Tomorrow’s vote is first about an immediate threat to our democracy.  This threat comes primarily from the domination of large, mostly multi-national, corporations who wish to lock in their dominance by using government to limit competition.  The US Supreme Court’s Citizens United decision accelerated this effort because it unleashed a flood of corporate cash, much of it provided in secret, into our political campaign system.

This multi-billion dollar effort is causing another, longer term problem:  We as a nation are not addressing our real needs and this means we are innocently taking massive and unnecessary risks.   What are those risks?

•  We are running larger deficits and debt than is necessary.  Yet we are being pandered to, again, with more tax cuts that are guaranteed to further increase deficits and debt.
•  We are much too dependent on fossil fuel energy.  Billions of people are climbing out of poverty worldwide and demanding a larger share of fossil fuel energy, which guarantees the price of these fuels will climb.  Yet we have no national program to install sustainable, clean energy systems which would insulate our country from the increasing cost of fossil fuels.   Importantly, this dependence threatens our national security as we are in danger of being in continual wars overseas protecting our fossil fuel sources.
• We are over using chemicals and hormones in our food industry.  This is not only degrading our environment but is also creating an epidemic of ill health outcomes, like diabetes, that are taxing our health care system and costing us hundreds of billions of dollars in unnecessary spending annually.
• Our weather is very likely to become increasingly more severe due to global warming.  Yet we have not begun national programs, such as those for sustainable energy or more robust infrastructures, to prepare for dealing with these probable weather challenges.
• Our financial system is lopsided, favoring very large banking conglomerates that are shielded from competition and the dangers of their risk taking.    We have, so far, continued to socialize their losses which has removed their caution to risk taking.
• Our tax structure too much favors the incomes of the wealthy over the incomes of a majority of Americans.  Privileged rates are applied to wealthy incomes from dividends, capital gains and carried interest.  The tax laws are shot full of tax avoidance schemes designed for the wealthy like unified charitable trusts, irrevocable trusts, offshore accounts and trusts and estate taxes that avoid capital gains taxes altogether.   Combined with broad based tax cuts, these schemes guarantee high deficits and debt and the underfunding of necessary government programs like social security, medicare and medicaid.
• Our regulatory structures are too weak.  From bank risk taking, to environmental abuse, to a medical system focused on the more profitable business of treating symptoms rather than creating cures, regulators all too often look the other way or become enablers of corporations only concerned with the most profitable activity irrespective of the activity’s bad outcomes for individuals and the nation.

Beezer here.  Unfortunately one of our two political parties, the Republican party, is ‘all in’ supporting the efforts of multi-nationals.  They enable all these bad outcomes.  They support unlimited corporate campaign spending that dominates our national discussions and hides the real risks we are taking.  They favor a tax system tilted heavily in favor wealthy incomes, which in turn aggravates income inequality and suppresses both job creation and income gains for the majority of working Americans.   They pander to our want of lower taxes while endangering our needs for a safer, healthier and more competitive economy.   This is the precipice we face in tomorrow’s national elections.  If Republicans win tomorrow, then our needs will never be addressed without encountering some massive disaster of epic scale.  It’s that important.  We need to regain our ability to self-govern. 

We’ve lamented our destructive national food policies before and argued that we should subsidize organic farming instead of spending $8 billion annually subsidizing corn for ethanol production:  Arguably the worst policy in the history of the United States.

Now the longtime food editor for the New York Times, Mark Bittman, weighs in with an op-ed that argues we should tax soda and subsidize vegetables.   The thinking is as straightforward as it is rational and based on the data:  We are becoming a very unhealthy, and medically very expensive, society in a large part due to our poor eating habits.  The rise in diabetes is alarming to the point of becoming a national emergency, yet we have no national policies in place aimed at reversing this unhealthy downward spiral.

