Via Cafe Hayek, on Freedom to Choose.
Via Cafe Hayek, on Freedom to Choose.
At latest count, there are around 7,200 Farmers’ markets in the United States. Of these, over 1,000 were established in this last year alone. Back in 2005 there were only 4,093 markets in the country.
What does this mean? Well, no one can deny the rise of the farmers’ market. From coast to coast and city to suburb, the farmers’ market is a phenomenon which has been attracting all walks of life in this country. After all, the food is local, fresh, from a friendly quasi-neighbor rather than a corporate logo, and the profits go back into the community. All of this, as anyone who has seen one too many Supply and Demand graphs can attest, will create a glut. Supply outstrips demand and the farmers earn less.
Taking Oregon as an example (avant guarde in the farmers’ market arena, as well as my new home): between 1998 and 2005 62 farmers’ markets opened and 32 of them failed. In Massachusetts, the opening of one farmers’ market caused profits at an established one just two miles away to drop 30%.
“So what?” You could say, “These are the laws of supply and demand that all economists talk about. Once the supply of farmer’s markets outstrips demand their profits will decrease and we’ll go back to equilibrium, right?” Well, yes, that’s how markets work. Except, of course, with Tulips in 17th century Holland, or the South Sea Bubble, or the British railway in the 1840′s, or the dotcom boom, or the housing mortgage crisis. Could Farmers’ markets be bubbles in the making?
Actually, probably not. While some local communities have a “Farmers’ market or bust” mentality (and this is quite literally what they might get if they do), most of the country enjoys them but not yet in an exaggerated manner. There are several reasons, however, for keeping a close eye on the rise of these markets:
1) Farms use 40% of our country’s water and have the worst reutilization rate (much worse than industry or households) of any category.
2) Along these lines, the water we divert and make available to these farms, especially in states like Arizona and Nevada, could go to other uses, like bringing water to the world.
3) Local farmers pollute. There is no getting around the fact that keeping production, distribution and operations local is worse for the environment than using economies of scale. Here, quite literally, costs tend to follow resources, so the fact that corporations find it cheaper to ship from other places is due to their using fewer resources (for more about this read Reason number 4 here).
So maybe, as unpopular as this may make us, we should be the first to say “Enough with the Farmers’ Markets!”. Both for their sake and for ours.
These days we hear many odd theories and half-truths, such as children’s vaccines making children autistic, the Large Hadron Collider causing black holes, and “speculators” distorting the prices of everything from oil to bread. There are some of these, however, that merit further attention. These are the Top 5 of all the crackpot myths that, all too often, are accepted as fact. So we decided to present them here:
1. Genetically Modified Organisms are bad
A prime example of how anti-science governments can be. To date, not one person has died due to Genetic Modification. In fact, not one person has even gotten sick. Yet this is still a huge debate around the world. Norman Borlaug is a name which, if it is not familiar to you, you should google right away. Borlaug has almost certainly saved more lives than anyone else ever in the world. He did so by genetically modifying crops. Pretty much all non-animal food we eat (and some animal) has been genetically modified. Corn, wheat, rice, soy, never occurred naturally, but were achieved by farmers experimenting and cross-breeding. The banana is a result of genetic modification. These are the evils entities such as the EU want to prevent when they forbid farmers, even in less developed countries, to grow GM crops. The result is millions of deaths per year due to malnutrition (5 million child deaths alone are due to malnutrition). The sad fact is we could feed many many more people, if not everyone who is in need, if GM crops were more widely spread. Yet we persist with the myth that they are evil.
2. Immigration needs to be curbed
Immigration is actually not one issue but various different ones. There are illegal immigrants in the country, and the issue of if/how to legalize them. There are legal immigrants, which have to jump through various hoops (which can keep changing) in order to maintain their legality. There is immigration policy, which determines who can come, for how long and for what reasons. And there is national security and border security, screening all would-be immigrants into the country. The ultimate goal of any immigration policy should be the free flow of workers in and out of a country. Of course, national security needs to be taken into account, and countries should be able to reciprocate. Aside from this, however, market forces should be allowed to dictate who works where.
