Despite a large literature finding negative impacts of minimum wage increases on employment opportunities for low skilled workers, a few studies have found minimum effects. For a list of annotated references see: Do Minimum Wages Cause Unemployment).
While some of the studies finding no negative impacts use very rigorous experimental designs, they are still not perfect. There are a lot of margins that impact an employer's response to labor costs, and cutting jobs is only one among many of possible impacts. We can't always measure the relevant variables or outcomes that matter. Many of these impacts are in fact long term as well.
A very good post regarding this as well as the issue of survivorship bias can be found here:
http://blog.independent.org/2016/04/03/beware-survivorship-bias/
"Many of the effects of increasing the legal minimum wage, for
example, take the form of actions that never occurred and hence cannot
be observed, for example, jobs that were never created because at the
higher minimum wage entrepreneurs did not consider the formation of
certain types of new firms or the creation of certain types of new jobs
to be worthwhile.
In short, in gaining a solid understanding of economic events, we
must beware of survivorship bias and never fail to consider the unseen
as well as the seen consequences of government interventions in the
market. A corollary is that we must not fool ourselves into the naïve
positivist belief that only countable data deserve consideration in
scientific work. The seen and the unseen, the counted and the
uncounted—all are proper raw materials for the serious and properly
trained student of economic and social life."
It is also interesting, in some of these states I have heard that there are some built in safety valves. For example, provisions that back off on the planned wage increases if detrimental effects become evident. It is interesting that politicians are aware that these kinds of wage increases are drastic and unprecedented, and these safeguards indicate they at least are cognizant of the evidence and plain common sense that indicates this could be bad. Actually, maybe that's a positive in terms of moving in the right direction of economic literacy? Unfortunately, this will only be based on short term and obvious measures like unemployment rates. Really bad outcomes like reductions in job training and job creation won't show up. The hidden costs won't get counted.
Some politicians have publicly stated that despite the economics, the arguments for these policies are morally compelling. But why not put their money where there mouth is if they truly believe that? If they truly believe that people are entitled to a minimum standard of living they could just as well legislate an income supplement or negative income tax equivalent to achieve this.
There is simply no way to argue that those that benefit from these policies 'gain' more than those that lose their jobs, or never get the opportunity to begin with because the new business that would otherwise employ them never opens as a result.
While some politicians want to make it illegal for the poor inner city kid to advance their career potential working for $7.50 an hour at McDonalds, it will remain perfectly legal for the rich kid in the suburbs to take the unpaid summer internship with the investment bank at $0/hr. That's how regressive progressive policies will ensure the poor get poorer and the rich get richer. But if you are in the class warfare business its a great way to generate repeat customers (voters) and garner support from the affluent progressive parents of those interns. Not a bad gig huh?
Friday, April 15, 2016
Friday, April 8, 2016
Do consumers have a 'right to know' about Intacta soybeans?
The title says it all: Sales Surge for Monsanto's Intacta Soybeans.
"Monsanto Co.’s new Intacta soybeans are not only killing bugs on Brazilian farms. They’re crushing demand for insecticides made by competitors DuPont Co. and FMC Corp......Soybean growers in northern Brazil who normally make six to 10 insecticide applications a season require only one or two sprays with Intacta crops.
I see two take aways from this, and I am not sure which one is bigger.
First, beyond AgWeb where's the press? If any other company had introduced a technology like this you would think the media would be all over it. The same people marching against Monsanto would be jumping for joy that a new green technology was putting the hurt on chemical companies.
The other story is that this is proof in point that biotechnology can reduce the use of toxic pesticides, hence its designation as a green technology (by me at least). So that means if the forced political speech laws of Vermont become law of the land, and they scare people away from GMO foods, or companies defensively substitute away, we're increasing our carbon footprint and supporting use of more toxic chemistries all in one fell swoop. I guess that's OK for some. (of course pesticide residues probably are not a big deal regardless but its the cost savings, reduced exposure, and reduced emissions on the farmscape that are impacted most).
Of course, given the scant media coverage, consumers won't know the difference. WOW so much for RIGHT TO KNOW as a justification for GMO labels.
See also: California Proposition 37: Capitalizing on Information Asymmetry and Government Regulation to Corner the Market on Sustainable Food
"Monsanto Co.’s new Intacta soybeans are not only killing bugs on Brazilian farms. They’re crushing demand for insecticides made by competitors DuPont Co. and FMC Corp......Soybean growers in northern Brazil who normally make six to 10 insecticide applications a season require only one or two sprays with Intacta crops.