Rather than subsidizing the production of unhealthful foods, we should turn the tables and tax things like soda, French fries, doughnuts and hyperprocessed snacks. The resulting income should be earmarked for a program that encourages a sound diet for Americans by making healthy food more affordable and widely available.

The average American consumes 44.7 gallons of soft drinks annually. (Although that includes diet sodas, it does not include noncarbonated sweetened beverages, which add up to at least 17 gallons a person per year.) Sweetened drinks could be taxed at 2 cents per ounce, so a six-pack of Pepsi would cost $1.44 more than it does now. An equivalent tax on fries might be 50 cents per serving; a quarter extra for a doughnut. (We have experts who can figure out how “bad” a food should be to qualify, and what the rate should be; right now they’re busy calculating ethanol subsidies. Diet sodas would not be taxed.)

Simply put: taxes would reduce consumption of unhealthful foods and generate billions of dollars annually. That money could be used to subsidize the purchase of staple foods like seasonal greens, vegetables, whole grains, dried legumes and fruit. 

Beezer here.  Being fat and diabetic is only one of several ills that we are not facing up to caused by foolish food production.  Medical experts are united in opposition to the overuse of antibiotics and hormones in cattle, pig and chicken farming.  They say this overuse is producing ‘super bugs’ that are resistant to the antibiotics we use to fight infections and other biological ills.  This country has been for much too long looking ‘the other way’ when it comes to enhancing the national welfare.  We continue to engage in expensive overseas wars.  We subsidize unhealthy food production.  We subsidize the largest most profitable oil companies in the world.  We are serial tax cutters who don’t want to pay the bills necessary for a healthy economy.  It’s a combination of ignorance and selfishness unlike any we’ve ever seen before in our country’s history.  If we don’t take the rose colored glasses off, we’re in for a series of rude economic and health shocks.  Time to pay the bills.  Time to close tax loopholes and if we’re going to subsidize anything, it should be things that are good for us all . 

A recent FDA test of 136 samples of beef, chicken, pork and turkey purchased at grocery stores found 47% contained Staphylococcus aureus.  Of those bacteria found, 52% were resistant to at least three classes of antibiotics.

Not that we need even more problems to worry about, but there you have another.  No doubt the FDA’s ability to monitor and warn us of danger will be strengthened by budget cuts.

From an earlier Beezernotes post here based upon a review of Michael Pollan’s book Omnivore’s Dilemma.

“You need to understand two basic things about cattle.  They evolved, like other ruminants, with a two stage digestive process that includes not only a stomach, but another organ called a rumen.  This allows cattle to turn otherwise non digestible grass into useable food for themselves, and into a nice source of protein for humans who eat beef.  Cattle and other ruminants (like the Bison), it can be argued, created the Great Plains.  Without their constant grazing of these grasses (and the fertilization and re-seeding therefrom), the Plains would become deserts because they are too dry for most other plants.

The second thing is that cattle don’t naturally eat corn.  In fact, it makes them sick.  But the ag industry has discovered that corn fed cattle grow faster than those grazing on grasses.  And corn, especially since the country started subsidizing corn in the billions of dollars annually (corn farms don’t make money, the corn sells for less than it costs to grow), has been made cheap.  Which has made beef cheaper than it would otherwise be.  Which would be nice except for the fact that the final beef product we’re now eating contains not only fewer nutrients but carries onto our dinner tables a host of medical problems.  Think obesity and diabetes, to mention two.  Or a third problem Pollan writes about below….

“…One of the bacteria that almost certainly resides in the manure I’m standing in is particularly lethal to humans.  Escherichia coli 0157:H7 is a relatively new strain of the common intestinal bacteria (no one had seen it before 1980) that thrives in feedlot cattle, 40% of which carry it in their gut.  Ingesting as few as ten of these microbes can cause a fatal infection; they produce a toxin that destroys human kidneys.

