Rural round-up

February 16, 2014

Price fixing doesn’t work Part XVII - Tim Worstall:

Thailand is finding out, in a most painful manner, what happens to those who try to fix prices:

Thailand, once the world’s biggest exporter, is short of funds to help growers under Prime Minister Yingluck Shinawatra’s 2011 program to buy the crop at above-market rates. After the government built record stockpiles big enough to meet about a third of global import demand, exports and prices have dropped, farmers aren’t being paid, and the program is the target of anti-corruption probes. Political unrest may contribute to slower growth in Southeast Asia’s second-largest economy.

In order to curry favour with the rice farmers who compose a substantial part of the electorate prices were fixed and fixed high. The inevitable thus happens, magically more is produced than anyone wants to consume and here at least it is looking like the government will go bust over it. “Produced” is of course a flexible word: there are long running reports of rice being smuggled over the Burmese border to take advantage of those high Thai prices. . . .

NAIT helps clear Northland TB infection:

ONLY ONE bovine tuberculosis (TB) infected herd remains in Northland.

Six other herds have been cleared by TBfree New Zealand. The single, remaining infected herd has recently had a whole herd TB test and is also on the verge of being cleared of the disease. The six other herds were linked by stock movements made before the disease was diagnosed.

TBfree Northland committee chair Neil MacMillan QSM said the cooperation of farmers and landowners in allowing TB testing and wild animal control contractors’ access to their properties to remove the disease was appreciated. . .

Rain and visitors pour into Waimumu - Terry Brosnahan:

It was cold, wet and muddy, but the money still poured in at the Southern Field Days at Waimumu, near Gore, this week.

Persistent rain on the second day of the three-day event didn’t deter farmers from attending and spending.  

Exhibitors spoken to reported strong sales and enquiries. They said farmers and contractors had done their research and were ready to do business rather than just come for a day out.

Field days chairman Mark Dillon said 12,100 people paid to attend the first day and 12,500 the second. Figures for Friday, the final day were not available when Farmers Weekly went to print. In 2012 a record 33,000 people went through the gates of the biennial event. Based on the area filled, a record number of cars were parked. . . .

Biocontrol bugs on show at Waimumu:

THEY’RE CREEPY, they’re crawly, and they’re on display in the Environment Southland marquee at Southern Field Days.

Following on from biocontrol success in several areas, a raft of biocontrol agents including Dung beetles, Broom galls mites, Green thistle beetles; Gorse soft shoot moths and Ragwort plume moths are making an appearance in the council’s tent this year.

Senior biosecurity officer Randall Milne says it’s an opportunity to educate the public about biosecurity and biocontrol agents. . .

Success: farming smarter, not harder -

Fifteen years ago Doug Avery was locked into failure.

The Marlborough sheep and beef farmer was barely coping, personally and financially, after years of successive drought had ravaged his farm.

“The severity of eight years of drought, including four one-in-one-hundred-year droughts, was so bad that I recognised the road that I was travelling was completely stuffed,” Avery says.

His 1500ha farm, Bonaveree, overlooking the Dominion Salt facility at Lake Grassmere, has been in the family for nearly 100 years.

But the glorious sunshine and drying nor’westerly winds that create perfect conditions for extracting salt from seawater were destroying the 59-year-old and his farming business.  . .

From white gold to kiwi gold:

Exchanging the dairy farm for kiwifruit vines came down to seeing the golden-sweet potential that was ripe for the picking for Bay of Plenty couple Elaine and Wayne Skiffington.

After 28 years of dairy farming, the couple decided to invest all their efforts into kiwifruit around 12 years ago and have never looked back.

“We saw the potential kiwifruit had to offer and went for it,” Wayne says.

Originally purchasing their 50 hectare property in Pongakawa, in the Western Bay of Plenty 20 years ago for run-off purposes for the dairy farm, it also happened to include a kiwifruit orchard. Not knowing much about kiwifruit but not wanting to get rid of the vines, the couple decided to lease the orchard to Direct Management Services (DMS), while they ran the farm. . .


Rural round-up

December 24, 2013

Proactive approach prevents dog fight – Sheryl Brown:

As a battle about water quality rages between farmers and regional councils throughout New Zealand, a group of farmers in the Lake Rerewhakaaitu catchment have drawn nationwide attention through a proactive approach.

Nestled under Mount Tarawera, Lake Rerewhakaaitu is the southernmost of the 12 Rotorua lakes and is surrounded predominantly by dairy farms.

In 2001 a report by Bay of Plenty Regional Council showed nutrient levels in streams flowing into the lake were increasing.

The report suggested tightening dairy disposal consent conditions and setting a ceiling level of nitrogen fertiliser application. . .

Talley’s to lift Open Country stake to as much as 70.5%:

(BusinessDesk) – Talley’s Group, the privately-held maker of foods ranging from frozen fish to ice cream, agreed to buy up to 14.99 percent of Open Country Dairy from Singapore’s Olam International for as much as $46.5 million.

The deal would lift Talley’s holding of the dairy company to as much as 70.5 percent from 55.5 percent, increasing its control of a business that returned to profit in 2012 while tapping shareholders for funds to repay debt. The sale price is close to the current carrying value of the investment in Olam’s accounts, it said.

Olam’s stake would reduce to as low as 10 percent, leaving it as the second-largest shareholder just ahead of Dairy Investment Fund on 9.99 percent. Talley’s is required to make a partial takeover offer under the terms of the Takeovers Code and its transaction with Olam will be a combination of direct sale of shares and acceptance of the offer, Olam said. . .