I see two take aways from this, and I am not sure which one is bigger.
First, beyond AgWeb where's the press? If any other company had introduced a technology like this you would think the media would be all over it. The same people marching against Monsanto would be jumping for joy that a new green technology was putting the hurt on chemical companies.
The other story is that this is proof in point that biotechnology can reduce the use of toxic pesticides, hence its designation as a green technology (by me at least). So that means if the forced political speech laws of Vermont become law of the land, and they scare people away from GMO foods, or companies defensively substitute away, we're increasing our carbon footprint and supporting use of more toxic chemistries all in one fell swoop. I guess that's OK for some. (of course pesticide residues probably are not a big deal regardless but its the cost savings, reduced exposure, and reduced emissions on the farmscape that are impacted most).
Of course, given the scant media coverage, consumers won't know the difference. WOW so much for RIGHT TO KNOW as a justification for GMO labels.
See also: California Proposition 37: Capitalizing on Information Asymmetry and Government Regulation to Corner the Market on Sustainable Food
Friday, April 1, 2016
A Safer Food Future Envisioned in Consumer Reports
I recently read one of the more intriguing pieces of agricultural/food journalism probably since the 2009 article in Time magazine titled "Getting Real about the High Price of Cheap Food" (See Time for TIME to Get Real). It was a recent piece in Consumer Reports, "A Safer Food Future, Now." I will admit, and to Consumer Reports credit, it is stated up front that this piece was meant to be a controversial piece, as part of a "series of provocative opinion essays by leading thinkers on urgent consumer issues." I just hope they feature a later piece with some science based perspective to counterbalance this one.
Here are some short comments on a few of the the more provacative ideas you'll run across in the article:
One of the usual suspects, antibiotics is brought up with the irrelevant canard about "three-quarters of the antibiotics sold in this country being routinely fed to healthy poultry and livestock at factory farms."
Then there is this statement:
"The spread of GMO crops has greatly increased the sale of glyphosate, now the most widely used pesticide in America. Studies have found glyphosate in the raindrops, drinking water, and air of the Midwest. Last year the World Health Organization declared that glyphosate was “probably carcinogenic to humans.”
Not sure why this is necessarily a negative. We know that glyhphosate has encouraged less use of more toxic chemistries, as well as lead to less carbon emissions. And other traits completely replace toxic pesticides altogether. And the WHO's characterization....well maybe CR should get in touch with Andrew Kniss do discuss more on that.
They cite that more than 90 percent of Americans support GMO labeling -"so that consumers can choose whether to buy them." The ninety percent figure is widely cited, but we also know 80% support labels on food containing DNA as funny as that is. Regardless, we know that GMO labels are political speech wordsmith-ed by special interests, designed to reduce information and choice. Consumers may want one thing but get another.
Then there are comparisons of wages of migrant farm workers to hedge fund owners (I'm not sure how you could justify this comparison in terms of the marginal product of labor).
Government policies that subsidize junk foods? - Whatever.
The article does end on a postive note that I certainly could stand behind:
"I feel confident that a food system appropriate for the 21st century is gradually emerging. It will be regional, diverse, kinder to livestock, less dependent on pesticides, more respectful of the environment, and far more compassionate."
Yes. Its called Modern Sustainable Agriculture.
Here are some short comments on a few of the the more provacative ideas you'll run across in the article:
One of the usual suspects, antibiotics is brought up with the irrelevant canard about "three-quarters of the antibiotics sold in this country being routinely fed to healthy poultry and livestock at factory farms."
Then there is this statement:
"The spread of GMO crops has greatly increased the sale of glyphosate, now the most widely used pesticide in America. Studies have found glyphosate in the raindrops, drinking water, and air of the Midwest. Last year the World Health Organization declared that glyphosate was “probably carcinogenic to humans.”
Not sure why this is necessarily a negative. We know that glyhphosate has encouraged less use of more toxic chemistries, as well as lead to less carbon emissions. And other traits completely replace toxic pesticides altogether. And the WHO's characterization....well maybe CR should get in touch with Andrew Kniss do discuss more on that.
They cite that more than 90 percent of Americans support GMO labeling -"so that consumers can choose whether to buy them." The ninety percent figure is widely cited, but we also know 80% support labels on food containing DNA as funny as that is. Regardless, we know that GMO labels are political speech wordsmith-ed by special interests, designed to reduce information and choice. Consumers may want one thing but get another.