“Most of the microbes that reside in the gut of a cow and find their way into our food get killed off by the strong acids in our stomachs, since they evolved to live in the neutral pH environment of the rumen.   But the rumen of a corn-fed feedlot steer is nearly as acidic as our own stomachs, and in this new, man-made environment new acid-resistant strains of E. coli, of which 0157:H7 is one, have evolved,–yet another creature recruited by nature to absorb the excess biomass coming off the Farm Belt.  The problem with these bugs is that they can shake off the acid bath in our stomachs–and then go on to kill us.  By acidifying the rumen with corn we’ve broken down one of our food chain’s most important barriers to infection.  Yet another solution turned into a problem.”

Beezer here.  Similar problems occur in the production of chicken, turkey and pork.  Applying the industrial model to our food production is creating huge unintended consequences, from the looming problem of super bugs, to uneccessary water pollution (think dead seas), to the loss of fertile soils and the consequent negative impact on climate change, to the loss of basic food diversity.  Whatever your view of how to counter these trends, the necessity of doing something constructive is not debatable.

Scientists around the world are finding that tried and true organic farming techniques offer powerful antidotes to global warming because they gobble up carbon dioxide.  From the May Discover magazine:

“If Ohio State soil scientist Rattan Lal is right, one of the simplest solutions to climate change may be right under our feet.  With proper stewardship, Lal says, the agricultural soils of the world have the potential to soak up 13% of the carbon dioxide in the atmosphere today–the equivalent of scrubbing every ounce of CO2 released into the atmosphere since 1980.  The claim is a bold one but researchers around the globe are digging up evidence that even modest changes to farming and ranching can have a major impact on carbon sequestration.

Some growers have already embraced an approach known as regenerative agriculture, which aims to boost soil fertility and moisture retention through established practices such as composting, keeping fields planted year-round, reducing tillage and increasing plant diversity……

Lal first came to the idea of soil as a powerful carbon sink not through an interest in climate change, but rather out of a concern for the land itself and the people who depend on its productivity.  While carbon depleted soils tend to be dry and prone to erosion, carbon-rich soil is dark, crumbly, fertile and moist.  In the 1970s and 1980s, Lal was studying soils in Africa so devoid of organic matter that the ground had become like hardened cement.  There he met Roger Ravelle, a pioneer in the study of global warming.  When Lal made a dispairing remark about the impoverished soil, Ravelle suggested the carbon had moved into the atomoshpere.  ‘I told Roger I didn’t know where it had gone; I just wanted to put it back,’ Lal recalls’.”

Beezer here.  Discover is a subscription magazine so I don’t have the full article before me, although I did read it while waiting for a relative in a doctor’s office.  The main thrust is that modern agriculture has forgotten techniques that replenish, even add to, fertile soil.  Using natural compost, including forest debris, protects and enriches the soil, which in turn better grows plants (even grass for ranching).  And this additional plant growth captures CO2.   The techniques are used by organic farmers and ranchers.  As is often the case in our world, good things produce other good things.  Modern organic agriculture efficiently produces diverse, healthy food free of artificial nitrogens, pesticides and hormones.  This agriculture adds to the natural production of fertile soils.  These are obviously good things.  And it turns out these good things produce another good thing:  The sequestration of Co2.      

Anyone who reads my posts knows a couple things about where I get much of my information.  The first is economics Professor Mark Thoma’s blogsite economist’s view.  It’s a fascinating aggregation of many blogs and it always, always elicits a robust outpouring of commentators, such as Beezer.  The second is that Beezer regularly reads another blogsite called Baseline Scenario.  This is a site written primarily by three authors, the two main ones being Simon Johnson, another economist and former chief economist of the International Monetary Fund (IMF) and James Kwak, a successful software entrepreneur, a former consultant at McKinsey and now a Yale Law School student.  Johnson is also a professor at MIT’s Sloan School of Management.

Johnson and Kwak also co-authored the book ’13 Bankers’ that dealt primarily with the bank system’s role in the current recession.

