Bell Curve The Law Talking Guy Raised by Republicans U.S. West
Well, he's kind of had it in for me ever since I accidentally ran over his dog. Actually, replace "accidentally" with "repeatedly," and replace "dog" with "son."

Monday, June 23, 2008

TJ's

I love Trader Joe's, which is why I had to write them a letter of complaint today. I hope you all will take the time to do the same.

36 comments:

Raised By Republicans said...

Two buck chuck is looking more expensive now.

rolleroid said...

The more important issue is that the UFW has become so neutered that decades after Chavez and the good work done by the UFW, employers still do not provide the basic level of support to workers (shade, portable bathrooms, water). The reason is simple - there is no real enforcement of wage order laws in California and when they are enforced, they lack sufficient force to make the employer think twice. Indeed, non-compliance with labor laws is part of their business model.
Some unions in California have the ability to prevent abuse by legal or econimic means, but the UFW weakens by the day, and in some cases, the collective bargaining agreements they have negotiated with growers and agribusinees are LESS lucrative and protective than agreements of 15, 20 years ago.
With fuel, water, and related energy prices increasing, the only way consumers are going to leave their grocery stores without emptying their wallets is by agribusiness reducing costs the only way they know will cause the least pain or press coverage - on the backs of those laboring in the fields.

Raised By Republicans said...

"the only way consumers are going to leave their grocery stores without emptying their wallets is by agribusiness reducing costs the only way they know will cause the least pain or press coverage - on the backs of those laboring in the fields."

Or by acknowleging that agriculture is not best done in a part of the world with astronomical real estate prices and unreliable access to local water.

We should trade for much of this so that farmers in parts of the world with better water and/or cheaper land could supply us with food for less without forcing all the production cost increases onto the backs of the workers.

rolleroid said...

RbR -
I don't know if your alternative resolves the issue. By abandoning the San Juaquin Valley you will do a number of things, not least of which:

1. damage California's economy, which relies on agriculture, as well as the individual local economies within central California
2. tear to shreds any remaining hope of labor victory in the fields, and
3. in all likelihood shift environmental concerns like resource allocation (water, land) and labor to other places in the world, where there is far less ability to assure consumers that workers were treated respectfully. To say nothing of the marked increase in resourse use to get agricultural products to the US. (I love lamb, but it makes me cringe to buy lamb from New Zealand, knowing the amount of dinosaurs it took to get it to me).

What I am advocating is a recommitment to labor in the fields, not wholesale abandonment. A refocused effort on labor issues, from the basic (water, shelter) to advanced (living wage) to the exotic (profit sharing) is the way to approach the problem. Raising the standard of living for farm workers, union or non-union (who necessarily benefit from higher union wages) will be environmental- and resource-neutral while raising prices for fresh goods a few cents, if that.

Raised By Republicans said...

But how much should we subsidize the agriculture in the San Juaquin Valley to allow a desert state's economy to "depend on agriculture?" At what point do we say that it's not worth it? At what point do we realize that we may be losing more than we gain (especially in the long term)?

Would any of that agriculture be profitable without the subsidies that range from cheap water, fewer environment reg enforcemnet, no labor law enforcement, not to mention the structuring of our immigration laws and spotty enforcement there to provide a transitory labor force in legal limbo that is tailor made to break strikes?

Obviously transportation uses a lot of fossil fuels. But the solution to THAT problem is not cutting off trade. Rather it is to find an alatnernative means of propelling a container ship.

As for the environmental impact on other parts of the world, I'm sympathic to concerns about population growth and environmental damage that goes along with that.

But banning trade isn't going to make matters better. On the contrary, resisting or distorting trade makes the entire global population poorer and makes us less able as a planet to address this gordian knot of problems.

The Law Talking Guy said...

RBR, you cannot possibly think that the lot of farmers in the third world is better than that of migrant workers here, even so. That is why they come here.

