Ducks and Economics

I’ve recently come across a series of posts on food by Sarah Brodsky at the Show-Me Institute  (a libertarian think tank here in Missouri) that I thought deserved a clearly articulated response. Sarah’s writing generally touches on the topics of local and sustainable agriculture in ways that I think don’t show much appreciation for the nuances of real-life markets and processes.

It is important to understand that I think of libertarian ideals in a different way most of the Show-Me Institute bloggers; my intellectual framework includes a rich appreciation of transaction costs and Coasian ideas along with the notion that comparative market analysis suffers if it does not account for the wide range of parameters that can characterize widely disparate markets. Other ideas I subscribe to in that vein are concepts from chaos theory that talk about self-organization and complexity and the idea that the interactions between public and private institutions are often far richer than the simple dichotomy between market and government that characterizes the public discourse.

So this series of posts will talk about food, a subject that I love. Today’s specific topic is the whole concept of local food, a concept that Brodsky seems curiously against. An excerpt:

Second, this is another instance of the government endorsing the idea that locally grown produce is superior to food from other sources. Anyone is free to hold this conviction; however, their belief has no place in policy until they come up with evidence for it. Supporters haven’t demonstrated a connection between local food and health. In fact, some dietitians even recommend frozen produce over fresh:

“[F]rozen produce actually can be healthier than the fresh variety. It is on the plant or tree longer than the fresh variety, so it’s packed with a higher nutrient value.”

If a public school near you is giving preference to food grown nearby, watch out. Your government might begin advocating local food as the correct choice for you, too.

Comments of that ilk are frequently distributed throughout Brodsky’s advocacy. While I’ll save the discussion of what role government should play in advocating policies designed to promote public health for later, today’s discussion will be about the unsupported claim that ‘supporters haven’t demonstrated a connection between local food and health’. First, let’s note that Brodsky conflates the notion of local food with the idea of non-frozen food, which doesn’t follow logically. One can grow vegetables and freeze them or prepare them for long term storage via canning or other preservation methods and this is not logically inconsistent with the idea that locally produced food is ceteris paribus better than the products of industrial agriculture.

But let’s talk about the list of reasons why locally produced food might be better than industrial agriculture. But it’s important to understand that I don’t disagree with the concept of industrial agriculture; some products are far more efficiently produced in quantities that allow us to take advantages of economies of scale in production and distribution. The reality of industrial agriculture is however far different, as markets tend to be dominated by large corporations that (horror!) use their resources to engage in rent-seeking behavior.

But some products do suffer when you increase yields without regard for other parameters. Winemakers have known for a long time, for instance, that it’s hard to make great wine without some regard for controlling grapevine yields. What’s true for grapes is also true across the board and it has a name: nutritional dilution. This topic is well addressed in the literature; here is an excerpt on the subject worth reading:

An explanation of exactly what happens in genetically engineered dilution effects may be helpful. Over many years of using yield potential as the dominant criterion in developing improved varieties, while average yields have risen, plant root systems have not been able to keep pace in drawing more needed micronutrients from the soil. When breeders selectively breed for one resource, using a selected trait like yield, fewer resources remain for other plant functions as the study explains.

“There may be trade-offs between the number of seeds and their size or between yield and growth rate and pest resistance. In tomatoes, there are trade-offs between yield which is the harvest weight and the dry weight, or between yield or fruit size and vitamin C, and between lycopene which gives tomatoes their the primary color and beta-carotene which is the precursor to vitamin A.”

This information on nutritional decline and selective breeding is nothing new to agricultural researchers and scientists. Science journals began publishing writings on nutritional decline over 20 years ago. A 1981 review in “Advances in Agronomy” discussed the widely cited “dilution effect,” in which yield-enhancing methods like fertilization and irrigation may decrease nutrient concentrations, an environmental dilution effect. Recently, evidence has emerged that genetically based increases in yield may have the same result, a genetic dilution effect. An explanation of exactly what happens in genetically engineered dilution effects may be helpful. Over many years of using yield potential as the dominant criterion in developing improved varieties, while average yields have risen, plant root systems have not been able to keep pace in drawing more needed micronutrients from the soil. When breeders selectively breed for one resource, using a selected trait like yield, fewer resources remain for other plant functions as the study explains.

Here is the link to the Davis 2004 study internally cited in the article above which was published in the Journal of the American College of Nutrition. What this establishes that large-scale agricultural production yields crops with far less nutrient value than crops where yields are relatively lower, a situation that typifies many small, local producers. Brodsky’s argument I think assumes that none of this is true and it is clear that her stance is articulated without reference to any of the relevant literature.

In a broader sense, there are other costs and benefits that Brodsky just assumes away throughout her advocacy. Most specifically, we can talk about the negative externalities of industrial agriculture. How, for instance, would she account for the pesticides and herbicides that make large-scale agriculture mostly possible? Without passing a moral judgment of the use of chemical manipulation in agriculture, there do exist negative externalities from the large-scale use of pesticides (for example) that are not reflected through prices. Refined sugar, for instance, is a great example: the average American eats 150 pounds of sugar a year.

The sugar industry, which receives federal subsidies, has let massive amounts of fertilizer and pesticide-polluted waters run off into the Everglades for decades. This has has horrendous environmental effects, the extent of which I won’t go into here, but a simple Google search will reveal plenty of literature on. Worse, subsidies allowed American sugar producers to undercut other sugar producers internationally. The market distortions that this policy create are large in scale and have far reaching consequences, including crushing domestic sugar production and agricultural economies in places where they are most needed (3rd World nations). Worse, the negative health effects of consuming large amounts of nutrient-deficient refined sugar have contributed in great part to America’s obesity and diabetes epidemics (Gross et al 2004, Jenkins et al 2004). Literally none of this is reflected in the market price of sugar.

And stories like these are not the exception. They are the norm. While I hazard that on the concepts underpinning libertarian thought I might have common ground with Brodsky, they form a very primitive lens for interpreting the detail-rich market and institutional structures that comprise reality. I, for one, would expect a master’s candidate in economics to present more thorough work, particularly when using a well-regarded think tank as a platform for one’s views.

My next few posts will address the school lunch/breakfast debate from this perspective and hopefully also the issue of government and its role in the public discourse (hint: it’s a lot more complex than you think!)