Santa delivers farmers the perfect weather present:

While holidaymakers may not be relishing widespread rain over Christmas, it will certainly bring a smile to many farmers one-third of the way into summer.

“The guy in the big red suit is delivering farmers the best present; widespread rain,” says Katie Milne, Federated Farmers Adverse Events Spokesperson.

“Farmers won’t have an excuse to get out on-farm but will instead have to get stuck into wrapping last minute presents. Aside from essential jobs on-farm, a few day’s weather enforced relaxation with family is the best way to recharge the batteries. . .

Scholar slams stubble burning as bad for soil – Tim Cronshaw:

A Nuffield scholar visiting Canterbury, who would never burn crop stubble on his farm, has criticised the worldwide practice.

Arable farmer Tom Sewell, who grows crops on a 400-hectare farm in southeast England, was one of two scholarship holders studying the long-term benefits of no-tillage in New Zealand.

He left for Australia a week ago convinced farmers could avoid stubble burning, banned in his home country.

“There are loads of problems with it. In the UK it would be a [non-runner] in public relations and would be a shot in the foot. The public perception is it’s bad for the environment, creating carbon dioxide and it’s burning a valuable carbon source for the soil and losing organic carbon.” . .

30 animals on offer at NZ’s first annual game sale -

The efforts of South Canterbury man Neville Cunningham, to have game animals such as red deer and white tahr recognised as being of value rather than simply termed a pest to be eradicated, came to fruition yesterday when he staged New Zealand’s first annual game animal sale.

The sale, held at his Timaru property, offered 30 animals by tender including a black tahr and a white tahr, chamois, trophy elk bulls, trophy red stags, a highland bull, two bison and arapawa rams.

All the animals have been bred by Mr Cunningham at one of his two properties, at Timaru or Aoraki/Mt Cook and some, such as the white tahr, have come from animals originally recovered from the bush, but now part of a managed breeding programme. . .

Two new farmer directors elected to Beef + Lamb New Zealand Board:

Two new farmer directors will join the Beef + Lamb New Zealand Board after the annual meeting in Feilding on 14 March 2014.

They are Waikaka Valley farmer, Andrew Morrison who will represent the Southern South Island electorate and Wairarapa farmer, George Tatham who will represent the Eastern North Island electorate.

They were both elected unopposed.

They replace Beef + Lamb New Zealand directors who had not sought re-election. . .

Bumper crop boosts NZ apple and pear exports:

The largest crop in nearly 10 years has allowed apple and pear growers to crack the $500 million mark for exports.

The pipfruit industry believes the result has placed it on track to reach its export target of $1 billion by 2022.

Pipfruit New Zealand Incorporated (PNZI) chief executive Alan Pollard said the economic impact of apple and pear exports on regions was “extraordinary”.

“North Island centres such as Hawke’s Bay received $350m in export receipts, up $100m on 2012, and South Island centres such as Nelson have received $150m, $50m more than 2012,” he said. . .

The master has not finished just yet – Hugh Stringleman:

The world’s greatest competition shearer believes he has at least one more successful year left in him.

Five-time world champion David Fagan, 52, wants to add to his tallies of 16 titles each at the Golden Shears and New Zealand Shearing Championships.

At the Te Kuiti-based NZ championships David has reached the open final 28 out of 29 times, and the 30th edition in March will provide the best-possible stage for his last hurrah. . .

How do politicians manage to believe such things? – Tim Worstall:

I’m slightly boggled by this statement:

Tim Farron, South Lakes MP and chair of the all-party parliamentary hill farming group, said: “We need to do all we can to support our farming industry, particularly in the uplands where life can be a real struggle. This support and funding could make a massive difference to upland farmers throughout Cumbria and help show the next generation that there is a real future in a career in farming.”

It appears to me to be an example of cognitive dissonance. For we’re also being told this about that same occupation: . .

Vineyards on sustainable, diverse path:

A rapid rise in exports fuelled New Zealand wine industry growth in the 1990s and the industry recognised it needed a proactive approach to sustainable production.

Considerable research led to a holistic programme that eventually became known as Sustainable Winegrowing New Zealand.

All but 6% of NZ’s producing vineyard area is certified under the Sustainable Winegrowing NZ approach, with a further 3-5% of operating under certified organic programmes.

Members are committed to protecting the unique places that make the country’s famous wines by reducing the use of chemicals, energy, water, and packaging and wherever possible reusing and recycling material and waste. . .


Rural round-up

October 11, 2013

Effluent may be power house for farmers - Collette Devlin:

Effluent – often a headache for Southland dairy farmers – could soon prove beneficial by offsetting electricity bills, recent research shows.

As part of the Southland Energy Strategy, Venture Southland has been working with farm consultants, Scandrett Rural, Niwa, and EECA trialling the capture of methane emissions from covered anaerobic effluent ponds on dairy farms.

The principle behind the project was to demonstrate that methane could be used as an energy source to reduce electricity use on farms and also reduce greenhouse emissions. . .