Then there are comparisons of wages of migrant farm workers to hedge fund owners (I'm not sure how you could justify this comparison in terms of the marginal product of labor).
Government policies that subsidize junk foods? - Whatever.
The article does end on a postive note that I certainly could stand behind:
"I feel confident that a food system appropriate for the 21st century is gradually emerging. It will be regional, diverse, kinder to livestock, less dependent on pesticides, more respectful of the environment, and far more compassionate."
Yes. Its called Modern Sustainable Agriculture.
Monday, February 15, 2016
The Supreme Court and the Chains of the Constitution
Milton Freidman said:
"The ballot box produces conformity without unanimity; the marketplace, unanimity without conformity"- Free to Choose
and as Don Boudreaux writes:
"The dispersion of knowledge and experience is one of the most important reasons for relying on free markets. Politicians and bureaucrats, despite their pretenses, know next to nothing about the all-important details of the economic affairs that they regulate. This reality means that government regulation is the displacement of expertise by ignorance."- http://triblive.com/mobile/9979317-96/affairs-ignorant-economics
All of the statements above are testaments for why democracy, if left unchecked, can be just as detrimental to a society as so called unrestrained or unregulated markets. Perhaps more so than the critics of capitalism would ever imagine or be willing to admit.
There is a lot of contention about whether we should nominate a new justice now, or wait until after the next election. Much of this has to do with the fact that the supreme court has not played a very effective role acting as a brake slowing the pace of unrestrained democracy. The effect is that many micro level personal decisions in our lives are becoming subject to the votes, opinions and interpretations made by these justices. The stakes are high for a lot of reasons.
In Judicial Activism Reconsidered, Economist Thomas Sowell describes our Constitution:
“The federal Constitution is "the supreme law of the land," not because it is more moral than state constitutions or state or federal legislative enactments, but because it represents a larger and more enduring majority.107 Minorities receive their constitutional rights from that enduring majority to which transient majorities bow, not from whatever abstract moral rights are imagined to exist as a brooding omnipresence in the sky.”
Once we start making heroic ‘modern’ interpretations of words in the constitution like ‘general welfare’ or ‘regulate commerce,’ the constitution is weakened, and minorities are forced to give power over to whatever transient majority prevails at the time. The short term gain from being able to bypass the amendment process (which requires obtaining the consent of the governed) via the courts or legislative process comes at a long term cost to our liberty and national well being. Every step we take away from the limited role of government defined by the specifically enumerated powers of the Constitution, we concentrate more power and wealth in our central government. This increases the incentives for large corporations and special interests to influence our lawmakers, and provides the means for ever more concentration of power and transfer of power away from the people. This outcome is what game theorists refer to as a prisoner's dilemma, (a nash equilibrium) and the solution or means of escape was proposed by our founders: a binding Constitution that limits the power of all players.
“in questions of power then, let no more be heard of confidence in man, but bind him down from mischief by the chains of the constitution” —Thomas Jefferson
We've broken the chains, and so these nominations have become a much bigger deal than they need be, or our founders envisioned them to be....and we will continue to send lawyers and lobbyists to Washington, offer up our candidates to the highest bidder, and freak out over court appointments all the while proposing band-aid fixes like campaign finance reform or new parliamentary rules and procedures around nomination processes. It's democracy out of control.
For some deeper dives into these issues see: Public Choice Theory for Agvocates
"The ballot box produces conformity without unanimity; the marketplace, unanimity without conformity"- Free to Choose
and as Don Boudreaux writes:
"The dispersion of knowledge and experience is one of the most important reasons for relying on free markets. Politicians and bureaucrats, despite their pretenses, know next to nothing about the all-important details of the economic affairs that they regulate. This reality means that government regulation is the displacement of expertise by ignorance."- http://triblive.com/mobile/9979317-96/affairs-ignorant-economics
All of the statements above are testaments for why democracy, if left unchecked, can be just as detrimental to a society as so called unrestrained or unregulated markets. Perhaps more so than the critics of capitalism would ever imagine or be willing to admit.
There is a lot of contention about whether we should nominate a new justice now, or wait until after the next election. Much of this has to do with the fact that the supreme court has not played a very effective role acting as a brake slowing the pace of unrestrained democracy. The effect is that many micro level personal decisions in our lives are becoming subject to the votes, opinions and interpretations made by these justices. The stakes are high for a lot of reasons.
