Category Archives: Economy

I sense a revolution coming, and a lot of you aren’t going to like it

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As some of you may have gathered, I do a lot of reading, especially about history, politics, and current events. Over the past few months, I’ve noticed a new theme starting to grow, first in comments, then in mainstream articles wherein the writers have begun to question the salaries earned by public sector employees at the taxpayers expense.

I am not commenting on whether or not public sector employees make too much, not enough, or whether what they do is of benefit to the people paying for it. Instead, I am considering what may be the first casualty of the coming taxpayer revolution against bloated government: public sector pay.

Let’s face it. Most taxpayers have no idea what most public sector employees do for a living outside vague notions of the jobs people like teachers, police officers, or firefighters have. Even with jobs the taxpayers think they understand, I suspect most taxpayers think people doing those jobs get paid too much, take advantage of the system, and (perhaps worst of all) could not get jobs elsewhere.

Having been a public sector employee at one time, I can see how the taxpayers might get that impression, which is why I think it is so easy for the taxpayers, angry at the situation we find our nation in but yet unwilling to realize the solution means they will have to make sacrifices, to think that part of the solution is to pay public sector employees less.

Unfortunately, if history is any indication of future trends, the employees who will be targeted by this anger will be the ones who least deserve it. The taxpayers will target local public sector employees–teachers, police officers, fire fighters, etc–who they depend on the most while ignoring the excesses carried out by the actual guilty parties–elected officials and career bureaucrats.

I think if history does repeat itself, the problem this time will be that many public sector employees will just quit. It will be impossible for the taxpayers to demand that, say, teachers begin their careers at 22 with master’s degrees, engage in constant professional development, put up with the taxpayers undisciplined and incapable children, and deal with the never-ending onslaught of government regulations for laborers wages. Take your pick of public sector employees, and you will find similar ridiculous notions.

I am not saying that there are not public sector employees–even teachers, police officers, and fire fighters–who do not get paid more than they should, take advantage of the system, and could not get jobs elsewhere. I am saying that the tendency is for the taxpayers to pick on the public sector employees they rely on the most because they are the most visible and the most accessible.

If we look at the history of such reactions, what we discover is that the governments enduring them and the people making them often fare badly. In the worst cases, the governments collapsed or the nations thrust themselves into civil war. In the best cases, nations endured long periods of malaise.

As a nation, we need to tackle the problems before us, and I understand that even public sector pay needs to be reformed if we are going to find our way out of the mess we’re in. I also understand that making irrational decisions based on anger rarely produces positive outcomes. Consider your demands carefully, because they will have consequences if they become reality.

DLH

This is what you get from $14 trillion in debt

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Most Americans have no idea why the world switching from the dollar to the euro as the global reserve currency, just like they have no idea why excessive government intrusion into their personal lives in the form of mandated health care is bad or why $14 trillion and growing in national debt is bad.

Yet, Vladimir Putin, de facto ruler of the worlds 12th largest economy is warning of the fact that Russia may abandon the dollar in favor of the euro and eventually join the Eurozone.

“So what?” you might say.

Well, the so what is that almost everything you probably think of as being part of your standard of living and current way of life derives from the fact that the rest of the world currently views the dollar as the standard for international trade. Oil, food, and industrial commodities are all bought and sold in dollars, and it is the strength or weakness of the dollar that determines the ebb and flow of international markets.

In short, it is the dollar, and therefore the United States, that dictates the rest of the worlds economy, up to and until the world switches to another standard. The other standard most likely to replace the dollar is the euro, and the moment that switch takes place, it will be the EU dictating terms to us.

Now, I know that there are people who think this is a good thing; who think the US needs to be brought down a peg. Unfortunately, those people do not consider the consequences of their thinking. The euro replacing the dollar will not mean that we suddenly will live in a more egalitarian world. On the contrary, such a change will simply mean that the powerful nations of Europe are calling the shots instead. The last time I checked, Europe’s record of calling the shots was a pretty bad one.

DLH

The global food crisis

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The specter of another global food crisis on par or worse than the events that shook parts of the world in 2007 and 2008 has once again reared its ugly head. Drought and fire in Russia have combine with poor harvests and reduced yields elsewhere in the world to dramatically increase demand even as the supply is tightening.

