Equality: by command, by market or by sharing?

Are command economies the only way to achieve economic equity?  This question was asked recently on Reddit.  It illustrates a common misconception about market economies.  Also, this blogger thinks a discussion on types of economy should include sharing as practiced by some smaller tribal societies. Continue reading

Food, glorious food

For some of us it is very easy to be complacent about food supply.  All his life this blogger has lived near an unlimited supply of food.  He now lives 20 minutes out-of-town and within an hour of at least a dozen supermarkets, all of which are always fully stocked with an excellent variety of foods.

I wish this were true for all the people on this planet and I hope it will remain true for the rest of time.  There are some reasons to be concerned.  Even with all this food available there are people here who rely on the local food bank to eat.  If our food factories were to break down a lot more people would go hungry.

Food is so important at least some people should be monitoring what is happening in the agriculture industry.  It is too important to leave to farmers who have interests that conflict with those of their customers.

Here are a few concerns about food production.

The industry is heavily subsidized, probably in so many ways nobody knows for certain the extent of the subsidies.  People living in rural areas sometimes have  disproportionate voting power and farm lobbies tend to be very powerful.  In any case most governments want a cheap food policy to avoid bread riots.  All the subsidies distort prices so that we make irrational buying decisions.  Last night this blogger probably would not have eaten fresh green beans from California or South America if we had to pay the full costs of growing and transporting them.  If agricultural subsidies were to be abolished food production would be more rational and efficient and some of us would make drastic changes to our diets

Another concern is that very few people know much about the sustainability of agricultural technology and those who do know are not always reassuring.  We know there is a lot of monoculture and a high use of artificial fertilizers and pesticides.  What would happen to our food supply if a financial breakdown were to mean farmers were not able to purchase their chemicals?   What is the true condition of the topsoil around the world?

Weather and climate change always has been and always will be an issue in agriculture.

From time to time somebody makes an issue of North American food waste with a claim that we waste enough food to reduce hunger around the world.  This could be true but there is the problem of getting the food to where it is needed.   Collection and transport would be expensive and trade works best when both parties have items of equal value to each other.

It is in the interests of all of us that agriculture be a viable and sustainable industry.  But there is an economic problem relating to the elasticity of the demand curve.  When the first hand-held calculators came out they were terribly expensive.   As the price came down more and more people were able to afford them  and manufacturers were able to make a profit with a small markup on lots of sales.  This is not true for agriculture.  Most of us eat the same amount of food regardless of the price.    So, if there is a bumper crop the price will go down even though sales will not go up.  Sometimes farmers are better off with a poor crop so that prices go up and their total income increases.

I’m not sure there is an answer to this problem that does not involve government interference in markets.  My preferred solution would be a universal income scheme which would include agricultural workers.  For a suggestion of how such a scheme might work I refer you to the essay “LETS go to market:  Dealing with the economic crisis” on this weblog.

As food is such an essential part of our lives we have a responsibility to ourselves to take an interest in the agriculture industry and monitor what is happening.

Independent contractors and falling living standards

This blogger disagrees with economist Robert Reich when he says the rise of “independent contractors” in the American labor force is a legal trend.  It is an economic trend in which incomes are trending down because of problems in the energy and resource base.

Our economy has recently been through some golden  years of prosperity which have come to an end, probably because we have used up the most easily accessible of the energy and mineral resources.  There are lots left but the difficulty of extracting them is reducing the potential for continued economic growth and maybe even going to force upon us some negative growth. 

One of the consequences is that living standards are falling – at least for some people.  As  wages are sticky and people protest when asked to take a cut in wages employers try to find other ways to accomplish the same thing.  One way is to contract out work and another is to assign the work to independent contractors.  The jobs get done at a lower cost to the employers and some workers have jobs even if at less income.   In some cases the work may be done by different employees. 

This is hardly a trend to make people happy.  If it were up to me everyone would have the same incomes, working conditions and benefits as most government employees.  But economic realities will not allow that.

If there has to be a reduction in living standards then it would be fairer to share it among most people.  One way to do this would be with a universal income scheme.

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