Jealous Jillaroo – Jackaroo Joins the Largest Drove In Aussie Memory – Jillaroo Jess:

Something very exciting is happening in eastern Australia at the moment. Well, not for me, I’m stuck at home taking care of the farm. Jackaroo has been lucky enough to be involved in the biggest drove in Australian history. A ‘drove’, is moving cattle/sheep from one place to another, feeding them along the way. They can be very long and hard distances travelled. Often, drovers live on the road, going from one job to the next. Cattle baron Tom Brinkworth has taken advantage of the drought and bad cattle prices by buying 18,000 head of cattle from the ages of 8months to 2yrs old. These cattle are being taken down the TSR (Travelling Stock Route), or ‘The Long Paddock’ to their new properties, some 2500km away (over 1500miles). The herd has been split up into 9 mobs, and are travelling 10km a day. There is about 80km/8days between the different mobs of cattle. . .

Let’s smash a cartel today - Tim Worstall:

I’ve pointed out here before that parts of the fertiliser industry seem to be run as a cartel. Now we’ve evidence that much of the fertiliser industry is run as a cartel.

C. Robert Taylor and Diana L. Moss have written “The Fertilizer Oligopoly: The Case for Antitrust Enforcement,” as a monograph for the American Antitrust Institute. Those looking for examples of possibly anticompetitive behavior, whether for classroom examples or for other settings, will find the argument intriguing.

The effect of which is:

Taylor and Moss write: “Damages from supra-competitive pricing of fertilizer likely amount to tens of billions of dollars annually, the direct effects of which are felt by farmers and ranchers. But consumers all over the world suffer indirectly from cartelization of the fertilizer industry through higher food prices, particularly low income and subsistence demographics. … [I]t is clear that corporate and political control of essential plant nutrients may be one of the most severe competition issues facing national economies today.”

Part of the detail of how the cartel works is that it is not allowed to affect domestic US prices (Ho ho). So therefore the richest farmers in the world are not affected: but all of the poor world ones are. . .

New appointments to Biosecurity  Ministerial Advisory Committee :

Primary Industries Minister Nathan Guy has announced five new appointments to the Biosecurity Ministerial Advisory Committee today.

The Committee plays an important role in providing the Minister with independent advice on the performance of New Zealand’s biosecurity system as a whole, and on specific biosecurity issues where necessary.

“Biosecurity is my number one priority, and hugely important to New Zealand as a trading nation,” says Mr Guy.

“A world class biosecurity system protects New Zealand from unwanted pests and diseases. This is essential for working towards our goal of doubling the value of our primary sector exports to $64 billion by 2025. . .

New Zealand’s diversity recognised at International Wine and Spirit Competition:

New Zealand’s diverse wine styles have stolen the show at the prestigious UK-based International Wine and Spirit Competition (IWSC). In the results released today, New Zealand wines beat all international competition to win not only the international Sauvignon Blanc and Pinot Noir Trophies, but the Chardonnay Trophy as well, while Gold Outstanding Medals went to a Gewürztraminer and a dessert Riesling. . .

Ceres Wines wins the coveted IWSC Bouchard Finlayson Pinot Noir Trophy:

Ceres Wines, a tiny artisan wine producer from Bannockburn in Central Otago, has won the coveted International Wine and Spirit Competition (IWSC) Bouchard Finlayson trophy for Pinot Noir. The trophy is awarded to the top Pinot Noir from entries received from around the globe. It is the third time in a row that the trophy has been awarded to wines produced in Central Otago, with Peregrine receiving the award in 2011 and Valli in 2012. . .

Re-wire on a Hayes Roast:

Hayes Roast is this season’s new addition to the offering at Hayes Engineering & Homestead, a Central Otago property cared for by the New Zealand Historic Places Trust (NZHPT).

“It’s been inspired by the inventions and ingenuity visitors experience at the site,” says Property Manager Scott Elliffe.

“We believe Ernest Hayes – inventor of the Hayes wire strainer that is still in use in farms around the world – would have quickly adapted to the new market of urban trail riders biking past his front door and developed a roasting machine to meet their needs for ‘city coffee, country food’.”

In partnership with Vivace Coffee, the NZHPT asked third generation artisan master roaster Bernard Smith to develop a blend of three original coffee beans that best emulated the strength of the site, the body of the ‘big skies’ Central Otago landscape and the sweetness of its sun overhead. . .


Who could this apply to here?

September 13, 2013

Quote of the day:

“It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a ‘dismal science.’ But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.” Murray Rothbard.

This could apply to all three Labour leadership contenders and anyone who promotes what they’re promising as workable and affordable.

Hat tip: Tim Worstall


Govt can’t always use kill switch

August 22, 2013

Tim Worstall points out the big difference between governments and markets:

. . . It takes great effort to get government to do anything. And that great effort comes from the interia of the system: meaning that it takes great effort to get something started and an equal amount of effort to get something stopped. This is in contrast to the market where yes, it takes great effort to get something working. But the system does contain that kill switch: bankruptcy. If something’s not working then it doesn’t take great effort to stop it. It just runs out of money and stops.

And that, I am afraid, is one of the reasons why politics is a bad way to get things done. Simply because they won’t stop doing things even when it’s obvious that they are the wrong things to be doing.

Whenever I have anything to do with the mechanisms of government – central or local – , which mercifully isn’t often, I feel like I’m trying to swim through syrup in gumboots.

The wheels of bureaucracy grind exceedingly slow and change rarely happens quickly.

That isn’t always bad – solutions to problems governments face aren’t usually simple and fast policy isn’t necessarily good policy.

However, politics does often get in the way of good change.

Governments do usually have a kill switch but they’re not always able to use it,

They generally have the ability to make changes but know that doing so will sometimes cost too much support.

Bad policy can be good politics and if change would be unpalatable to too big a chunk of the electorate  governments, and parties wanting to get into government, have to stick with it.

