Why the USA Corn Belt is so important to food prices

One of the claims to fame one hears growing up in the corn belt is: We Feed the World.   That was always something of an exaggeration and everyone knew it, but it did relate to a real truth which was: Without exports we would drown in food.

I never saw a really good chart of just how reliant USA agriculture is on export markets.  This one is especially telling.  It also points out how serious this summer's drought really was.  I had an extremely reliable report from a farmer who was bragging that because of his no-till methods, he was getting 100 bushels per acre where is neighbor was getting only five.  Couple of points here: A normal good crop is 200, and, Five is effectively zero because it doesn't pay to harvest so little.

This will cause a world of hurt throughout the system.  Yesterday, the Minneapolis Star Tribune had a piece on how high grain prices are just destroying California's milk producers.  I am certain we will soon see a LOT of these sorts of stories.

Economics as bad theology

Because economics is historically rooted in the study of moral philosophy, it is not at all strange that debates in economics often come larded with religious terminology and ideas.  It most often overlaps in USA with Calvinism but the economy as the Will of God is not exclusive to the followers of John Calvin.  Unfortunately, the god most worshipped by the dismal science is the god of hellfire and judgment, not the one of love, mercy, and providence.

Harvest moon

Harvest Moon tonight.  It was already spectacular last night—autumn moons are.  A moon so bright it allowed work after sundown in those centuries before light bulbs.

Astronomy is a fascinating subject in part because it is a scientific pursuit that has been around far longer than humans have actually understood what science really means.  And so it became intertwined with our culture from folk wisdom to passionate theological controversy.  This has not been true for the more recent scientific niches.  I am pretty certain that no expert in fluid dynamics has ever been threatened with torture the way Galileo was for actually observing Jupiter's moons.  Of course, what saved astronomy from being forever a religious football was its undeniable commercial value.  Good astronomy led to powerful navies and overseas imperial capabilities.  Turns out Galileo was the exception—astronomy now has had centuries of public funding and as the pictures from Hubble or the Curiosity Rover demonstrate, this investment means we have gotten very good at astronomy indeed.

But even if you love astronomy for the hard science, it is still fun to remember when folks knew the stars because it was their most accurate way to predict future events.  And nothing demonstrates this more than the names we gave to full moons.  In the northern hemisphere, calling February's full moon the Hunger Moon tells us much about what surviving winters once meant.

Saturday toons 29 SEP 12

Why energy efficiency takes persistence

One of my favorite authors of the 1980s was Amory Lovins. He was an energy efficiency advocate who preached that it was a LOT cheaper to save energy than figure out ways to generate more. He called reduction in demand "negawatts" a bit of clever wordsmithing that got him a MacArthur "genius" grant. And to his credit, he actually went out and built a house incorporating all the energy-efficiency ideas floating around western Colorado at the time. We never saw how well this all worked and it was silly expensive—PV panels in those days were so expensive, even NASA cringed. But as an example of the kind of solution that emerged from the nexus of academia, grantsmanship, and those hippie contractors that built Aspen, his efforts were quite remarkable.

There is nothing particularly novel about designing for energy efficiency. There are places on earth such as Scandinavia and Germany where the obsession with energy efficiency permeates any conversation where it is remotely relevant—and this has been true since forever. It's an idea beyond rational debate. The only question is, How deep into this subject are you willing to explore?

My brother got interested in energy efficiency because he was appalled at the stupidity of building a box out in the sun and then cooling it at great cost using five tons of air conditioning. So he was interested in negawatts too, only he was coming at it from a whole different direction. He was a small-time builder who took on most any job that paid the bills. This versatility would allow him to eventually become a construction supervisor who enjoyed the tricky challenges of building churches and performing arts centers. This was not a world where if you ran over budget, you merely wrote another grant proposal. And if something only sort of worked, the lawyers appeared. For him, energy efficiency was a worthy goal but it had to be affordable and it had to work as advertised.

In 1991, after thinking about the problem for several years, he decided to build a home for his wife and kids using the energy-efficiency ideas he could glean from his central Florida environment. He had bought some rural property off the road running between Orlando and Titusville. Titusville is an interesting place—it is home to NASA so is one of those ghettos for rocket scientists. It is also the home for Florida's Solar Research Center so my bother managed to enlist some formidable intellectual firepower for his project. His radiant barrier was suggested to him by the same guy who designed the insulation package for the Lunar Excursion Module. And since he was building his own house, he had a pretty clear understanding for how much theory he could put into practice.

