makes specific reference to the situation in Russia.
I read that paper due to a pointer on this site. Sorry, I'm too lazy to search and find it. Mea culpa.

Posted by: Jonathan Goldberg on September 11, 2003 09:31 AM

Correction: The Russian economy was likely already contracting and it is believed to have been on an increasingly declining growth tragetory for 30-40 odd years. In other words it was growing more and more slowly for a long time. It probably quit growing and began contracting around 1986-87. The slope of the curve implied increasing contraction unless efforts were made to reform the economy. None of the Soviet reforms had changed the slope.

DD assumes this problem didn't exist and also assumes that the outcome was the result of Harvard Type policy choices. He ignores the Harvard Type literature which predicted many of the problems that actually occured. I personally was skeptical of the potential efficacy of shock therapy with so many one industry towns. I do however recognize that we never saw shock therapy in Russia. Indeed, exactly when were property laws enacted on agricultural lands? The critique is pathetic for such a bright man.

Posted by: Stan on September 11, 2003 11:30 AM

An example to put some light on the smoke:

Corn subsidy: 1.9 billion
US corn bushels: 10.3 billion
Corn price $2.30 / bushel
Total value of corn crop: $23.7 billion
Subsidy as percent of value 8%

If we add the subsidy to the total value we get $25.6 billion. If the subsidy were covered by increased corn prices, then corn would be priced at $2.49 per bushel. This is only about an 8% increase in the price.

Would the additional 8% make a huge difference? If one considers production costs to be about 60%, then the subsidy would be 20% of profits. Would the additional 20% make a huge difference in whether or not a subsistence farmer was viable÷

Posted by: bakho on September 11, 2003 11:54 AM

Stan wrote:

(a) "I was simply pointing out that 0.6 percent of developing country GDP is a very large number." Again, it seems reasonable (if not rock-solid) to posit that IPR might cost the developing world as much as, if not more, than the 0.6% due to ag subsidies.
(b) "Second, counting the development costs of IPR as zero is an easy way to ignore them in your calculations." No one counts these costs as zero. The point is that, like any other monopoly rights, IPR leads to economic inefficiencies. Look at MicroSoft's operating margins, for example.
(c) "If so, why is there a sudden tie between it and ag now? In other words, are you a Japanese farmer?" I myself am opposed to ag subsidies (I grew up in an ag-intensive state, Iowa), since they're economically distorting and perhaps are harmful for the environment. However, the "tie" (as you put it) between the ag and IPR issues is appropriate: economists (at least public ones) spend oodles of time bemoaning the inefficiencies and (transnational) inequities caused by these subsidies, but are mum when it
comes to IPR, and it's reasonable to ask "why".
(d) "Since their basic task is dealing with government profligacy when corresponding tax bases do not exist, they make great political whipping boys. I'm sorry that you feel obliged to join in the party." Huh? *My* position is based on what I've read of the destruction they've wrought in the developing world, mostly in the way in which they argue for unrestricted capital flows. And as for government profligacy, how often do they tell countries to cut their militaries, which is just money down a rathole? Or how often do they tell countries to tax away the economic rent on land (in a neo-Georgist fashion)?
(e) "DD's blame game with the "Harvard Institute Types" on Russia is pathetic. If the Russians had actually done what the Harvard Types recommended, they could take full blame for the results. But the Russians never came close to fully implementing the reforms." That's odd. If you're going to conduct social planning, you're responsible for doing the planning in the real world. Privatization often, even usually, results in outright theft of assets, and to think it wouldn't be otherwise in a nation like Russia--with no real history of the rule of law--was a cataclysmic blunder. Same thing for the deregulation of electricity in California--dereg advocates say that it couldn't have worked because of retail price caps that were part of the *partial* deregulatory scheme. So, folks like yourself let dereg advocates and irresponsible folk at the Bretton Woods institutions live and carry out policy in a dream world, where incentives and institutional interests don't matter (at least for the powerful), and when the policies are actually implemented and screwed up because--lo and behold!--incentives and institutional interests *do* matter, you say, "it's not our fault because the policy wasn't implemented correctly."

Posted by: Stephen J Fromm on September 11, 2003 12:12 PM

By one definition, a subsistence farmer is on the edge of starvation, so I should think 8% would be desperately wanted. (By another, maybe only relevant to historians?, a farmer so far from markets that growing extra food is useless is also a subsistence farmer, but may be very productive and have lots of time and energy for art, culture, war. Anyhow.)