In Judicial Activism Reconsidered, Economist Thomas Sowell describes our Constitution:
“The federal Constitution is "the supreme law of the land," not because it is more moral than state constitutions or state or federal legislative enactments, but because it represents a larger and more enduring majority.107 Minorities receive their constitutional rights from that enduring majority to which transient majorities bow, not from whatever abstract moral rights are imagined to exist as a brooding omnipresence in the sky.”
Once we start making heroic ‘modern’ interpretations of words in the constitution like ‘general welfare’ or ‘regulate commerce,’ the constitution is weakened, and minorities are forced to give power over to whatever transient majority prevails at the time. The short term gain from being able to bypass the amendment process (which requires obtaining the consent of the governed) via the courts or legislative process comes at a long term cost to our liberty and national well being. Every step we take away from the limited role of government defined by the specifically enumerated powers of the Constitution, we concentrate more power and wealth in our central government. This increases the incentives for large corporations and special interests to influence our lawmakers, and provides the means for ever more concentration of power and transfer of power away from the people. This outcome is what game theorists refer to as a prisoner's dilemma, (a nash equilibrium) and the solution or means of escape was proposed by our founders: a binding Constitution that limits the power of all players.
“in questions of power then, let no more be heard of confidence in man, but bind him down from mischief by the chains of the constitution” —Thomas Jefferson
We've broken the chains, and so these nominations have become a much bigger deal than they need be, or our founders envisioned them to be....and we will continue to send lawyers and lobbyists to Washington, offer up our candidates to the highest bidder, and freak out over court appointments all the while proposing band-aid fixes like campaign finance reform or new parliamentary rules and procedures around nomination processes. It's democracy out of control.
For some deeper dives into these issues see: Public Choice Theory for Agvocates
Saturday, February 13, 2016
Can Science or Evidence Change Your Mind?
I was recently listening to an EconTalk podcast with Russ Roberts and Adam Ozimek, about why economists change their minds or don't and the impact or role of evidence. In general it is hard to find good examples of people changing their minds about
ideologically firm beliefs in the face of strong contradicting evidence.
Outside of the specifics of issues related to microeconomic theory (like
the impacts of minimum wages on unemployment) or macroeconomics (are
fiscal stimulus policies effective?) one example of a couple a couple of fairly well known
people that have changed their minds in this regard include Mark Lynas
and Bill Nye the Science Guy.
"There is an equivalent level of scientific consensus on both issues, I realized, that climate change is real and genetically modified foods are safe. I could not defend the expert consensus on one issue while opposing it on the other." - Mark Lynas, How I Got Converted to GMO Food, NYT April 24,2015
http://www.nytimes.com/2015/04/25/opinion/sunday/how-i-got-converted-to-gmo-food.html?_r=0
“I went to Monsanto,” Nye said, “and I spent a lot of time with the scientists there, and I have revised my outlook, and I’m very excited about telling the world. When you’re in love, you want to tell the world.” - Proof he’s the Science Guy: Bill Nye is changing his mind about GMOs by Washington Post March 3, 2015
https://www.washingtonpost.com/news/energy-environment/wp/2015/03/03/proof-hes-the-science-guy-bill-nye-is-changing-his-mind-about-gmos/
On a personal note, rather than change my mind about issues related to economics/markets/prices I find that the evidence has made me less dogmatic, and more skeptical or borderline agnostic. Despite Leamer's influence, and the credibility revolution, I find issues like what Andrew Gelman refers to as the garden of forking paths and researcher degrees of freedom weigh pretty heavily on my mind, no matter how solid the identification strategy or methodology as presented in a polished 'study' or paper.
"There is an equivalent level of scientific consensus on both issues, I realized, that climate change is real and genetically modified foods are safe. I could not defend the expert consensus on one issue while opposing it on the other." - Mark Lynas, How I Got Converted to GMO Food, NYT April 24,2015
http://www.nytimes.com/2015/04/25/opinion/sunday/how-i-got-converted-to-gmo-food.html?_r=0
“I went to Monsanto,” Nye said, “and I spent a lot of time with the scientists there, and I have revised my outlook, and I’m very excited about telling the world. When you’re in love, you want to tell the world.” - Proof he’s the Science Guy: Bill Nye is changing his mind about GMOs by Washington Post March 3, 2015
https://www.washingtonpost.com/news/energy-environment/wp/2015/03/03/proof-hes-the-science-guy-bill-nye-is-changing-his-mind-about-gmos/
On a personal note, rather than change my mind about issues related to economics/markets/prices I find that the evidence has made me less dogmatic, and more skeptical or borderline agnostic. Despite Leamer's influence, and the credibility revolution, I find issues like what Andrew Gelman refers to as the garden of forking paths and researcher degrees of freedom weigh pretty heavily on my mind, no matter how solid the identification strategy or methodology as presented in a polished 'study' or paper.