I think your first comment, that two buck chuck is looking more expensive, is worth a lot more thought. How can we pass the real cost on to the consumer? For as long as it's $2, it will win in the marketplace.

Raised By Republicans said...

"RBR, you cannot possibly think that the lot of farmers in the third world is better than that of migrant workers here, even so. That is why they come here."

If we compare a landowning farmer in the US to a landless peasant in Guatamala, of course I don't. But I think the REASON they're so badly off in Guatamala is largely because we subsidize otherwise unprofitable agricultural enterprises here and dump millions of tons of ag products on the world market below cost thus putting the otherwise barely profitable Guatamalan ag sector out of business.

What's more, let's compare the real alternatives here. It's not realistic to compare a land owning US farmer to a land owning Guatamalan farmer as proof that immigrants are coming to work in the US ag industry to make themselves better off. Immigrants in the ag sectors are not land owners in the US anymore. That might have been true 100 years ago (certainly, my family went from being migrant farmers in Denmark to being landowning farmers in Minnesota and Nebraska) but it's not true today. Today they are leaving farms that they may have owned down in Guatamala or wherever to become migrant workers (essentially landless peasants) in the US.

Our subsidies put their small farms out of business. Then their only alternatives are move to a factory in the nearest city where their home government is subsidizing industrialization projects or move to the US (often illegally) to join the massive "disposible workforce" in the US ag sector. Once in the US they are kept in legal limbo with no access to labor law protections etc. That's hardly the classic American "they're coming here to make a better life" story.

Raised By Republicans said...

Something else to consider.

We are going to trade. The only question is what we are going to trade. A big (but not the only) reason countries like Guatamala, Thailand, Malaysia are subsidizing industrialization is because we've largely made their ag sectors unprofitable with subsidies and trade barriers (such as "buy local" movements - the ag equivolent of "buy American" movements) and dumping.

These countries all depend on the US to buy their stuff to sustain their economies. They'll be shipping stuff via dinasaur buring container ship to us regardless of our ag policies. The question is would the world be better off if they were shipping ag products or the components of cross trainer shoes or 100,000 T-Shirts with "Save The Planet" written on them?

History Buff said...

Immigrant workers are exploited in all sectors of the economy, not just agriculture. I think the best thing that we could do for them is 1. encourage economic growth in their own countries and 2 increase the number of unskilled laborers allowed to cross the border legally. It's a lot harder to take advantage of someone who is here legally.

Raised By Republicans said...

History Buff, I couldn't agree more.

The question remains, how do we accomplish those goals? Should we encourage industralization even in countries better suited to agricultural production or should we encourage ag production where it makes sense and industrial production where it makes sense?

rolleroid said...

RbR
I may be wrong, but it seems that you are advocating at best a two tiered global economic structure, where those countries with the ability to industrialize should do so, and those who cannot, are left to farm. Worse, if we encourage a country to produce what makes sense for them to produce aren't we, in the end, encouraging them to create a one-dimensional economy? This would seem to leave those countries increasingly subject to the whims of the global marketplace.
My initial critique was not that trade or consumer protection or consumers themselves are the cause or or solution to the problem. In light of the fact that the time necessary to order the changes RBR touts (California deemphasizing agriculture, greater emphasis on global sources of food, sea changes in how Americans view trade and agriculture) will be measured by decades rather than years, the most fruitful approach to resolving (now) the issues brought up by two buck chuck is an immediate concentration on bettering the working environment of workers in the fields. Three Clam Sam would be purchased in the same volume, I believe, if the extra dollar bought TJ's customers peace of mind.

Raised By Republicans said...

Rolleroid, in the short term you are right. But even there I fear you will never be successful in bringing labor justice to the fields of California so long as preventing exactly that kind of development is a key feature of the of the system of subsidies and other government interventions in the market that make much of California agriculture appear profitable. Every strike can simply be broken by bringing in another wave of workers kept in legal limbo by a selectively enforced immigration policy. Oh, and I love the marketing appeal of "Three Clam Slam!"