From my point of view, these events are neither unpredicted nor surprising. For decades now, the global food system has been built on fragile, faulty premises that concentrates food production in too few places, utilizing too many resources, and employing too few people. Especially in the industrialized world, enormous populations demand more and more food from less and less land and workers.

Meanwhile, industrial monoculture steadily exhausts the land still dedicated to agriculture, and industrial agricultural byproducts poison the land that grows the food it is supposed to help. Even with modern farming techniques, in many places infertility in the soil and chemical resistant pests are gaining the upper hand. The cost of producing food continues to increase even as the prices fail to keep pace, meaning that circumstances force farmers to sell more land, take more shortcuts, or get out altogether. Compound this problem with the occurrence of natural disasters like the recent drought in Russia, and all of the elements for a crisis of biblical proportions are present.

While this situation seems bleak, and it is for many people, it does not have to be. There is another way, but it is a way that requires people to change their view about where their food comes from.

Less than a century ago, even in the industrialized world, the largest area of employment was agriculture, either directly because people farmed or indirectly because people worked in businesses that supported farmers. Small town America, as an example, was also farm town America because those towns existed to support the farms that surrounded them. Certainly, there were hard times, but such times were usually brief and limited in geography.

Less than a century later, less than 1 percent of the American population farms, and the number of people working in industries supporting farming might total 1 percent. This means that, in the United States alone, 294 million people depend on the efforts of 6 million people for their daily bread. If something untoward happens, like drought or yield decreases, suddenly those 294 million people have nowhere to turn for their food.

That is, unless they turn to themselves.

Throughout history, even in the most specialized and stratified societies, most people directly invested some kind of effort into feeding themselves. At the least, they had gardens, kept small animals, or leased out plots of land for agriculture in return for part of the proceeds. Summer and autumn kitchens were filled with the efforts of preserving food for the winter, and most people relied on the larder rather than the grocery during the long winter months.

Most of us still have relatives that remember those times, and most of them will tell you that, even in the lean times, no one really starved.

What changed from those days was attitude. Governments and individuals decided that farming was beneath them. Instead, they decided that farming should be someone else’s job, and the number of those people willing to farm continued to decline even as the demand for the farm’s produce continued to increase. Now, there are not enough farmers, there is not enough productive land, and natural events threaten to upset this fragile balance.

That is, unless people do something about it.

About a month ago, I challenged readers of my weblog to do something simple: stake off a 10 foot by 10 foot section of their yard or of someone’s yard who was willing to let them, and plant wheat. This little plot, if all goes well, has the potential to produce enough grain to make bread for a year from its produce. Even with diminished yields, it can produce a sizable crop. Yet, hardly anyone responded to my challenge, and that lack of response is the problem.

About a year ago, I began reading that economists expected the average price of food to rise 20 percent in the next year. Now, some watchers believe the price of certain kinds of food could double before the end of 2011. The factors behind these price increases are complex, but they cannot help but strain the budgets of the 294 million people who choose year after year to trust someone else to feed them.

That is, unless people start feeding themselves.

Make no mistake: food production is hard work, but hunger strikes me as being even harder work. Besides, small-scale food production in a back yard or a small, borrowed lot is hardly the undertaking people imagine when they try to compare it to industrial agriculture. Further, small-scale food production has the added benefit of accomplishing all of the things people need to be doing anyway: getting outside, getting exercise, spending time with family and friends, breaking the tyranny of the TV and internet.

All that small-scale food production requires is a will to do it. Perhaps the crisis has not grown enough for enough people to care, but why wait until it has?

DLH

It’s everywhere

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There’s a picture circulating around the internet right now showing the pink paste that is “mechanically separated chicken”, which picture seems to disgust people who see it even as they consume products made from it in huge quantities. What’s more, this picture represents the barest tip of the iceberg compared to what is being done to produce most of the food product most people consume on a daily basis.

Yet, somehow, the fact that most of the food in most of the supermarkets in most of the world represents an industrial preparation more akin to plastic than what we like to think of as food, people still eat the stuff, and the companies that produce those products make millions from what they sell. I’ve even heard people try to compare the industrial food production system to what happens in a real kitchen when someone is preparing food from real ingredients. This is how far we have become detached from our food.