3. Buying Local is good
As a tie-in, local farming will never feed the entire world. Artificially keeping farming (and other businesses) local is one of the biggest waste of resources (the biggest of water), it debilitates local economies, it is very harmful for the environment and it makes everyone in the process poorer in the long term. For a more detailed analysis of what we think of this, click here and here.
You can watch our video tying Buying Local with Immigration policy here:
4. We have a shortage of water
At least 36 millions people are undergoing droughts at this moment. At the same time, over 70% of the earth’s surface is made of water. Does this seem odd? Well it should. The problem has nothing to do with your running water or long showers. Although fresh water is being wasted (coincidentally, most by local farming), the main crux like in salt water. In order to transform this abundant resource into something potable we need to perfect a process called desalination. The main problems with this are the cost of desalination and the transportation of water. This seems like prime territory for a far-sighted visionary to make a name for him/herself, and provide water to the world.
5. Education is worth all that money
It simply isn’t. Education these days has more to do with signaling than what is being learned. This is what justifies tuition levels of $100,000. The sad fact is that all too often one spends their whole life paying this money back (and/or bankrupting their parents in the process). In fact, we predict that a bubble in higher education is occurring and will probably burst at some point. We have also had a guest columnist address this situation, while another contributor provided us with a calculator to see if your higher education will actually be worth the cost.
You may or may not recall our Dumb idea on how to end Illegal immigration. Whether you do or not, we feel the idea is best described in Video. And to song. So Enjoy!
When we sat down to tackle the great problems confronting our society today, we were not at a loss for serious issues that need remedies. As would be the case with any good citizens, one of the first problems that came to mind was illegal immigration. Our politicians have told us time and time again how this is such a corrosive issue, and politicians don’t lie. But how can we use our powers to help in this cause? After many conferences, conference calls and water-cooler conference sessions, our proposed solution is very simple: Buy Local
Say your town has too many of those pesky immigrants (only of the illegal variety of course), and too many corporate multi-nationals as well. If you buy local, you can help your local community. Of course, your money just enters banks using currency issued by the Treasury Department regardless of where the account-holder is actually located, but if you keep insisting, you can create local monopolies and oust those hated corporates. Once this is done, more businesses in your community will be local small businesses – with the result that you’ll have more local enterprise with greater autonomy.. Think of it, no more Coca Cola — but you’ll have ‘Main Street Beverages’ producing, bottling and distributing their wares right in your local town!
Inevitably, there will be the issue of where to place the bottling factory. Not in your backyard, obviously (maybe closer to where the illegals live?) Of course, other communities will be buying local as well (it’s only fair), so the only customers for your community’s businesses will be your community. This will drive many businesses to bankruptcy — which, in turn, will drive many people away from your town to LA or New York.
The people who stay, however, will realize that while before they could choose among different sodas, fruit juices and bottled waters, ‘Main Street Beverages’ only has capacity for its Cola, which isn’t really all that good. But at least it’s local. And big farmers have been chased out! But the local farmers have very small farms and therefore no Economies of Scale, so the price of an apple is now $6. It didn’t help that last week one of the farmers was caught trying to buy cheaper fertilizer from an international chain, so he had to be kicked out of town.
At this point, you can be sure the number of immigrants into your town, both legal and illegal, will grind to a halt. Mission Accomplished!
* Note: This post was inspired by reading Angry Bear’s wonderful solution to global warming and burning too much coal
Briefly, over 150 million people are undergoing drought conditions at this moment. At the same time around 72% of the earth’s surface is covered in water. Any economist can tell you this is not an optimal allocation of scarce resources. Many will call it downright shameful.
Although we are far from water experts, we have mentioned before that desalination is a technique that can be perfected, and we are clearly not alone. The United States is probably the only country that has the money and resources to perfect desalination technology and its means of distribution. Instead, our water industry funding goes towards diverting the Colorado river, along with the Mississippi, Missouri, Potomac and Hudson, among others, in order to encourage farming in areas that would not otherwise support farms.