But with regard to what I am proposing, you are mistaken, Rolleroid. I'm advocating that governments should not distort the local competitive advantanges that they have. Some countries will do much better at capital intensive activities, others will do better at labor intensive activities and still others at land intensive activities. And of course there are various combinations of those.

The basis of my argument is found in the Stolper-Samuelson theorem about factor endowments. http://en.wikipedia.org/wiki/Stolper-Samuelson_theorem

Every country has relatve endowments of Land, Labor and Capital. Countries that are well endowed (or "rich") in Land are automatically poorly endowed with Labor (because both are measured more or less by population per square mile of usable land). Countries can have lots of capital in either Land rich or Labor rich modes. Companies in countries that are rich in a factor like land will be especially good at competing in the global market when they produce land intensive goods. Companies in countries that are labor rich will do better emphasizing labor intensive goods. Note: when I say "better" I mean better than they would given their own alternative strategies not better than every other country in abosolute terms.

Some examples:

Capital and Labor rich but Land poor: Western Europe and Japan; The North Eastern megalopolis (Boston to D.C.); California.

Capital and Land rich but Labor poor: Most of North America - especially the Midwest; Australia; New Zealand;

Land rich, but capital and labor poor: Most of Africa; Most of Latin America; parts of Asia; Much of Eastern Europe;

Labor rich but capital and land poor: Bangladesh; China; Much of India etc.

Keep in mind that as countries gain capital, they can transition from one catagory to another.

Now, if we try to make a profit doing land intensive things in a capital and labor intensive environment, we won't be able to compete in a fair market. So we need to subsidize. That's exactly what's been going on in places like Western Europe and California for decades now. And it's imposing grinding poverty on much of the world.

I'm not suggesting that abolishing trade subsidies and allowing free trade for agriculture would be a silver bullet to solve all our problems. But it would make billions of people better off than they are now. And it could do so much more quickly than the decades Rolleroid suggests.

rolleroid said...

I will take the time to read the wiki piece (especially since I am skeptical that something like this could be achieved in a time frame quicker than LA believes its downtown will look like Manhattan), but in the meantime - a quick defense of (certain) subsidies.
When I was debating in the early to mid 90's, a team from Kentucky funded their plan by eliminating honeybee and mohair subsidies, which at the time were in the 200-300 M range, which is a relative pittance, and they thought themselves very clever.
However, a cursory look at the research found that by eliminating honeybee subsidies, one billion (with a B) people would suddenly drop under the line of malnourishment set by the UN. And no, Law Talking Guy, the evidence wasn't from some yahoo that debaters usually get their evidence!

USWest said...

This may be useful in this disucssion. It is an interacitve, Stat-By_State map of farm subsidity dollars" from PBS' NOW.

RBR and I have long been advocats of dropping farm subsidities. However, I notice, yet again, that Calfornia is getting painted as the bad boy. So, FYI: based on the map, in 2005 there are 18,119 farms in California geting a combined $649.4 million in subsidities for an average of $36K per farm.

In Iowa, ther were $2.2bil in subsidities doled out to 119,912 farms for an average of $18 mil per farm.

It is one thing if subsities are meant to help the small farm. But these are huge agribusinesses.

Bell Curve said...

This is why I should post more often. Even a pitiful two-line blog post makes for some great comments! You all have given me a lot to think about.

Still, take the time to write to Trader Joe's. Hopefully they can exert some influence and we can take baby steps toward a fair workplace.

The Law Talking Guy said...

Separate non-protectionist arguments can be made for "buy local" in agriculture. First, there is the pollution caused by trucking food hither and yon. Carting tomatoes across the ocean or thousand miles up from Mexico causes a lot of pollution that would be unnecessary if bought locally. Food importation is often ecologically unsound.

Also, vegetables grown for importation taste bad. They must be grown and bred for durability, not flavor.