Twenty years later, his house now has documentation for being a net zero house. Yes it took PV cells to get his electrical bills to zero and he didn't buy them until 2008, but his house was already remarkably comfortable even when the air conditioner wasn't running. And when PV cells finally did become affordable, his roof was at the correct angle facing the proper direction because of decisions made in 1992.

I am very happy he is finally getting the deserved coverage for his efforts.

Spanish riots

 Ah yes, the IMF riots—the logical and expected outcome of the sort of "structural adjustments" those insane people cook up at the behest of finance capitalism.  This, remember, is not new.  These lovely people have been causing crippling human misery around the world more or less continuously since  I first started following their actions in 1982.

So now they have turned their guns on Spain.  And the Spanish people are having none of it.  I have no idea why they have responded more violently than say, the Irish or the Estonians, but I think part might be that since the IMF has been clobbering Latin America for over 30 years, much of the really good anti-IMF writing has been done in Spanish.

We can only wish the Spaniards well.  Someone must ultimately stand up to the thieves that run the international financial organizations.  Might as well happen on the Iberian Peninsula.  But no, I have no intention of joining a new Abraham Lincoln Brigade.

Bad news for unemployment

I have been arguing for a long time that there is no "automatic" bounce back from a serious structural blow to the real economy.  Today I have charts.  The first one is an update of a chart I have shown many times before.  The second one is new.  It shows the recovery times for various countries from shocks to their real economies.  My favorite examples come from Finland and Sweden where it required over 17 years to "recover" from the Recession of 1991.  Sweden and Finland are almost always at or near the top of any measurement of a successful social order.  If THEY required nearly two decades to recover from an economic event most folks in USA have never heard of, I think it safe to say that no one ever really recovers from structural shocks to the real economy.

And then there is Russian grain

Spent the day driving across a segment of the Northern Corn Belt—you know, the part that got most of the rain it needed.  Quite a bit of the harvest is in and most of the corn still standing in the field looks like it will yield a significant fraction of normal.  We saw only one sign of a bumper crop, ONE coop was piling corn on the ground.  Drove past four ethanol plants that seemed to be operating at full capacity.

Where the crops have been good, life is pretty much normal.  I do find it a little spooky how much agricultural infrastructure can be operated by so few people.  Rural USA is getting old.  But even old and empty, rural Minnesota seems like it will have contributed more than its fair share to the feeding of the world's hungry billions in 2012.  This best-case scenario glosses over the fact that this year's crop will be slightly smaller than last year's.  And as we see below, Russia's grain yield is off by 25%.  A little bit here, a little there, and pretty soon you are talking about a real food shortage.

Cross your fingers, folks.

The usual suspects bash the Volt

When someone asked Ben Franklin on what was the good of flight (balloons) responded, "of what use is a newborn baby?"  Back when this was still a nation of inventors, such a one-liner would silence the fools.  Now we have the situation of the Chevy Volt—a car as inventive as any in the past 50 years—perhaps ever.  And yet the buffoons like Rush Limbaugh are still taking potshots at the car of the year (Motor Trend, European car magazine editors, etc.)  In their world, Peak Oil has not happened, climate change is a hoax, and new technology is a failure if it doesn't make a ton of money right out of the box.  And since the Volt is obviously an act of pure genius, the Wrong-Wingers must resort to lying to make their point.  Here the growing number of Volt fans try to set the record straight.

What is so disturbing about this foolishness is that almost NONE of the technologies we need to climb out of the mess we find ourselves, will turn a profit in its first five years of existence—if that.  It's another example of why the marketplace is, at best, a lagging indicator.  HAS TO BE!  This isn't something simple like an iPhone App—this is something that has eaten up $Millions in engineering to satisfy a market they must create in a tough economic times caused by actions they did not take.  So it is not so surprising that the market purists at Cato and Forbes don't get it.  The Volt makes thermodynamic, fuels-choice sense.  Eventually it will make economic sense.  Amazing how often that works.