In other words, the emphasis on buying from local farmers directly affects the 150 million people who are undergoing droughts. We reiterate, if you want to save the environment, be entrepreneurial, or invest in someone who is, about finding new water solutions. Don’t waste money on nonsensical ideas.
For some more ideas on solving the global water crisis by actual experts you can click here.
My extreme-recycling, hybrid-driving, local-produce buying girlfriend keeps scolding me for wasting water when I leave the tap water running or wait for the shower to warm up. She says I’m ruining the environment and wasting precious water. I wanted to research the veracity of these statements, but most people I ask seem to have some sort of agenda. What does economics have to say about this? Are there any concrete numbers? Am I really ruining the environment?
I’m afraid your girlfriend is incredibly right on both counts: You are ruining the environment AND you’re wasting water. However, your girlfriend is the bigger enemy of the environment: There is a difference between being A) Someone who cares for and is saving the environment and B) just following certain norms that allow you to stop thinking but actually do more harm than good. The person who tells you not to keep your tap water running, or to skip a shower, or even to be parsimonious with your lavatory flushing, and who is then buying produce from their local farmers, falls squarely under B.
40% of water usage in the United States is for farmers, another 40% is for power generation, while only 8% is for household consumption. Actually, only 5% is for ‘indoor’ household consumption.
Interestingly, of the water you use in your house, about 75% goes back in the system and is then reutilized. The reutilization rate is 98% with power generation, but only 40% for farmers.
In other words, you running your water makes a miniscule difference in the scope of things. On the other hand, your patronizing of local farmer produce keeps them farming, which does much more harm for the environment. If you want to go green, it’s good to start by using your brain rather than social convention, and tell your girlfriend you’ll turn the tap off once she starts buying global.
Fortune Magazine has a feature on Myths and Truths about going green. Some highlights include:
Myth: Bottled Water is Safer than Tap Water
(Reality: Tap water is subject to stricter government standards.)
Myth: Buying Local food is better for the environment
(We refer you here and here for more about this.)
Myth: It’s Better to buy an artificial Christmas tree than to cut down an evergreen every year.
Myth: Paper grocery bags are better than plastic ones.
Myth: Offsets are the answer to Climate Change.
Myth: You need to warm up your car before driving it
(Reality: Idling the car for a few minutes in winter just wastes gasoline.)
Myth: Car Air Conditioning wastes energy.
Myth: Hybrids are much better for the environment than regular cars
(We refer you here for our discussion on this.)
Myth: Driving fewer miles is good for the environment
(it seems they’re referring to the ‘Left turn’ that UPS drivers don’t make.)
Read the full article, along with the “realities” to each myth, in Fortune magazine here.
In this era of globalization, where the world is flat and everyone is a mouse click away, people have been buying closer and closer to home. People buy goods that are produced nearby in order to help their local community and reduce their carbon footprint. As we have mentioned in the past, we believe this belies a faulty understanding of economics.
An article in the Economist mentions this phenomenon as well. In particular, it mentions a Borders that was supposed to be built in Austin. The locals objected and the plans fell through, so a Whole foods opened in its place. This would make sense, since Whole foods was founded in Austin. However, since it is now a publicly traded company, it is extremely hard to argue that more of the proceeds are re-entering the local community. A good example of feel-good faulty economics.
Having mentioned in the past that Buying Local is not a realistic manner of saving the environment, we are greatly pleased to see our points of view reaffirmed in a paper by Hiroko Shimizu and Pierre Desrochers entitled: “Yes We Have No Bananas: A Critique of the ‘Food Miles’ Perspective”
They take many examples, and show that goods were bought from far away places for a reason: they are more efficiently grown. Their paper goes on to show that efficient growth greatly outweighs the greenhouse gases emitted in transportation.
For example, British farmers emit 2,394 kg of carbon dioxide (Co2) per ton of tomatoes produced. For Spanish farmers it is 630kg. It therefore makes environmental (as well as economic) sense for British consumers to import Spanish tomatoes.
Their conclusion is that “food miles are, at best, a marketing fad”. Media outlets take note.
Original paper here.