Posts filed under ‘Food and Agriculture’
Homogeneity and Cooperation
| Peter Klein |
Why are Scandinavians so cooperative? Nicolai and Lasse might suggest it’s their superior moral character. La Porta et al. (1997), Putnam et al. (1992), and others point to Protestantism: hierarchical religions like Catholicism and Islam, it is argued, tend to discourage trust and retard the development of social capital. The Protestants, who already have Max Weber in their corner, seem to be piling it on.
Not so fast, says Kevin O’Rourke in a recent paper, “Culture, Conflict, and Cooperation: Irish Dairying Before the Great War” (Economic Journal, October 2007). O’Rourke compares the Danish and Irish dairy industries before 1914 and argues that cultural and ethnic homogeneity, not religion, explains the success of Danish cooperatives. Unlike recent large-sample econometric work on trust, the paper uses deeper, more robust indicators of cooperation. Key findings:
At first sight, the contrast between Protestant Ulster and the Catholic South (as well as between Denmark and Ireland as a whole) seems a striking confirmation of the LLSV hypothesis that culture matters for the ability to cooperate, and that hierarchical religions such as Catholicism undermine both trust and cooperation. However, on closer examination it appears that politics, not culture, was responsible for the lower Irish propensity to cooperate. Suspicion between Catholics and Protestants, and tenants and landlords, spilled over into Nationalist suspicion of the cooperative movement and hindered its spread, despite the efforts of the [Irish Agricultural Organisation Society] to remain apolitical. To this extent, the results are more consistent with the stress on [ethnolinguistic fractionalisation] in Alesina and La Ferrara (2000) than with the cultural perspective of LLSV, Knack and Keefer (1997) and Zak and Knack (2001).
Denmark benefited from several relevant advantages that Ireland did not enjoy during this period. In particular, it was an extremely homogeneous country, ethnically, religiously and linguistically. There was no conflict over who should own the land, since land reform in Denmark had been underway since the late eighteenth century. . . . Nor was there any ethnic conflict, or disputes over where national boundaries should lie (all such controversies became redundant following the loss of Schleswig-Holstein in 1864). The results suggest that this homogeneity of Danish society is what explains the success of cooperation there.
Conference Announcement: The Practice and Theory of Entrepreneurship
| Peter Klein |
The University of Missouri’s McQuinn Center for Entrepreneurial Leadership announces its 2008 conference, “Entrepreneurship: Where Practice and Theory Meet,” 6-7 November in St. Louis:
A conference bringing together practitioners and researchers to discuss current research and share best practices for creating successful new ventures and vibrant economies (with a special focus on rural entrepreneurship). The conference will highlight the Appalachian Regional Commission’s 10-Year Entrepreneurship Initiative, the W.K. Kellogg Foundation’s Entrepreneurship Development Systems in Rural America Program, and recent community initiatives.
Speakers include Elaine Edgcomb (Aspen Institute), Deb Markley (Rural Policy Research Institute), and John Potter (OECD). The conference is sponsored by the McQuinn Center, ExCEED / University of Missouri Extension, the Rural Policy Research Institute, and the Federal Reserve Banks of St. Louis and Kansas City. Further details including registration information, accomodations, etc. are available at the McQuinn Center website. Contact Ken Schneeberger for more information.
NIE Guidebook
| Peter Klein |
The long-awaited New Institutional Economics: A Guidebook is due out this September from Cambridge University Press. Editors Eric Brousseau and Jean-Michel Glachant assembled an all-star team including Oliver Williamson, Paul Joskow, John Nye, Gary Libecap, Lee Alston, Pablo Spiller, Benito Arruñada, Stéphane Saussier, Jackson Nickerson, Brian Silverman, Joanne Oxley, Mike Sykuta, Mike Cook, and many others — even Foss and Klein. You can pre-order yours today — the hardback’s a whopping $140 but the paperback’s only $59.
Here’s the official CUP page and here’s an information page put together by Eric Brousseau. It should be a valuable reference for years to come.