Unfortunately, the USDA and supermarkets have colluded for years to prevent any realistic comparison shopping among fruits and vegetables. You can't go into a store and pick a better tasting product. The USDA clearly favors a regime where a tomato is a tomato is a tomato. In other words, full commoditization of agricultural products so that they are fungible. As consumers, buying locally means buying better. But deprived of the information, or bamboozled into buying "organic" products that are often just as ecologically unfriendly as non-organic products.

For all these reasons, bad food drives good food out of the market, as it has done for decades. I do not believe that saying "buy local produce from local farmers" is inherently protectionist if the goal is to get better food.

The Law Talking Guy said...

RBR writes taht US policies in subsidization etc. "[put] the otherwise barely profitable Guatamalan ag sector out of business."

Is there any real evidence of this? I mean, would higher food prices help Guatemala as a whole? Or would they just hurt the peasants more? Isn't that what's happening now with the run-up in food prices?

rolleroid said...

RBR
After reading the wiki entry I am further convinced that there seems to be no real mechanism to bring about the changes you desire re: labor, agriculture, subsidies, etc. in the time-frame you put forth.
Indeed, I am reminded of the many Saturdays spent playing one of the myriad war games with many of those on this blog, where one has perfect knowledge of events, locations of enemies and friends, and absolute control over the use of resources - in this case, armies. None of us playing really contemplate the sheer amount of energy and effort that needs to harnessed in order to effectuate the movement in the real world.
It may be an imperfect comparison, but in reading over the above posts, I do not think it less instructive. California will continue to be an agricultural powerhouse, period. Water and other resources will continue to be bitterly debated and defended. These facts auger in favor of a direct, political solution in the short term (greater labor rights and protection) and consumer-driven solutions in the medium- to long-term. Let us not forget that many Americans do not consume fresh vegetables and fruits because they taste bad but because they are expensive, and they can get two double cheeseburgers for the price of a decent sized organic apple. An economist would applaud them for gaining satiety and the most caloric bang for their buck.
Of course, we Americans can shift our mind-set and econo-agricultural priorities to sustainability and local sourcing, and I am all for that (take a look at my backyard, which my almost 2 year old daughter lovingly calls "the farm"). Right now, though, the field worker needs protection.

Raised By Republicans said...

LTG...is there "real evidence"?

Yes, mountains of it.

Here is an UNCTAD report:
http://www.unctad.org/Templates/webflyer.asp?docid=10038&intItemID=3549&lang=1

Note especially this part: "Cheap food products are widely available on international markets, largely as a result of subsidized exports from developed countries. It is thus not surprising that many developing countries have not invested substantially in agriculture. Recent analysis by the FAO and UNCTAD has shown that agricultural subsidies in developed countries have been associated with rapidly increasing food imports in developing countries, alongside a decline in agricultural production."

If you don't believe UNCTAD just look at the policy demands of leaders of developing countries. Their paramount claim in the Doha round of trade talks was the end of ag subsidies by developed countries.

Really, the idea that ag subsidies distort the world food market in ways that make people in developing countries significantly worse off is not that controversial - except in those parts of the world currently benefitting from the distortion (i.e. big agricultural companies in places like California and France).

Raised By Republicans said...

"After reading the wiki entry I am further convinced that there seems to be no real mechanism to bring about the changes you desire re: labor, agriculture, subsidies, etc. in the time-frame you put forth."

Ummm... what about just abolishing the subsidies by law? That's a fairly clear and straight forward mechanism. England did it in 1846 when they abolished the Corn Laws. W. Germany did it in 1949 when they abolished price controls across the board.

The capital will shift out of agriculture to more profitable sectors fairly quickly (in a matter of a few years at most).

Laborers will be a tigher fix. But only a tiny fraction of our labor force works in agriculture and most of them are the least skilled workers in the economy. And many of them are undocumented immigrants who themselves came here from declining agcricultural districts in their home countries. For those who don't return home to take advantage of the recovery of their home ag sectors, it would cheaper for US to provide for their needs through welfare and job retraining programs than through ag subsidies (which benefit them only a trickle at best).