Purists slam this as unprincipled.

But given the choice of staying pure in opposition where they can achieve nothing or swallowing the odd dead rat to get into, or stay in, government where they can make a positive difference, most will opt to chew the rodent.


Tax breaks better than subsidies

July 14, 2013

Quote of the day:

. . . If you believe that politicians, those who direct such subsidies, are knowledgeable, clever and honest beings, striving only to do what is right for the common weal, then you might well argue that they should direct, in detail, where the taxpayers’ money goes. If you’re over the age of seventeen you will have been disabused of that notion, that politicians are honest, knowledgeable and clever, and so would prefer that politicians do not direct in detail. Rather, we might accept that public goods exist, that they should be subsidised in some manner, but having done that we want to keep the politicians as far away as possible from the details of what happens next. I would go further too. A tax break means that anyone who meets the rules gets the tax break. A grant making system means only those who suck up to the politicians get the grants. . . Tim Worstall.

It bemuses me that politicians are usually, and not always fairly, regarded pretty unfavourably but some people still want to direct out money where they see fit by way of subsidies.


Flexibility increases employment

July 8, 2013

Unions and others on the political left greet any move to make labour laws more flexible with howls of outrage.

They either don’t realise, or won’t accept that it increases employment:

Using 1981–2009 data for the 50 states, this article examines the relationship between economic freedom and the unemployment rate, the labor force participation rate, and the employment-population ratio. After controlling for a variety of state-level characteristics, the results from most specifications indicate that economic freedom is associated with lower unemployment and with higher labor force participation and employment-population ratios.

Why don’t people believe this?

Tim Worstall thinks it’s because people really don’t understand the job churn in the economy:

If you think that a rise in unemployment of 100,000 means that 100,000 people have been fired then you might well think that making it harder to fire people will lead to a reduction in the number of people in unemployment. But the truth is that this isn’t what causes a rise in unemployment at all. There are always 100,000 people getting fired. More than that actually: some 3 million jobs, or 10% of the total, are destroyed in the UK economy each year. That’s that destruction part of capitalism. This rate doesn’t, particularly, rise in recessions nor fall in booms either. That’s a reasonably constant rate at which the economy destroys the things that people do for a living.

What does change in a recession is how many new jobs are being created: thus the balance, between those fired and those hired, changes. The actual unemployment numbers that we see are the end result of this complex process. If unemployment rises by 100,000 in one month it’s not the result of 100,000 more people being fired. It’s the result of 100,000 of that (roughly) 250,000 who get fired every month not finding a new job. Unemployment isn’t best thought of as a result of people being fired therefore: it’s a result of people not getting hired.

At which point the economic freedom argument begins to make intuitive sense. The more economic freedom, the less regulation stopping you from doing things, the more things will get tried and done.The less the cost of firing an undesired worker the more of them will be hired: demand curves do indeed work that way. So far so true: my speculation is that those who don’t get this point are those who don’t really understand why unemployment occurs. It simply isn’t because people get fired because people get fired all the time. It’s that they don’t get rehired at times which is what causes unemployment.

The usual suspects warned of dire consequences if the 90-day trial period for new staff was introduced.

They said it employers would keep staff for 89 days then lay them off.

They have a very jaundiced view of employers and don’t understand the cost and work involved in recruiting and training staff, even for jobs requiring little skill, would put almost all off churning through employees like that.

There hasn’t been a long list of people losing their jobs within the 90 day period but there have been more jobs created and unemployment is edging down.

That will be due to several reasons, one of which is that the 90 day trial period, like other initiatives which liberalise labour law, reduces the risk of taking on a new employee.


Farm subsidies transfer cash to rich

July 3, 2013

George Monbiot says farming subsidies are a transfer of cash to the rich.

The main subsidy, the single farm payment, is doled out by the hectare. The more land you own or rent, the more money you receive. . .

When our government says “we must help the farmers”, it means “we must help the 0.1%”. Most of the land here is owned by exceedingly wealthy people. Some of them are millionaires from elsewhere: sheikhs, oligarchs and mining magnates who own vast estates in this country. Although they might pay no taxes in the UK, they receive millions in farm subsidies. They are the world’s most successful benefit tourists. Yet, amid the manufactured terror of immigrants living off British welfare payments, we scarcely hear a word said against them. . .

Thanks in large part to subsidies, the value of farmland in the UK has tripled in 10 years: it has risen faster than almost any other speculative asset. . .

An uncapped subsidy system damages the interests of small farmers. It reinforces the economies of scale enjoyed by the biggest landlords, helping them to drive the small producers out of business. . .

He could have added that subsidies  distort the usual rules of supply and demand, increase inefficiencies, limit choice and add costs for consumers, protect poor performers from their own folly and create unfair competition for non-subsidised produce.

Most New Zealand farmers were somewhat less than enthusiastic about being dragged into the real world by the Lange-Douglas government in the mid 1980s but I haven’t met a single one who would want to go back to subsidies.

It’s better to face the market and prosper, or not, as a result of your own efforts than be at the mercy of political and bureaucratic whim.

Hat tip: Tim Worstall


Argument against publicly funded lobbying

July 2, 2013

A cautionary tale from Britain:

An ‘independent’ celebrity-backed campaign to increase foreign aid was secretly engineered by Whitehall, it was claimed yesterday.

The IF movement recruited David Beckham, Orlando Bloom and Mo Farah to ensure the Government made good on a pledge to spend 0.7 per cent of national income on overseas help.

