From: Michael Lorrey (mike@datamann.com)
Date: Sat Feb 24 2001 - 10:52:53 MST
Charlie Stross wrote:
>
> On Thu, Feb 22, 2001 at 10:20:43AM -0500, Michael Lorrey wrote:
> >
> > Very good points, Greg. Also note that in any economic system, demand
> > tends to expand to meet supply, and also that excessive supply over
> > demand tends to cause waste and a preference for the cheapest supplier,
> > which invariably tends to be one that externalizes costs to a greater
> > extent than its competition. Maintaining supply/demand balance works to
> > minimize pollution and waste of resources, something that all greens
> > (and extropes) should be for, regardless of their economic dogma.
>
> Generally true, but ...
>
> We're seeing at least one example, today, of an entire industry being
> driven to the brink by improvements in its own efficiency and competition
> on price. Agriculture!
I don't think so. Industrial improvements in agriculture have put the
traditional family farm in danger, just as supermarkets and mega-markets
have endangered the mom and pop corner store. Neither agriculture nor
the retail sales industry is in any way in danger.
>
> Here in the EU, price supports have begun to collapse over the past couple
> of years. (Those supports, at least in the UK, were originally intended
> to provide for self-sufficiency in time of war -- talk about learning the
> lessons of WW2!) Agricultural produce prices are falling, and it turns
> out that we can't easily support an agricultural sector at all. Only about
> 2% of the population in the UK is directly involved in food production
> (but produce roughly 50% of the food required by the entire population).
> Go back 200 years and it took 80% of the population to produce 100% of
> the food required. That's a huge improvement in efficiency ... but the
> farmers are having horrendous difficulties making ends meet, because of
> the continuous downward pressure on food prices.
Only family farmers are having trouble. Industrial farms are not. The
primary problem with prices is that buyers are organized to set prices
while sellers are not, and the farmers suppliers are also organized to
control prices better. Typically when like minded and similar sized
farms band together to control pricing, they do rather well. Industrial
farms don't mind low prices because it drives their smaller competitors
under.
> A fundamental problem is that people *can't* physically consume much more
> food; obesity levels are rising, but the main source of new money going
> into foodstuffs is spending on luxury goods, prepared items, imported
> exotica, and so on. Everyone can afford to eat, and most people can afford
> to eat what by 1950 standards would be considered a luxury diet. We've got
> the most intensive, industrialised agricultural system in the EU, but it's
> competing with third world banana economies -- it can't bring in enough
> money to operate effectively.
Third world banana economies cannot keep up. One of the primary reasons
of popular peasant support for the Iranian Revolution, for example, was
that the farmers in Iran were being decimated by cheap imported US
wheat, rice, and corn.
>
> If we posit a world in which regional economic imbalances have flattened
> out, we'll eventually hit a point where downward pressure on food prices
> can't go any further because if it does there'll be insufficient money to
> pay for food production -- but consumption os flat. If food is produced
> at cost, in sufficient quantity and quality for everyone, there is *no*
> further room for growth (other than through artificially-induced fashions
> and fads, which offer transient relief through manufactured scarcity).
This displays a rather dumbfounding display of ignorance of market
economics.
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