Climatarians
I recently caught the February 4th Agritalk podcast with Mike Adams, and heard Jeff Stier and Julie Kelly discussing their article in National Review about 'climatarians.'
"climatarian (n.) A diet whose primary goal is to reverse climate change. This includes eating locally produced food (to reduce energy spent in transportation), choosing pork and poultry instead of beef and lamb (to limit gas emissions), and using every part of ingredients (apple cores, cheese rinds, etc.) to limit food waste."
http://www.nationalreview.com/article/429966/climatarians-crusade-stop-eating-meat-save-planet
Climatarians "want every meal to be a political statement on topics such as farm workers’ rights or the carbon footprint of your family’s dinner." I think that's been true for a lot of anti-agribusiness and anti-family farm activists for a long time, as well as the mantra of a number of foodies that know little about modern agricultural technology and production.
"climatarian (n.) A diet whose primary goal is to reverse climate change. This includes eating locally produced food (to reduce energy spent in transportation), choosing pork and poultry instead of beef and lamb (to limit gas emissions), and using every part of ingredients (apple cores, cheese rinds, etc.) to limit food waste."
http://www.nationalreview.com/article/429966/climatarians-crusade-stop-eating-meat-save-planet
Climatarians "want every meal to be a political statement on topics such as farm workers’ rights or the carbon footprint of your family’s dinner." I think that's been true for a lot of anti-agribusiness and anti-family farm activists for a long time, as well as the mantra of a number of foodies that know little about modern agricultural technology and production.
They go on to discuss a lot of important issues related to meat and cancer, as well as the resource intensity of organic production systems, as well as the implications of the Carnegie Mellon study that indicate that a climatarian influenced diet might actually be worse for the environment than one containing more meat. Of course, science is not central to the dogma of a climatarianist agenda, as the article states: "Regardless of science to the contrary, these activists promote the organic, local, non-GMO diet as the most eco-friendly."
For a deeper dive on some related issues see:
Saturday, February 6, 2016
How Big Data and Genomics are Crushing the Myth of Monoculture
From: Multi-hybrid corn planter trials in Corn and Soybean Digest (link):
"If multi-cultivar planters gain significant market share in coming years, farmers could see a big shift in the corn hybrids and soybean varieties available to plant in unique field environments, says Jason Webster, Beck’s Hybrids research agronomist…….“We may have customized hybrids for certain soils that never would have been released in the past,” he says."
This is in line with what I have said before (see Big Data + Genomics ≠ Your Grandparent's Monoculture):
"the disruptions of new technology, big data and genomics (applications like FieldScripts, ACRES, MyJohnDeere or the new concept Kinze planters that switch hybrids on the go etc.) will require the market to continue to offer a range of choices in seeds and genetics to tailor to each producer's circumstances of time and place. There are numerous margins that growers look at when optimizing their seed choices and it will require a number of firms and seed choices to meet these needs as the industry's focus moves from the farm and field level to the data gathered by the row foot with each pass over the field."
The convergence if big data and genomics is driving more diversity into every seed in every field across every acre.
"If multi-cultivar planters gain significant market share in coming years, farmers could see a big shift in the corn hybrids and soybean varieties available to plant in unique field environments, says Jason Webster, Beck’s Hybrids research agronomist…….“We may have customized hybrids for certain soils that never would have been released in the past,” he says."
This is in line with what I have said before (see Big Data + Genomics ≠ Your Grandparent's Monoculture):
"the disruptions of new technology, big data and genomics (applications like FieldScripts, ACRES, MyJohnDeere or the new concept Kinze planters that switch hybrids on the go etc.) will require the market to continue to offer a range of choices in seeds and genetics to tailor to each producer's circumstances of time and place. There are numerous margins that growers look at when optimizing their seed choices and it will require a number of firms and seed choices to meet these needs as the industry's focus moves from the farm and field level to the data gathered by the row foot with each pass over the field."
The convergence if big data and genomics is driving more diversity into every seed in every field across every acre.
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