But internal documents reveal plans were cooked up by ministers and advisers at Whitehall and the Tory party conference two years ago.

At one of the first summits, an aide of David Cameron met representatives of five charities which between them receive more than £60million a year from the taxpayer via the Department for International Development. . . .

The government gave lobby groups money to lobby it to do something it wanted to do.

There’s no better argument against public funding of lobby groups.

It reinforces the wisdom of changes made here so that groups whose primary focus is political or lobbying no longer get charitable tax status.

Hat tip: Tim Worstall.


Jobs come, jobs go

June 17, 2013

The opposition couldn’t have picked a worse time to be wasting their time and our money manufacturing a crisis about a manufacturing crisis.

New Zealand manufacturing activity rose in May to the highest level since June 2004, led by new orders and production, stoking optimism the economy may be picking up pace.

The BNZ-BusinessNZ performance of manufacturing index rose 4 points to 59.2 in May, the highest level in nine years and the strongest reading for May since the survey began in 2002.

The monthly survey suggests manufacturing may not be as weak as suggested in government figure this week showing sales volumes fell 0.6 percent in the first quarter and indicates companies are confident enough to take on more workers.

Machinery and equipment manufacturing led gains in May, with a reading of 67.4. . . .

The good health of manufacturing was on show at last week’s National Fieldays:

Prime Minister John Key says the National Fieldays are a perfect example of why New Zealand’s manufacturing sector is at its highest level in nine years. . . .

“New Zealand is well placed to be doing well in manufacturing,” Key said at Fieldays.

“What you’re seeing here at the Fieldays is actually a lot of innovative manufacturers who are developing products.

“I think we’re (New Zealand) a good place to do business. We’ve got a good, stable democracy, we have an English court and law system and we’ve got a competitive economy,” he said.

Those who think we’ve got a crisis here might take a look at India:

As many as 14.08 million jobs were lost in the five-year period ended in 2009-10 in the agriculture sector which engages almost 60 per cent of the workforce in the country.

The job losses in the manufacturing sector during the five year period from 2004-05 to 2009-10 was 5.03 million as per the draft 12th Five-Year Plan approved by the country’s apex policy making body National Development Council (NDC) in December last year.

According to the data analysed in document, employment in the agriculture sector in absolute terms was 237.67 million in 1999-2000 which increased to 258.93 million in 2004-05 and then fell to 244.85 million in 2009-10.

Similarly the workforce engaged in manufacturing sector was 44.05 million in 1999-2000, which increased to 55.77 million in 2004-05 and then came down to 50.74 million in 2009-10. . .

Jobs come and jobs go. In spite of all those losses, there were gains in some areas and overall employment increased:

 . . . However, the employment in non-manufacturing sector increased from 20.84 million in 1999-2000 to 29.96 million and 48.28 million in 2004-05 and 2009-10 respectively.

The workforce in electricity, gas and water supply also saw a decline from 1.30 million in 2004-05 to 1.25 million in 2009-10. The other sector broadly in services sector saw a surge in employment.
 
The overall employment in the country has jumped from 396.76 million in 1999-2000 and 457.46 million in 2004-05 and it was 460.22 million in 2009-10.

In 1841, over one in five workers (22%) were in the Agriculture and fishing industry.

This has now fallen to under 1%. But we produce an awful lot more food than we did back then.

In 1841, a third of the working population (36%) worked in manufacturing and in 1901 this was at a similar rate of 38%.

This has now fallen to 9%. And we do indeed still manufacture an awful lot more by value than we did back then.

How can that be?

The answer to how we did both is that we invented machines that did a lot of the work of those people. Yes, this did indeed mean that these people thus became unemployed: which was the very point of making the invention. The point of the mechanical hay baler is to make manual hay balers unemployed. The point of the robot riveter is to make human riveters unemployed.

And thus those made unemployed by the technological change can go off and work in services. Which is how we all become richer: we’ve now got the machines doing the food and the manufacturing, the humans doing the services and we get all three: food, manufactured goods and services.

Think about it for a moment, if we still had 22% in farming and 36% in manufacturing then that’s 58% of the people. Currently 81% of the population work in services (there’s a bit in construction, water etc as well). If we’ve 58% who cannot be in services because they’re in food or manufacturing then we’d, just as in 1841, only be able to have 33% working in services. So, which half to two thirds of the services we currently do get would you like to give up simply because we don’t have the people available to do them? OK, we all agree the diversity advisers can go but beyond that?

Quite. By mechanising agriculture and manufacturing we’ve been able to get the production of both of those that we desire and also have a vast expansion of services that we also get to enjoy. We have more thus we’re richer. And that of course is the point of doing such mechanisation: to make us all richer and long may it continue.

Machines have replaced a lot of jobs. They’ve also increased productivity and freed people to do things machines can’t.

Jobs come and jobs go and more jobs come. It’s not a recent phenomenon, it’s been happening for centuries as new inventions make it easier to do old jobs.

Instead of manufacturing a manufacturing crisis the opposition should be putting their energies into finding solutions for the problem of people who don’t’ have the skills, and sometimes the will, to do the new jobs.


Voluntary co-operation

June 14, 2013

State control of various necessities in Venezuela has resulted in shortages of food and loo paper  in response to which there’s an app which crowd sources information on where supplies are:

I’m afraid that my Spanish isn’t all that good but it’s good enough to confirm that they really are offering a method of finding out which shops have toilet paper, sugar, flour….you know, the simple basics which shops really shouldn’t be running out of.