Raised By Republicans said...

"Let us not forget that many Americans do not consume fresh vegetables and fruits because they taste bad but because they are expensive,"

Yes! And the ag subsidies and trade barriers that protect the California farm interests are a big reason why! In Europe and Japan where subsidies are even worse, food prices are outrageously high! In Europe they fight them by imposing price controls at the same time they subsidize innefficient local producers. But this is so expensive to the EU that it takes up 40% of the total EU budget and is about to get so out of hand as to be a full blown fiscal crisis.

When the UK abolished the Corn Laws the price of food first leveled off (it had been rising which was the motive for abolishing the Corn Laws) then dropped.

"An economist would applaud them for gaining satiety and the most caloric bang for their buck."

Not exactly. But I'll take that as a snarky comment rather than a core part of the argument.

The Law Talking Guy said...

"Cheap food products are widely available on international markets, largely as a result of subsidized exports from developed countries."

Given that food prices are soaring everywhere, what is the benefit of removing these cheap food products from the market? The arguments and the UNCTAD report seem to be from a time of overproduction, which were are plainly no longer in.

rolleroid said...

The point re: consumers choice of food is that price is a tremendous barrier to overcome for consumers to change their habits, and I don't know if the average (U.S.) consumer will care about agricultural supports and environmentally appropriate agricultural/industrial resource choices by foreign countries if it necessarily raises food prices in the US. A modest increase due to better wages for agricultural labor in the US would not seem so ... foreign.

And I don't think it is a snarky comment. If I have a finite amount of money, why should I not try to maximize the caloric intake with that money? Families living on minimum wage have to make those decisions every day.

Raised By Republicans said...

"Given that food prices are soaring everywhere, what is the benefit of removing these cheap food products from the market? The arguments and the UNCTAD report seem to be from a time of overproduction, which were are plainly no longer in."

The issue isn't whether food is cheaper than it was before but rather that subsidized food from the developed world are cheaper than their unsubsidized competition from the developing world.

What we've seen in the last several decades is that these subsidies have devasted the ag sectors in the developing world (which is what the UNCTAD report is talking about). Now we have a combination of population growth and yet more subsidies (this time for ethanol) and we have a supply problem and spiking prices but with fewer sources of production than we had before this all started.

If it helps your emotional state, go through the same logic but cross out the world "agriculture" and write "cars."

As for Rolleroid's assumption that ending subsidies and other government hand outs for some parts of the ag sector will make US food prices go up he is mistaken. Our food prices will go DOWN if we stop subsidizing and protecting American producers that need it to be competitive.

An economist would argue that a fully informed consumer would consider the relative utility of various types of diets. It would be more complicated than simply counting calories. But yes, poor people get hurt by expensive food. Which is why it is so important to allow a free market for agriculture.

USWest said...

RBR wrote: "Really, the idea that ag subsidies distort the world food market in ways that make people in developing countries significantly worse off is not that controversial - except in those parts of the world currently benefitting from the distortion (i.e. big agricultural companies in places like California and France)."

I only add (i.e Iowa, and Indiana).

Raised By Republicans said...

US West is absolutely right to point to other parts of the country as beneficiaries of ag subsidies. Iowa and Indiana and the rest of the corn belt have been benefiting enormously from various ethanol boondogles that are ultimately a waste of public resources.

What is frustrating to me is that places like Iowa could probably compete just fine without the subsidies. But farmers have become adicted to the extra cash.

When I rant and rave in my classes about ag subsidies here in the Midwest, I get some pretty sour looks from some of my students.

I bash California more on this blog for two reasons. First, California's ag sector is far more artificial than is that of the corn belt. Second, all this talk about how much revenue the California ag sector generates always ignores how much federal money it costs to generate that revenue - below cost water, free police/INS muscle to break strikes, selectively enforce immigration policies, cash pay outs etc etc etc.

uswest said...