I pay no attention to critics—after all, no one ever built a monument to a critic.  attributed to Composer Jan Sibelius

Still the bad guys

Outside of our imperial military adventures, nothing influences our international reputation more than environmental policy.  Obama inspired a lot of hope that maybe, just maybe, the USA posture on environmental issues would improve.  As can be seen from this from Deutsche Welle, the Germans have given up their hope for change.

Pharmaceutical crime

Big Pharma has been fined over $11Billion in the past three years and not surprisingly, it hasn't changed their behavior much—if at all.  First of all, $11Billion may be a very large number to most of us mortals but it is more like a rounding error to the drug companies.  More importantly, they were already going off the ethical rails back in the 1970s when I first looked into how they operated.  There are people who are now retiring who have never worked for a pharmaceutical industry that was anything but a cesspool of corruption. They have managed to extract so much from the real economy that they actually caused structural damage.  40 years of corruption pretty much makes that corruption an institutional artifact.  And it will probably take much more than some small (or even large) fines to deter this criminal juggernaut.

The gold standard (sigh)

It annoys me more than a little that for some ungodly reason, we must discuss the gold standard—again.   History has provided ample reasons for why the gold standard is—at best—a disaster waiting to happen.  But in a country where the teaching of history is damn near illegal, even something so thoroughly discredited as the gold standard has made something of a comeback—thanks mostly to Ron Paul and his minions.

My long description of why I believe the gold bugs have at best, a superficial understanding of economics and monetary policy can be found at my web site.  But in brief, money has two main elements making up its worth.  Either it can be exchanged for something more tangible (gasoline, food) or it can buy human talent, work, and creativity.  Of course, there are other strategies a society can use to validate its currency.  As the old Greenbackers used to say, any money that you can use to pay your taxes is good.  And obviously any money that you can use to retire your debts has value because the lender had agreed it has value.

But even the economically conservative Atlantic felt the need in August to demonstrate yet again why even the favorite argument of the gold bugs—price stability—is not much of a talking point after all.

Saturday toons 22 SEP 12

The banksters are still crooks

The banksters are amazingly quiet these days.  Perhaps it is just that with the elections sucking up all the air in the room, we aren't seeing so many stories about them.  But more likely it that they may be discovering how one of them, Willard Romney, seems to be more hated each and every time he opens his mouth.  Besides, like all criminal enterprises, moneychanging is traditionally done in the darkness and shadows.  24-hour cable news has brought some of these folks out into the light but this is a recent development that runs counter to the old saying "men love darkness rather than light because their deeds are evil."  Here are two updates that demonstrate just how unreformed the banksters really are and what they have been up to when we weren't looking.

What a miserable summer

Everyone here in Minnesota talks about the weather—it is a very important topic.  But you are not allowed to complain about it—after all, you can plan for bad weather but you can't change it.  But since we humans have changed the climate, I guess it's OK to complain about this bizarre summer and wonder, Is this the new normal?

And it's not over.  Take the Russian wildfires.  After 2010, the idea that such a disaster could be topped was unthinkable.  Now it looks like that was nothing.  Of course, we knew more about the fires back then because the smoke was blowing into Moscow and the wheat crop was burning.  This time, the fires are in Siberia and we know about them mostly from satellite photographs.

Producers and Predators

Watching the Republicans hijack to the Producer-Predator dichotomy reminds me of when they hijacked the "rising tide lifts all boats" line of the Progressives.  In that case, the original argument was that rising incomes for the most poorly paid of us would lift the incomes of everyone in the social strata above them.  This is the argument of Henry Ford and the Keynesians in addition to Jack Kennedy who is often credited with the idea.  When it was hijacked, it came to mean that a rising yacht would lift all tides and that the most thoroughly discredited economic idea in history—trickle down—was actually not as insane as it sounded.

So now we have Republicans talking without any irony about producers-parasites.  The very idea that some retiree living on Social Security is a moocher is insane. MOST people in that social stratum lived their whole lives as Producers doing things like pick vegetables in the heat of California's Imperial Valley.  So an idea that started out as a description of the differing economic strategies of farmers and bankers has been appropriated by mega-thief Romney to argue that old people just scraping by are actually more harmful to the real economy than a vandal capitalist like himself.  And that is what their argument is—a cynical attempt to distract folks from their own sins.  I am not so sure I would do this if I were them, because the Producer-Predator argument has a long and honorable history and it WILL crush these cynical bastards if it gets out.