It’s all rather bizarre that a country that has sufficient technology to be running smartphones doesn’t have the ability to keep such consumer basics on the shelves. Even worse that a major oil supplier at the peak of an oil boom cannot manage it. . .

The problem is state control.

The solution is to leave it to the market.

There are those who insist that whatever it is going on there must be someone in charge. Like our Soviets above with the bread, like many socialists in many places and times. Things must be planned, organised, someone must make things happen, there must be control. And then there are those who, even if a bit mystified by quite how it happens, accept that the voluntary cooperation within markets does some pretty nifty things. Like keeping toilet paper on the shelves at prices that people are delighted to pay for it.

The real point being that markets are pretty good at some things. They do not need that control, that planning, that guidance, nor even having their prices fixed. I’m pretty much a pro-market extremist, admittedly, but even I don’t say that all markets work perfectly all the time. The trick is to work out which do, at least acceptably, and concentrate on those that don’t, at least not acceptably. For example, we might well argue that the pure free market distribution of income is in some manner not acceptable. Thus we desire to change it through the tax and or benefit systems. I’d go along with that myself, even if perhaps not in the specific manner that many places now do it.

However, at the same time I’d want to point out that markets really do solve some problems without any further intervention being needed. Markets being, really, just voluntary cooperation among people and groups of people. And we’ve a lovely example here of just that. Before state intervention in the toilet paper market there was sufficient for what the populace desired to use. After said intervention there wasn’t: at which point we get further voluntary cooperation through the crowdsourcing of information to overcome the governmental intervention.

Markets really just do work at times and the real trick is to, when observing that they do in a specific sector or activity, step out of the way and allow them to keep working. . .

Markets aren’t perfect but voluntary co-operation usually works better than state control.

 


Less bureaucracy more trade

June 10, 2013

Quote of the day:

. . . the findings that apply to foreign trade will also obviously apply to the inland trade as well. The more bureaucracy there is then the less trade will get done: the simpler (or less of it) the bureaucracy there more trade will get done. And as it is indeed trade that produces economic wealth this would make us all richer.

What’s really interesting about the less bureaucracy on foreign trade results is that small firms gain as well as large. Thus we’re not seeing the small guy being trampled when the big boys are let off the regulatory leash.

So, there really seems to be no reason at all why we should not reduce bureaucracy in order to make us all richer. And those bureaucrats will now have to go and do something useful for a living: shame, isn’t it? Tim Worstall

He was opining on Anti Dismal’s post Making trade easier and less bureaucratic actually helps trade.

 


Free Trade made simple

February 19, 2013

Immeasurable amounts of time, effort and money go into free trade negotiations but Tim Worstall shows it doesn’t have to be difficult:

Exports are simply the dreary drudge work we do in order to be able to afford those lovely imports. So, for the EU to “negotiate” a free trade area with the US is very simple. Just stop taxing EU citizens who purchase American goods by imposing tariffs upon them. Similarly, for the US to have free trade with the EU just means lifting those portions of the US Customs code that tax imports from Europe. There, all done. Extraordinarily simple, easy to achieve and yes, it would make us all richer to boot.

Sadly, the economically deluded, the protectionists and others who make money from trade barriers won’t take the simple solution.


Progress best prescription for people plague

January 23, 2013

Gareth Morgan has got the fur flying and alienated all cat owners with his cats to go campaign which declares the felines animalia non-grata.

David Attenborough has gone further by declaring that people are a plague on earth.

The television presenter said that humans are threatening their own existence and that of other species by using up the world’s resources.

He said the only way to save the planet from famine and species extinction is to limit human population growth.

“We are a plague on the Earth. It’s coming home to roost over the next 50 years or so. It’s not just climate change; it’s sheer space, places to grow food for this enormous horde. Either we limit our population growth or the natural world will do it for us, and the natural world is doing it for us right now,” he told the Radio Times.

I won’t go as far as Not PC who says you first David  because as Tim Worstall points out there is a far better way than death to manage population growth:

. . . we do in fact know how to manage this process of curtailing growth in the number of humans.

Get rich.

Everywhere it has happened, everywhere this species of ours has gone from rural and Malthusian destitution to a bourgeois urban middle classness, the population growth rate has fallen like a stone. Indeed, so much so that it becomes the population contraction rate. It doesn’t actually need you and Jonny Porritt demanding full body condoms for all. It only requires that people know they can eat three times a day, have a roof over their heads and that there’s a decent chance that all the children they do have will survive into adulthood. Absent immigration there just isn’t any population growth in the rich world. Far from it, there’s contraction (to be absolutely accurate you have to adjust for it taking until the second generation of immigrants to reduce childbirth down to the rate of the indigenes). . .

Yes, those of the deep, dark, anti-progress, anti-people persuasion might not like it but the best prescription for the people population plague is progress of the economic kind.

I’m not sure what affect it will have on the cat population though.


Free range but not organic

January 7, 2013

Organic farmers reckon the British countryside could be restored by cattle herds grazing like the bison of the American plains.

Graham Harvey, a farmer who used to advise the BBC on agricultural storylines in The Archers, said the countryside is being destroyed by industrial scale farms that concentrate on monoculture fields of wheat and animals in massive sheds.

Organic matter in soils has been reduced by continuous use of fertilisers and pesticides.

Instead he said that more of Britain could return to grazing animals as this returns fertility to grassland and retains the countryside.