That said as a long preface, what follows is two posts, one by Thoma at economist’s view, and the other by Kwak at Baseline Scenario.  Thoma writes about the small town he grew up in and Kwak writes about a recent experience he had at Yale Law School–two very different posts. 

But somehow they are related, in Beezer’s view.   The issue is putting an understanding to why they are related.  We’ll leave it up to whomever reads both, as we’ve done, to find what the connection really is, if any.

First, Thoma’s post.

As many of you know I grew up in a small town, it was just a bit under 4,000 people at that time, the same town that my mom was born in. I recently went back there for a high school class reunion (35^th). While I was there, something struck me that I’ve been meaning to write about.

In the town I grew up in, pretty much everyone knows who the best doctor is, the best dentist, the best painter, the best carpenter, and so on. There were sometimes disagreements about exactly who was best, e.g. who had the best restaurant, but we all knew who to choose if you needed something done, something to eat, your house cleaned, lawn mowed, legal work, child care, whatever. The people who didn’t weren’t very good at these kinds of jobs didn’t survive for very long. I can think of three lawyers off the top of my head, and if I needed one, I’d know who to choose, or certainly who to ask (growing up, my next door neighbor was the county clerk, and she could be very helpful in navigating anything related to the courthouse — she saved me once when I was in court for going 95 mph and the judge thought a night in jail would be a good lesson — thanks to her I escaped jail, but I did get the message — losing my license for a month helped with that).

I thought about this again yesterday as I was trying to change dentists. I’ve lost confidence in the one I have, but have no idea who to choose. I asked a few people, and they had recommendations, people mostly say the like who they have, but it was nothing like the kind of comprehensive knowledge I had where I grew up. Same for choosing a painter, a car mechanic, or most anything else. I never really know if I can trust them when the initial choice is made.

In an environment like I grew up in, there is little need for many types of regulation, it is largely redundant. If I still lived there and needed a room added onto my house, I have a friend I grew up with who does that type of work and I would trust him to do it right. Period. And if it wasn’t right, he would make it good. These are people you see frequently around town, or hear about from others, people you grew up with from kindergarten through high school (even college since many of us ended up at Chico). Sure, the doctors and dentists and the like came from outside, but my grandmother was a nurse, one of my mom’s good friend worked for a dentist in town, people played golf with the doctors, dentists, etc. at the local 9-hole course, socialized with them at the Tennis Club — you knew what you needed to know. If someone got sick at your restaurant, it was over for the owner. Word would spread quickly and everyone would know. If you had a good story and a good reputation — being good in grade school and being known as honorable has its rewards — you might survive. The town, person by person, would make it’s call. That call wasn’t always correct, small town rumors, cliquishness and the like are known menaces, but for the most part the town took care of itself. So while it wasn’t always perfect — there are parts of the town I don’t miss at all — it managed well enough.

What I’m wondering is whether this can, at least in part, explain differences in attitudes toward regulation between more conservative rural areas and larger cities that are generally much more liberal. In a larger city, you are much more vulnerable to predatory type behavior, unfair treatment, much more likely to be dealing with strangers you have never seen before and will never see again. That uncertainty, and the experience of being taken advantage of if you aren’t continuously on guard, and sometimes even if you are — maybe a contractor did a lousy job and refuses to fix the flaws or refund money — might lead you to declare “there ought to be a law!,” or that “someone needs to stop this!” You would be much more inclined to think that regulation was needed.

That’s not to say that things are perfect in small towns, they’re not of course, or that exploitation of the weaker by the stronger isn’t present. It is. Farm labor comes to mind. And there is still a role for safety and other types of regulation. But there does seem to be a much stronger sense that people can take care of themselves without the need for a bunch of rules and regulations, and without the need for police looking over your shoulder to make sure that you comply.