More on Agricultural Adaptation: Johnny Appleseed
| Dick Langlois |
The abstract of a new paper called “Alertness, Local Knowledge, and Johnny Appleseed” recently crossed my computer screen. By a grad student at George Mason called David Skarbek, the paper applies a Kirznerian account of entrepreneurship to the case of Johnny Appleseed, aka John Chapman (1774-1845). The entrepreneurial part will no doubt be of interest to many readers, including my estimable co-bloggers. But I’m more interested in the historical and institutional angle.
Skarbek points out that, contrary to the Disney-fueled myth, Johnny Appleseed didn’t scatter apple seeds randomly throughout Appalachia and the midwestern frontier. He planted clearly defined apple groves, totaling some 1,200 acres by the time of his death. This turned out to be crucial for homesteading, since under American state law the planting of fruit trees was one way to create a property right (in Lockean fashion) out of unowned land. Chapman was thus an institutional entrepreneur.
What Skarbek doens’t say, however, is something I learned at the NBER conference I wrote about earlier. In addition to having what we would nowadays call mental health issues, Chapman was also an evangelical Swedenborgian who shared with Thoreau the view that apples should aways be grown from seeds. (For documentation, see for example here.) In fact, apple trees grown from seeds are good for only one thing — cider — and, indeed, the Johnny Appleseed legend got a boost in Appalachia during Prohibition as the fruits (as it were) of his efforts were used for hard cider. Apple cultivation normally requires grafting, a form of hybridization known for centuries and practiced in Appleseed’s lifetime by the likes of Thomas Jefferson. The point is that Chapman saw hybridization as unnatural and immoral, and his quest was animated as much or more by this religious view as by environmentalist zeal or entrepreneurial insight. As the mention of Thoreau suggests, however, distaste for “unnatural” breeding methods is not exclusive to religious fundamentalists, and indeed today it is followers of Thoreau not (generally) Christian evangelicals who object to genetically modified organisms.
Before They Were Famous
| Randy Westgren |
If we point to “The Nature of the Firm” (1937) as the moment when Ronald Coase earned is place in the Pantheon, then we can go back two years (and 16 years before his doctorate was awarded) to a period when he was lecturing at LSE and working on public utilities to find the beginning of a series of papers in Economica (with R.F. Fowler) on the English pig industry (see here, here, here, and here for JSTOR links). The story line is about the effects of anticipated prices (based on lags) for hogs and corn on production decisions and the consequent cobweb model of dynamic prices. A classic in agricultural economics.
Another giant figure, Sewell Wright, examined the same phenomenon in the US in an obscure publication ten years earlier: Corn and Hog Correlations, USDA Department Bulletin # 1300, July 1925. Wright was an animal husbandman (and guinea pig breeder) at USDA after completing a doctorate in genetics at Harvard. (more…)
Climate (Change) and Agricultural Adaptation
| Dick Langlois |
Just for the fun of it, I drove up to Cambridge on Friday to take in one day of an interesting NBER conference on Climate Change: Past and Present. The conference was organized by Gary Libecap, whom I’ve known for years, and Richard Steckel, whose work I have always read with interest. Steckel is one of the people who have pioneered the use of archaeological techniques in economic history, notably measuring the heights of skeletons for evidence on nutrition in historical populations. This time he talked about using tree rings in historical research involving climate.
There were several excellent papers, which are available at the conference website. The two I liked the best have a flavor of evolutionary economics as well as evolutionary biology. Richard Sutch talked about the history of hybrid corn in the U. S. An important figure in the story is Henry Wallace, who founded one of the earliest hybrid-corn seed companies and, as Secretary of Agriculture, evangelized for hybrid corn and higher corn yields at the same time he was implementing pro-cyclical New Deal farm policies that restricted agricultural output in other commodities. But the main story is one of evolutionary learning. The major midwestern droughts of 1934 and 1936 accidentally revealed the (unintended) benefits of one kind of hybrid corn that was resistant to drought, thus changing the perceived payoffs to farmers of adopting the new technology, whose primary benefit was ultimately increasing yields. (more…)
Westgren at Missouri
| Peter Klein |
Those of you within driving distance of Columbia, Missouri should come over Monday (2 June) for a seminar by Randy Westgren, “The Entrepreneurial Niche,” at 2:00 2:30pm in 217 Mumford Hall. Abstract below the fold. The talk is sponsored by the McQuinn Center for Entrepreneurial Leadership. Email me for details. (more…)
Middle Managers in the Theory of the Firm
| Peter Klein |
The current issue of Knowledge@Wharton features a piece on the challenges facing middle managers. The middle-management role is typically high in responsibility and low in authority — middle managers are accountable for the performance of their subordinates but selective intervention from above makes it difficult for them to commit to particular incentive schemes. Moreover:
[T]op reasons for dissatisfaction among middle managers include micromanagement by senior managers and lack of respect, says [author David] Sirota. “And sometimes the senior leader is just really ineffective; middle managers don’t want to be in a company that is run by that type of person.” . . .