He suggested a US method ‘mob grazing’, based on how wild bison graze the American plains, is the best way to ensure productivity.

Using electric fences, farmers split their pastures into a large number of small paddocks. Putting their cattle into each paddock in turn, they graze it off quickly before moving the herd to the next. . .

That sounds like rotational grazing which is common practice in New Zealand.

Free-range is the norm for sheep, beef, dairy and deer here.

But farms don’t have to be organic to look after the soil and they’re better if they’re not organic if you want improved productivity.

Hat tip: Tim Worstall.


Are we near peak farmland?

January 5, 2013

The spectre of a peak in the supply of a necessary resource is generally reason for concern.

This might not be the case for peak farmland:

The amount of land needed to grow crops worldwide is at a peak, and a geographical area more than twice the size of France will be able to return to its natural state by 2060 as a result of rising yields and slower population growth, a group of experts said on Monday.

Their report, conflicting with United Nations studies that say more cropland will be needed in coming decades to avert hunger and price spikes as the world population rises above 7 billion, said humanity had reached what it called “Peak Farmland”.

More crops for use as biofuels and increased meat consumption in emerging economies such as China and India, demanding more cropland to feed livestock, would not offset a fall from the peak driven by improved yields, it calculated.

If the report is accurate, the land freed up from crop farming would be some 10 percent of what is currently in use – equivalent to 2.5 times the size of France, Europe’s biggest country bar Russia, or more than all the arable land now utilized in China.

“We believe that humanity has reached Peak Farmland, and that a large net global restoration of land to nature is ready to begin,” said Jesse Ausubel, director of the Program for the Human Environment at the Rockefeller University in New York.

“Happily, the cause is not exhaustion of arable land, as many had feared, but rather moderation of population and tastes and ingenuity of farmers,” he wrote in a speech about the study he led in the journal Population and Development Review. . .

Improved yields are usually the result of improvements in management, breeding and weed and pest control, and the mitigation of climatic challenges such as drought or flood.

These include genetic modification and irrigation and usually means intensification which aren’t universally popular.

. . . Gary Blumenthal, head of Washington-based agricultural consultancy World Perspectives, said the report’s conclusions were not surprising as technology already exists to dramatically boost crop production. But achieving “peak farmland” would depend on the technology being made available globally, he added.

“If we could just get yields in the rest of the world at levels that they are in the U.S. or Europe, we would have substantially more food,” Blumenthal said. “Just using existing farmland more efficiently, would substantially increase supplies. Yields are rising.” . . .

It’s not as simple as transferring methods from one country to another.

There are often political, financial and practical challenges to overcome before what works well in one place can be applied in another.

. . . Ausubel’s study admits to making many assumptions – rising crop yields, slowing population growth, a relatively slow rise in the use of crops to produce biofuels, moderate rises in meat consumption – that could all skew the outcome, if not accurate.

It also does not factor in any disruptions from significant climate change that U.N. studies say could affect farm output with rising temperatures, less predictable rainfall, more floods or droughts, desertification and heatwaves.

Still, it points out that both China and India have already spared vast tracts of land in recent decades.

In India, for instance, wheat farmers would now be using an extra 65 million hectares – an area the size of France – if yields had stagnated at 1961 levels. China had similarly spared 120 million hectares by the same benchmark. . .

Just as cities can go up rather than out, so can production.

Crops could soon be grown in greenhouses the size of skyscrapers in city centres across the country, it has been claimed.

Birds Eye and other food producers are investigating building ‘plantscrapers’, which could accommodate hundreds of storeys worth of crops, in a bid to make farming more economical, sustainable and meet increasing demand.

The ‘vertical farms’ would use an innovative feeding system which nourishes plants with enriched water, therefore cancelling out the need for soil – and the need for food to be grown  and harvested in the countryside. . .

Then there’s hydroponics using sea water:

The seawater greenhouse developed by UK-based Seawater Greenhouse is a low-cost solution for year-round crop production in some of the world’s hottest and driest regions. It does this using seawater and sunlight. The technology imitates natural processes, helping to restore the environment while significantly reducing the operating costs of greenhouse horticulture.

The first project was in Tererife, Spain, in 1992 where a prototype was built in England and shipped to Spain. This was a pilot project, which validated the concept and demonstrated the potential for other arid regions.

In 2000 another greenhouse was built in Abu Dhabi to try out the concept in a different climate, where humidity is higher than in Spain. Again, this was a success. The greenhouse provides a cooler climate that enables crops to be grown year-round, even in the extreme heat of the summer months. It also allows for the reclamation of salt-infected land by not relying, at all, on groundwater resources. It is a major benefit to local agriculture.

Seawater Greenhouse is now nearing completion of a new greenhouse to tame the harsh Australian outback. The greenhouse uses a natural distillation process to turn seawater, pumped from the nearby Spencer Gulf by solar powered pumps, to grow tomatoes hydroponically. The 2500m² greenhouse is capable of producing 100% of the energy needed, but also has a back-up power system in case of malfunction. The first crop will be ready to harvest in October. . .

More food can be produced from less land but the real test is whether it can be done sustainably.

Hat tip: Tim Worstall at the Adam Smith Institute.


Bureaucracy and suspicion of science

January 3, 2013

Quote of the day:

A “rational optimist” like me thinks the world will go on getting better for most people at a record rate, not because I have a temperamental or ideological bent to good cheer but because of the data. Poverty, hunger, population growth rates, inequality, and mortality from violence, disease and weather — all continue to plummet on a global scale.