And that’s just the town. If you add in all the farmers who live in the vicinity — the reason for the town to exist at all — farmers who are their own bosses and think they ought to be able to do as they please with the land that has often been handed down for generations, it’s easy to see how a “leave us alone to take care of ourselves” attitude comes about.

Just a thought.”

And now Kwak’s post:

“For a class, I read an old (1986) paper by Kahneman, Knetsch, and Thaler on fairness. It’s based on surveys posing various hypothetical situations where businesses can take some action. For example, most people thought that it was OK for a grocer to pass on a wholesale price increase to consumers (Question 7) but not to raise prices because there is a general shortage and the grocer has the only shipment of a certain item (Question 12). In short, people have an intrinsic sense of fairness the authors summarize this way: “The cardinal rule of fairness is surely that one person should not achieve a gain by simply imposing an equivalent loss on another.”

Today in class, the professor posed the first question from the paper:

“A hardware store has been selling snow shovels for $15. The morning after a large snowstorm, the store raises the price to $20.”

In 1986, 82 percent of respondents thought this was unfair. In class, it was about 50-50.

As the professor said, this is probably because there are a lot of business school students in this class. Business school students are classic Econ 101 robots. They know enough to know that if there is a demand shift, not only is it OK to raise prices, but you should raise prices in order to clear the market. In this case, supply is fixed in the short term, so raising the price won’t increase supply; the Econ 101 argument is that raising the price allocates the shovels to people who will derive more utility from them (because they will pay more), thereby increasing social welfare.

But this rests on a huge assumption: that willingness to pay is the same as utility. Unfortunately, however, this assumption fails in the real world; poor people simply can’t pay as much for snow shovels as rich people, and as a result a price increase will allocate shovels to rich people, not to those who need them the most.* But people who believe Econ 101 only remember the demand and supply curves they saw on the first day of class, so they think firms should raise prices.

I suspect that belief in Econ 101 is not only stronger among business school students (and the businessmen they become) than among ordinary people, but is also stronger today than it was in 1986. The free market ideology teaches not only that businesses can maximize profits by any legal means, but that they have a moral imperative to maximize profits by any legal means, including generating profits by imposing equivalent losses on their counterparties. (Essentially all proprietary trading fulfills this condition.) And three decades of this ideology have probably changed people’s responses to these types of questions.

More fundamentally, the 1986 paper shows that Econ 101 is diametrically opposed to human beings’ intuitive sense of fairness. Yet public policy largely follows the dictates of Econ 101. Is that a good thing?”

Beezer here.  Somewhere there is a nexus here that helps explain the deep conflicts we now see in our political atmosphere.  Small towns as described by Thoma would necessarily be very wary of government regulation because the small town intimacy takes care of what might otherwise require regulation.  They’d be conservative about ‘big government’ in other words.  Forgetting, of course, that small agrarian towns wouldn’t exist today without Agriculture subsidies.

And econ 101 posits that price is the only factor needed to ‘clear a market’ effectively.  Forget that the real world might want to ‘clear’ the market a little less efficiently in order to protect a large portion of its citizens–to protect the commonweal.

As America’s Industrial Ag. megalith continues to pump out lousy food and toxic chemicals into our bodies, the natural response to use local farming is growing like there’s no tomorrow.

From a USA Today news article here.

“The “local” movement — buying and eating food produced locally rather than shipped from thousands of miles away — has been gaining steam with the steady growth of farmers markets and a phenomenon called community-supported agriculture. CSA members purchase shares of a farmer’s crop for the season. The government doesn’t track the numbers, but Local Harvest, a nationwide directory of small farms, farmers markets and other local food sources, estimates that tens of thousands of American families belong to CSAs, and supply trails demand. The number registered with Local Harvest alone indicates how quickly CSAs have multiplied over the past decade: The directory’s listing has increased from 374 farms in 2000 to 3,660 today.”

Additionally, the Farmer’s Market phenomenon where urban areas set up local farm bazaars, normally once a week, is also growing.  From the USDA this: