The Negative Externalities of Organic Food
Tonight, Penn & Teller will expose the myth or Organic food for exactly what it is: Bullshit!
In their excellent television show, Bullshit!, they will tell us that, just like “Global Warming”, there just isn’t any science to back up the claims of those who extol the virtues of an Organic diet. A paper published in the American Journal of Clinical Nutrition (a peer-reviewed scientific journal) concludes that “Our review indicates there is currently no evidence to support the selection of organic over conventionally produced foods on the basis of nutritional superiority”.
I bet, however, that Penn & Teller will miss yet another point never spoken of regarding Organic food: Organic food hurts poor people. If you want to know how, read on.
In the science of economics, we recognize a phenomenon known as “externalities”. They come in both the positive and negative flavor. An example of a positive externality is when a business adds pretty landscaping to the front of its office building. Anyone passing by can enjoy looking at the scenery, but there is no practical way for the company to charge for the positive experience. In this case, a party having no part in the financial transaction benefits.
In the case of Organic food, there is a negative externality imparted onto everyone who does not buy the stuff. Due to the lack of use of conventional (and therefore, more effective) pesticides and fertilizers, the yield per acre of all organic crops is less than that of conventional crops. Since Organic foods have a higher market prices, it provides an incentive for farmers to take land previously used for conventional crops and divert them to use for Organic crops.
Now that there is less land available for conventional crops, rents on this space will increase. This increase in land use cost will be reflected in the final price of the conventional crops. While those of us who buy only conventional produce had no part in the financial transactions of producers and purchasers of Organic food, we suffer none the less from the negative externality of higher prices for conventional produce. Due to the availability of less disposable income, the poor are hurt by this phenomenon more than the well to do.
Almost universally, the Organic crowd are your typical Lefty/Liberal/Socialists. And, once again, they say they want to help poor people while simultaneously doing them more harm than good.
Depriving Government of Loot
As an extension of my posting regarding the question of a recession, I have another point to add.
As I previously stated, consumers will react to whatever the media reports. If, driven by inaccurate data published by the government, the mainstream media reports the economy to be in recession, consumers will seek out lower cost alternatives such as Wal-Mart. This sets up a feedback loop:
Assume that the typical Wal-Mart does $500,000 in sales per day. I happen to think that this is a very low estimate, but I use it only as an illustration. I have seen reports that I consider reliable that Wal-Mart saves the average consumer 15% on purchases over other retailers. As such, if Wal-Mart did not exist in a particular community, those consumers would spend $575,000 for the same goods. Let us also assume that the local sales tax is 7%. Sales at the Wal-Mart would net $35,000 per day in taxes for state & local government. That is $5,250 less tax than would be generated if the Wal-Mart did not exist. That is about $2,000,000 less in tax per year. There are 20 Wal-Mart locations here in the Phoenix metropolitan area – that is $40 MILLION less for government.
This reduction in tax revenue gets reported as even more grave economic news thus driving more business to Wal-Mart and perpetuating the feedback loop.
Various reports (which I cannot verify) indicate that Wal-Mart Same Store Sales (SSS) has risen by 3% to 4% in the past year while Target SSS has declined by about 7%. This evidence supports my contention that there is not less economic activity per se, but rather that economic activity has shifted from higher priced vendors to vendors who offer better value.
Not that I mind any of this. I own Wal-Mart stock and I am tickled pink whenever government is deprived of loot.
Reefer Madness
The movie Reefer Madness (1936) was produced in 1936 as a propaganda film to warn The Public about the evils of marijuana.
Aside from its inaccurately portrayed stoners as drug crazed fiends hell bent on violence, it did get one thing right. In one scene, a school principal goes to to beg a federal official for help. The fed says:
“But do you realize that marijuana is not like other forms of dope. You see, it grows wild in almost every state in the Union. Therefore, there is practically no interstate commerce in the drug. As a result, the government’s hands are tied.”
Did somebody amend the Constitution in the last 70 years and not tell me about it? Or, did the Federal Government just start ignoring it?
Is it a recession?
“It’s a recession when your neighbor loses his job; it’s a depression when you lose your own.”
- Harry S Truman
The above quote, while technically inaccurate, fairly well describes how most people view “the economy”. Few Americans have even the slightest notion of what “the economy” is, much less its actual condition. They rely more on what the media tells them than what they actually observe. Current dogma tells us we are in the worst economic times since the Great Depression.