As someone who has been writing about Producers-Predators since the 1980s when I first discovered this 19th century class analysis, I take this personally.  But I am not worried because while Producer-Predator class analysis was invented by the Producers themselves in thousands of conversations among the cheated farmers of the 19th century, producer-parasite is largely the demented musings of Ayn Rand who was light-years away from understanding the sort of productive activity it requires to keep a nation going.

Affordable solar housing

Last Monday, I wrote about a really nice home that had won a bunch of awards for energy efficiency.  It was beautiful and stunningly well-built but it probably cost at least $750,000.  So I wrote my brother asking, "Don't you have any examples of affordable energy efficiency?"

So he dug through his examples and came up with this really clever house put up by the Habitat for Humanity folks.  This is probably one of the best homes they ever built.  Modest, solid, with a HERS rating of 18 (remember, most new housing comes in at around HERS 100.)  The excuse that energy-efficient housing is too expensive took a major hit with this place.

Getting all the parts right

My brother is just going to love this story.  And he has dozens of similar examples to demonstrate that the kind of problem outlined below is certainly not limited to the British Isles.  At least once a week, he gets called to inspect a home with expensive new windows that have not produced the expected energy savings.  Then he gets to tell the poor homeowner that energy efficiency is the sum of many parts and the difference between cheap and expensive windows is a pretty trivial part.  In other words, they just blew a lot of money for a "cure" that doesn't cure much.

I have been following the Swedish homebuilding industry since the early 1980s and even back them, their skills and techniques were probably the best in the world.  The key to understanding their approach is they make houses as absolutely airtight as possible and then manage the necessary ventilation functions with carefully engineered air exchange equipment.  Constructing a weather-tight home and then getting it to breathe properly is a lot harder than it looks—and it looks damn difficult.

In the process of building these super-insulated homes, the Swedes have spun off small industries like NIBE that make the parts to enable super-insulation.  Naturally, these industries want to grow beyond the borders of Sweden / Scandinavia.  Problem here is, a part designed to work in a well engineered super-insulated home is forced to operate in a limp-down mode when the structure is badly-insulated or leaks air where it should not.  In a super-insulated home that performs as planned, the heat recovery systems by NIBE probably work magnificently.  But as can be seen below, GB builders still have to make serious improvements in technique before they're ready for such sophisticated heat recovery systems.  One of the signs that the builders believed they were better than they really are, many of the NIBE units were undersized.

What a freaking mess.  And yet one more example that it takes more than good intentions to build green homes.

Melting the Arctic ice

While it is fun to slap around the climate change denialists, this friends is getting scary.  Nothing good ever happens when the jet stream gets a kink in it.  Two winters ago, a kink brought us mega piles of snow.  Last winter, we hardly had a winter at all—70°F in freaking March.  One thing we have learned about climate change—weather patterns are hard to predict but we can always predict something will be very extreme.

Useless drugs

This is the sort of story that makes us Institutionalists nod sagely.  It turns out that when it comes to drugs, the French and we have many of the same problems.  This might seem counterintuitive.  After all, the French have what many low-information voters would call "socialized" medicine and we have the purest for-profit schemes imaginable.  Yet this seeming "huge" difference is overwhelmed by the similarities such as: There is a finite number of ills that drugs can actually treat effectively; or, Doctors everywhere are seduced by the same claims for a drug's effectiveness; or, Patients in pain will demand their doctors "do something" even if there really is nothing that can be done.

The first story is from RT and the second from the Guardian.  There isn't much difference between them but the similarity is that both seem somewhat surprised that two top members of the French state medical bureaucracy would come out swinging against drugs that most doctors around the world consider standards (such as statins).  I am especially impressed that they came to a conclusion I hold which is that drug making is “the most lucrative, most cynical and least ethical of all the industries.” (Note: at least it's still an industry!  Of course, if 50% of their output is useless, they must have passed some bar for membership in the Leisure Classes.)

Saturday toons 15 SEP 12