But a global optimist can still be a regional pessimist. When asked what I am pessimistic about, I usually reply: bureaucracy and superstition. Using those two tools, we Europeans seem intent on making our future as bad as we can. Like mandarins at the court of the Ming emperors or viziers at the court of Abbasid caliphs, our masters seem determined to turn relative into absolute decline. It is entirely possible that ten years from now the world as a whole will be 50 per cent richer, but Europeans will be 50 per cent poorer. . .  Matt Ridley.

He goes on to talk about the costs of bureaucracy:

As the Ming empire found out, the more government you buy, the less economic activity you get. A Fujian travelling salesman in 1400 was enmeshed in such a tangled bureaucracy that he could neither travel nor sell without bribes and permits, and he had to submit a monthly inventory of his stocks to the emperor.

Sound familiar? Every small businessman I talk to these days has a horror story to tell about the delays and costs that have been visited upon him by planners, inspectors, officials and consultees. Using the excuse of “cuts”, the bureaucracy is taking even longer to make decisions than five years ago. In the time it has taken Britain’s Government to decide whether to allow a fifth exploratory shale gas well to be drilled in Lancashire, and from the same standing start, the same investors have drilled 72 producing wells in Argentina. That the country of Watt and Stephenson should look a potential cheap-energy gift horse in the mouth in this way is staggering to this jaded optimist.

From ancient Egypt to modern North Korea, always and everywhere, economic planning and control have caused stagnation; . . .

There is a need for some rules but the more involved governments are in business the more difficult, and costly, it is for businesses to start, to operate and to grow.

. . . A growth-preventing bureaucracy is not the only thing suppressing enterprise in Europe. Superstition is also playing a part, as it has done in past episodes of economic decline. The great flowering of Arab prosperity and culture under the Abbasids was brought to an end with the burning of books, the shutting down of inquiry and a mistrust of novelty.

Again there are echoes. Many of the ideas that led to the genetic modification of plants — which has boosted yields, cut insecticide use, saved fuel and soil, and helped the poorest farmers — were pioneered in this country. Yet today there is almost none of this work done in Britain and none of its boons are permitted to farmers and their customers. The labs are ghostly quiet. Why? Entirely because of neophobic superstition that has animated reactionary elites into opposing change on the basis of myths peddled by green mystics. . .

Those myths promoted by green mystics are getting in the way of science and productivity improvements here too.

Hat tip: Tim Worstall


There is something in trade

November 12, 2012

Tim Worstall says there seems to be something in this trade idea:

I can’t say that I’ve ever really understood this idea that we must all eat only the things that have been grown in our own region. “Region” of course is a variable thing. It seems to depend on how deep the green of the fool recommending it is. Something from “the nation” to “your back yard” is the spectrum. But as I say, I’ve never really understood the point.

For we know what happens when food supplies are indeed restricted to just the region one is actually in. We’ve been there before, back before we had decent roads. And what used to happen is that when the local crops failed then everyone died of starvation: even if 30 miles away there was a bumper crop. Quite why anyone wants to recreate the bad parts of the Middle Ages I’m really not quite sure. . .

Localists and proponents of yokelnomics – the policies which would take us back to peasant economies of the distant past – pose the greatest danger to food security.

There are good points about buying local but not at the expense of free trade which is an essential part of addressing world hunger.


Politics ‘too complicated’

November 3, 2012

More than a third of British graduates admit that politics and government are too complicated.

Regardless of what sort of degree they’ve undertaken, graduates are supposed to have learned to research, reason, enquire and think.

If people with those skills can’t apply them to politics there’s little hope for the rest of the voting public.

. . . 36 per cent of people educated to degree level agreed with the statement that “politics and government seem so complicated that a person like me cannot really understand what is going on”. Among those who left school at 16 the rate was 65 per cent.

People in some countries are still dying for democracy and yet these people in Britain with centuries of democratic tradition can’t be bothered to do the little required to understand what’s what with the people who run the country and spend so much of their money.

But is it any better here?

When asked to list things which they liked least about Britain’s political system, 53 per cent cited “the quality of our politicians”. . .

That’s with a First Past the Post electoral system where the candidates have to win the support of voters.That doesn’t guarantee their quality or ability but it does mean they have to campaign on their own merits.

While MMP has brought in some very able politicians through party lists, I’m sure we could all come up with a little list of others who wouldn’t stand a chance if they were elected directly by voters.

Hat tip: Tim Worstall


Higher company taxes hit wages

August 6, 2012

The left generally favours higher taxes and some of the left also show an anti-business streak.

That combination can lead to policies which tax businesses more.

But Tim Worstall asks who pays for that:

 The only three groups possible are the shareholders of that company, the customers of it or the workers. At  which point we have an interesting new paper on what that incidence is in the European example:

A stylised model is provided to show how the direct effect of corporate income tax on wages can be identified in a bargaining framework using cross-company variation in tax liabilities, conditional on value added per employee. Using data on 55,082 companies located in nine European countries over the period 1996–2003, we estimate the long run elasticity of the wage bill with respect to taxation to be −0.093. Evaluated at the mean, this implies that an exogenous rise of $1 in tax would reduce the wage bill by 49 cents.

As we can see, the workers are paying 50% of that corporation tax bill. Meaning that anyone (and everyone) shouting that companies must pay more in taxes is in fact saying that they want to reduce the wages of the workers.

The law of unintended consequences at work again – higher company taxes hit wages.


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