California doesn't get much for free. The National Guard will soon pull away from the border, therefore leaving border states to pay for border patrol.

Calfornia supports huge numbers or Mexcian laborers who come across to work in the Ag fields around the country. We pay for the medical care, the education, etc. of many of these people either directly or indirectly. I don't object to this. That is the cost of doing business and people, regradless of where they are from, have a right to education and medical care in my opinion. So I think in the end, if it doesn't balance out, California and her fellow border states pay out.

The Law Talking Guy said...

Right now, as of this moment, steps to discourage American farmers from producing or exporting products would drive up food prices everywhere. The welfare of farmers in third world countries - who cannot compete even at today's prices, apparently - would depend on prices remaining high or going higher. Right? I mean, the theory cannot be that food prices would get lower in the third world if we stopped ag subsidies, and that such lower prices would benefit the farmers who already can't compete.

I remember this discussion in terms of deregulating electricity markets. The CA legislature permitted it, but barred prices from rising above pre-deregulation rates. After the failure of the market, the price restriction was blamed. Of course, if the deregulated marketplace can only provide higher prices than a regulated marketplace, the deregulated marketplace is of suspect value.

Cars aren't the same as agriculture. Agricultural products are highly perishable and have an inelastic demand.

The Law Talking Guy said...

Let me be clear: I think the solution to our current food crisis requires governments everywhere to encourage and subsidize overproduction of food, i.e., MORE food than the free market would otherwise produce. The reason is that people need food who can't afford it. We need to artificially lower food prices in the third world. It's not sufficient that an optimal number of people get an optimal number of calories, or whatever a free market would produce. Everyone needs a sufficient number of calories. I'm saying that food is more akin to a public good like clean air and water.

Dr. Strangelove said...

Pardon a latecomer to the conversation. USWest wrote a while ago:

"Based on the map, in 2005 there are 18,119 farms in California getting a combined $649.4 million in subsidies for an average of $36K per farm. In Iowa, there were $2.2bil in subsidies doled out to 119,912 farms for an average of $18 mil per farm. It is one thing if subsidies are meant to help the small farm. But these are huge agribusinesses."

Actually, that's an average of $18k per farm in Iowa (not $18 mil). That is only half of the average $36k per farm California farms are getting. This may change USWest's analysis of the subsidies.

Raised By Republicans said...

US West's state by state subsidy count probably doesn't include discounted water which is probably the lion's share of bennies to Californian Agribusiness.

LTG, we did see a period where all governments were subsidizing food production. In the 1960s many developing countries borrowed heavily to subsidize their ag sectos to keep up with the developed countries' subsidies. The result was the crippling debt crises in the 1970s and 1980s.

So I guess my question is how would these countries pay for it? And if they could pay for it, how is that really reducing the price of food? Isn't it really just transfering the costs from the nominal price to the tax rate?

If we want to increase overall food production right now, the high prices will do that pretty quickly. But if we want to avoid the problem in the future we would do well to consider the unintended consequences of things like ag subsidies.

USwest said...

Thanks Dr. S. I misplaced a zero.

Raised By Republicans said...

Actually, I came up with the same per farm number Dr. S. did.

The Law Talking Guy said...

"If we want to increase overall food production right now, the high prices will do that pretty quickly."

They aren't. That's why there's a shortage. Nobody would be talking about the need for action if the market were "clearing" in a reasonable amount of time.

Raised By Republicans said...

Part of the problem is that this coinciding with several natural disasters that reduce supply (cyclones in the Indian Ocean, floods in the American Midwest, draughts in Australia and Africa etc) and with record subsidies for ethanol which robs foodstuffs for the sake of our cars.

The Law Talking Guy said...

Of course you mean droughts. Draughts are probably not hurting the food production. =)