Now, I do not believe that it is possible to eat–or medicate–ourselves to some strange form of immortality, but I do believe that it is possible for us to increase our quality of life, however long it might last. I am certain that the advent of food products and processed food has diminished that quality even as it has served to help increase its quantity. I wonder what the point of such a thing might be.

In this modern era, I am certain that it is possible to have the best of both worlds: to have the benefits of access to a higher calorie diet that probably leads to longer life while also greatly increasing the quality of that life by refusing to consume what the modern world passes for food. Sadly, this kind of increase in quality and quantity requires a choice that far too few people are willing to make or, perhaps, even understand can be made.

The choice I am talking about is twofold.

First, one must choose not to eat most of what one finds in a typical grocery story. Really, if one was sincere about this sort of thing, he would stop shopping in grocery stores at all. Instead, one would seek out food at its source, buying directly from the people who grow it in its most basic forms. This kind of choice also means choosing to make one’s own food rather than having someone else make it for you, but I see that all as part of one choice.

Second, one must choose to spend more of his income on food. Americans, as a measure of percentage of income, spend less on food than at any other time in the history of the United States and maybe even the world. Currently, the average household spends less than 7 percent of its income on food, and that number is still declining. As a result, Americans have to make compromises about the kinds of food they buy, opting for cheaper alternatives because that is all they think they can afford. Further, other lifestyle choices like cable, the internet, and the like force most people to make choices for convenience and cost rather than quality when it comes to food. Making this choice will likely mean making hard choices about other things.

Once made, these choices, I believe, will have immediate, tangible, and ongoing benefits. Frankly, it won’t just be because of the food either. The lifestyle choices one will have to make to choose quality food will improve the quality of life just because they will. There is little doubt in my mind that less television coupled with better food will improve the health of most people.

But for that to happen, you have to do it first.

DLH

Food as a fungible commodity

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All around the internet, you can find vigorous discussions about how, with the impending risk of international economic meltdown brought about by massive overspending, the smart bet is to invest in things like gold, which is a fungible commodity that will retain its value even if the rest of the economy self-destructs.

While, in some ways, this exhortation to invest in things like gold makes all kinds of sense, typical economic-downturn commodities like it have many disadvantages: they’re expensive, hard to move in quantity, limited in availability, and difficult to produce. These disadvantages mean that, even if one accumulates quite a bit of them, they will be harder to use when the time comes and will eventually run out.

On the other hand, food is also a fungible commodity, and while it often lacks the durability of other commodities, it has the significant advantages of being cheaper, easier to move in quantity, largely available if you want it to be, and surprisingly easy to produce. In fact, before precious metals, gem stones, and oil, food was the currency de jure in most parts of the world for millenia.

What is so amazing about food production is that almost anyone can do it, even on marginal land or land often presupposed not to be agricultural. As I have challenged everyone to do in my “10-10 Challenge” and is discussed in a variety of books like You Can Farm, Small-scale Grain Raising, and The One Straw Revolution, just about anyone can produce quite a bit of food on small plots of land with minimal investments of time and effort. Historically, families in the East have fed themselves and sold surplus off plots as small as a quarter of an acre, which includes raising livestock.

The beauty of small-scale food production is that, if the economy does tank, the food you produce will still have value–perhaps even more value than it did previously. Further, unlike traditional economy beating investments, producing your own food means that you do not have to rely on someone else to produce that food for you, which then means that the other fungible assets you might have accumulated are now available to procure all sorts of other things.

Even if you don’t want to produce your own food, you can still invest in food as a commodity against economic disaster. The company Heirloom Organics sells investment grade seed packs designed for long-term storage and that contain open-pollinated, heirloom crop seeds that will become very valuable if the economy collapses. Companies like Emergency Essentials sell supplies of long-term storage foods like cereal grains and legumes. Even if one does not use these food items himself, they can become a valuable commodity in the case of economic hardship.

Of course, my underlying argument here is that everyone should establish a higher level of self-sufficiency by growing their own food, one of the benefits of such activity being that it can act as insulation against economic hardship. Doing such a thing seems like a double benefit and an easy choice to me.

DLH