Extremely annoyed Berkeley agroeconomist:

http://www.alumni.berkeley.edu/Alumni/Cal_Monthly/June_2001/QA-_A_conversation_with_Miguel_Altieri.asp

Small-farm effectiveness:

http://www.oxfamamerica.org/advocacy/art2570.html

not specific to industrial ag. vs. not, but does discuss monoculture vs.polyculture - the first makes yield, which is yield of a *single crop*, higher; but the output of all useful crops is higher with polyculture. Polyculture is the norm for the many sorts of less-industrial-input agriculture. (Also, for farmers near shaky markets, polyculture means you can live off your own output in the years you have to, instead of going permanently into debt.)

http://www.alternet.org/story.html?StoryID=13905

I know an expat Swiss who's pretty convincing on the Swiss experience of smaller farms, more reforestation, more local farmer-knowledge, less synthetic chemicals; I can find loose references to this online, but I think my French is too poor to find their own gov't reports.

Posted by: clew on September 11, 2003 12:14 PM

"Virtually the only people who are not suffering from this year's food shortages are farmers who use agroforestry, the practice of planting trees on farms," adds Böhringer.

Approximately 22,000 Malawian farm families have been trained in agroforestry techniques and are managing to feed their families, a development that has not escaped the attention of the country's Ministry of Agriculture and foreign aid donors. Maize farmers who practice agroforestry, Böhringer notes, usually produce anywhere from two to four times more than the national average.

http://www.futureharvest.org/earth/malawi.shtml

-- The trees are nitrogen fixers, so make the soil better without requiring annual purchased fertilizer.

It isn't Bill Gates using his fortune for demo farms (although maybe he will, when done with malaria); it's Prince Charles.

Posted by: clew on September 11, 2003 12:32 PM

A farmer earning $450 per year gets an 8% increase to $486 is not going to afford college for the kids or health insurance. These people need to be trained to do something else, because they cannot make enough income from farming alone.

Many farmers in the US also do that. Plenty of US farmers have one or more family members that work in off farm jobs.

Posted by: bakho on September 11, 2003 03:54 PM

I agree with Ann and disagree with the fatuous essay cited. The food problem is a distribution problem. it is also a Western problem. Most of the grain crop, for instance, goes not to feed impoverished nations, but to feed meat production.

And the comparison to the Roman empire is ridiculous.

Posted by: Flaffer on September 12, 2003 01:40 PM

Stephen,

a) b) c) You can tie whatever you want to ag for all I care. I see no rational reason to do so in this case since ag is supposedly now on the table while IPR supposedly isn't. Of course it doesn't necessarily matter. Feel free to do what you want. I'll remain baffled by the connection.

d) "And what would similar language say about the economists at the IMF, the economists who helped design Russia's privatization scheme, and so forth?" Posted by Stephen J Fromm at September 10, 2003 01:04 PM

"No. I referred to "the economists who helped design Russia's privatization scheme", which appears to have resulted in a spectacular decline in longevity in an industrialized nation during peacetime. You're making the link to Stalin's collectivization because of your (not unreasonable) claim that "this woman's" plan would create far more economic havoc than the purveyors of the Washington Consensus." Posted by Stephen J Fromm at September 11, 2003 06:55 AM

"Huh? *My* position is based on what I've read of the destruction they've wrought in the developing world, mostly in the way in which they argue for unrestricted capital flows. And as for government profligacy, how often do they tell countries to cut their militaries, which is just money down a rathole? Or how often do they tell countries to tax away the economic rent on land (in a neo-Georgist fashion)?" Posted by Stephen J Fromm at September 11, 2003 12:12 PM

I see. The Washington Concensus is evil and the IMF wrecks economies. Stiglitz and other reputable economists have shown the flaws in the IMF's strategies: http://www.j-bradford-delong.net/movable_type/2003_archives/000398.html
The IMF would never adopt better policies based upon better research would it?

e) There is nothing odd about requiring a condition exist ("shock therapy") before it can be termed the cause of something (a 42% decline in GDP). Russia never had shock therapy, thus shock therapy cannot be the cause of Russia's 42% GDP decline. Russia did have random economic privatization inspired by political actors intent on forestalling a return to Communism. The difference is very large. Blaming Russia's policies on the IMF is par for the course.


Bakho, the money would not be averaged out in an economy. How would it flow? To who? How much would these individuals receive and what could they do with it?

Posted by: Stan on September 12, 2003 02:06 PM

"Me: What the hell happened? How did you f*** up Russia so badly? People call Art Laffer a crap economist, but he never starved a million people to death! What were you guys smoking?"

Starved a million people to death? Is that all? The Chinese starved ~20 million to death. And they did it AFTER the Soviets demonstrated that was what would happen.

I recommend (to everyone who can stomach reading descriptions of exactly what happens to a human body starving to death) reading, "Hungry Ghosts" by Jasper Becker:

http://www.amazon.com/exec/obidos/ASIN/068483457X/ref=ase_theatlanticmonthA/104-1341190-3071131


Posted by: Mark Bahner on September 14, 2003 12:12 PM
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