Thursday, February 21, 2013

Why The World Needs Economists

Fact:  Productivity (output per person/hour) is much (MUCH) higher on smaller plots of land.* 

Resolved:  That this proves that "smallholders can feed the world."  More important, large farms are wasteful, and should be broken up.

Now, my good friend Marc Bellamare is no right wing, free market fundamentalist.  But he puts the hammer down on this argument.   In fact, he puts three different hammers down on it.  Bang, bang Bellamare's silver hammer made sure it was dead. 

The point is that even if you are a lefty, being trained in economics puts a pretty tight limit on how much stupid crap you can say.  We need more economists.

*This is a fact, unless it's measurement error.  Then it's not.


August said...

I think I have a good economic reason to disagree, but given my hazy recollection of college, I am not sure. Let me know if I am wrong.
Anyway, I remember the term 'economies of scale' and I also remember something about companies wanting to make sure their marginal cost equaled their marginal revenue. So, one day when I was arguing with some progressive, I realized his policies were actually responsible for what he hates. In this case, he hated Walmart. So, these progressives use government to put all sorts of costs on business. The government interference raises total cost, thus to make marginal cost equal to marginal revenue, Walmart and other huge operations were born. Walmart spreads all that government generated cost out over billions of transactions, while the Mom&Pops don't see that many transactions in a lifetime. In farming, it is even worse because the subsidies provided means government isn't just a cost, but in many cases a client. Government bets on Solyndra and GMO soy beans, while the free market says no thanks.
So, it seems to me there is an economic reason to assume most modern businesses are actually bigger thanks to big government and that the first step to make anything 'sustainable' would be to remove all these costs so that businesses could find the correct scale. In any case, it's a fun argument to have with the sustainability crowd.

Mungowitz said...

Yep, I'll buy that, August. The scale of farming is too large, because of subsidies and entry barriers.

But we don't need to break up the large farms. We just need to cut the subsidies. Optimal scale will still be pretty large.

Nonetheless, you make a good point, and I thank you for it!

A leap at the wheel said...

Great, now just explain to the Occupy crowd that the same applies to banks, and we'll really get somewhere.

Seth said...

What isn't clear to me.

1. Was the presenter who made the original claim an economist?

2. What this economist actually did to help the world. Was someone going to actually break up large farms?

3. Whether economists as a group have done more harm than good.

enoriverbend said...

"being trained in economics puts a pretty tight limit on how much stupid crap you can say"

Oh, dear. Let's not leap from one anecdote to this ... appalling display of naivete. Need I mention certain columnists as counter-examples?

Emilia Nolette said...

The world is talking about the deflationary recession at this movement. If we have a good economist many small businesses can servive. Also, many people will loose their jobs because of recession. So, a good economist can help us out in this manner.