Definitions
Definitions of “recession” abound. An article published in The New York Times (1975) defined a recession as “two down quarters of GDP”. This definition is the one I hear used most often by “the mainstream media” (MSM). It is lacking in that it does not define how much negative growth is needed to constitute a recession. Is it 5% or 50%??
The National Bureau of Economic Research (NBER) defines a recession as “a significant decline in the economic activity spread across the country, lasting more than a few months, normally visible in real GDP growth, real personal income, employment (non-farm payrolls), industrial production, and wholesale-retail sales.” NBER is a non-government, not for profit group that I generally admire. However, even their definition is somewhat lacking. The use of the words “significant” and “few” in their definition is vague and give too much wiggle-room.
Both of the above definitions rely on Gross Domestic Product (GDP). I am not confident relying on GDP as a metric since it is subject to manipulation. In the US, GDP figures are computed by the Bureau of Economic Analysis (BEA) which is part of the US Department of Commerce. This organization, like all government entities, is subject to political pressure from elected officials, all of whom have an agenda. GDP is the sum of Consumer spending, Government spending and Investment (C+G+I for all you Keynesians). Most government spending, by definition, is non-productive spending. As such, with enough government spending, GDP could be seen as increasing while the real economy stagnates.
What Is Seen and What Is Not Seen
At best, GDP as published by the Federal Government is an estimate. Since I am unable to find any reliable information about the methodology used, I can reasonably assume that much of this data relies on reports compiled by the various state revenue departments. Each month, retailers must report to their states their volume of business and remit the appropriate tax payments. However, there are a number of states that do not have sales taxes. Therefore, figures for their Gross State Product must be arrived at using other methods of estimation.
As for the other two components, Government Spending and Investment, I can only speculate that this is nothing more than a guess. Given the amount of waste, fraud and abuse that is incurred in government spending, I fail to see how government spending figures can be accurate. As for the Investment component, the vast volume of money moving in and out of the investment market in any period of time makes estimates unreliable.
All of the above represent “what is seen”. I postulate that “what is not seen” is a very significant part of the economy. As taxes and regulation increase, businesses and individuals contrive methods that leave no paper trail of their economic activity.
- The shadow economy, black market or underground economy. This describes methods of doing business outside of the ever watchful eye of government. Most of these transactions take place using cash or barter. When this happens, there is no reporting to government. Therefore, these amounts cannot be included in GDP calculations.
- I have a second hand report of at least one employer who has “laid off” his employees. While they are collecting unemployment compensation, the employer has hired them back “under the table”, paying them in cash rather than through a government monitored system. This skews published unemployment rates as other economic indicators.
- The emerging world of internet sales greatly diminishes the amounts of sales tax revenues collected by the states. Who knows how many millions of dollars in PayPal transactions take place each hour, most of which are unreported.
While these factor constitute a large portion of my opinion of the state of “the economy”, there is yet one more tale-tell sign that tells me things are not as bad as The Great Depression: my own perceptual abilities.
– I see just as many people in restaurants as I did two years ago.
– The number of idiots talking on cell phones while driving has not gone down.
– High-Def televisions are flying off store shelves.
What I have not seen are:
– Lines of people waiting outside soup kitchens.
– An increase in the number of people holding “will work for food” signs.
This isn’t to say that some people are not hurting as a result of an economic downturn. There are:
– Mortgage brokers who formerly provided loans to people who were not credit worthy
– Construction workers who build houses to be sold to the un-credit worth
– Auto workers who produced cars that nobody would buy
In my observation, any slowdown in the economic activity of the US has been primarily limited to industries that have behaved badly. All the rest of the hype is just so much Bullshit!
Some Things Never Change
Click Here to watch this 1933 NRA Promo
I got a kick out of this! The phenomenon of the Hollywood Left backing a Socialist President is nothing new. Take a look back at 1933.
For those of you who are victims of government education, the NRA was the National Recovery Administration – the bureaucracy that oversaw the administration of the New Deal law that set prices, wage rates and production levels.
Pay close attention to the exterminator character. The actor playing the role is Moe Howard – you probably know him better paired when with his sidekicks Larry and Curly. How appropriate that the government employed “Stooges” to advocate the Socialist agenda.