Navigating the various relationships upward, downward and horizontally can be an emotional management challenge, adds Wharton management professor Sigal Barsade. “This is particularly noticeable with organizational change. If you are a middle manager, there may be a change that you didn’t have much to do with, but you need to translate it to your people and make them feel protected and valued. However, you are also someone being impacted by the change. Because you didn’t design the change, you might be left feeling like you don’t know what to do yourself, but you still need to comfort, protect and inspire your people.”
A more colorful description is provided by Chef Shuna Fish Lydon who blogs on all things culinary at eggbeater. Here she is on the role of the sous chef: (more…)
InBev and Bud . . . In Bed?
| Randy Westgren |
Recent news about the impending bid by InBev for Anheuser-Busch was interesting subtext for my current study tour on EU agri-food supply chains. We normally schedule a stop at InBev when we spend our first week based in Leuven, Belgium, which is InBev’s HQ. This year, they told us a visit was impossible. I had assumed that it was due to shake-ups in the management following a weak first quarter, but I guess there was more in the air!
You will note that A-B shares rose on the news. The strategic fit is stunning. InBev is strong in its traditional markets (Belgium and Germany from the Interbrew parent; Brazil from the Ambev parent) as is A-B, who also has an equity strategic alliance with Tsingtao in China. Not much overlap geographically and lots of opportunities for building on existing distribution alliances. A merged firm gets serious presence in mature markets as well as the growing ones.
The other thing that the market will react to is the InBev style. They drive growth with a limited number of global brands; they pare local brands over time. And they are relentless cost-cutters. Look at the top management team for a “Belgian” brewer. It has only taken a few years for the “tradition-oriented” Belgians to be succeeded by aggressive Brazilians. (I know this smacks of ethnic profiling, but ask around. . . .) The corporate culture of InBev is palpable.
Pensées de l’Alsace
| Randy Westgren |
Sorry to carry no intellectual weight tonight. One day remains of a 14-day whirlwind tour of the EU with 24 students of business, international studies, and agriculture. No student has had as much as 4 hours of sleep any night this week and I am in awe of their willingness to throw themselves into long days of travel and company visits. I am beat. Much of my day was spent translating between English and French, between US weights and measures and EU metrics (including such oddballs as quintals and hectolitres), and between currencies. Luckily, there was beer.
In honor of Peter Klein’s francophilia, I note the following from our second day outside Strasbourg.
(1) Cousin Naomi’s book has been translated as La Stratégie de Choc and sells as a trade paperback for 25 euros. It is not flying off the shelves. Evidently, there aren’t enough intellectuals in Europe’s second capital to make a sale.
(2) Not that polemics aren’t big press here. I bought Le Monde Selon Monsanto by Marie-Monique Robin. Evidently (on first read) Monsanto is behind the dioxin poisoning in Belgium, agent orange use, hormones in beef, and lost biodiversity in Mexico. Complete crap, but worthy of two hours on national TV earlier this year. Something for Naomi Klein to aspire to.
(3) We dined at a restaurant in the beautiful village of Obernai tonight. The specialty of the house is choucroutte (sauerkraut) served in a 2 kilo pile topped with 4 kilos of sausages, meatballs, pork chops and belly slices. What sweet revenge on the sour, self-absorbed vegetarian in the group (add emoticon here)! Magnificent food!
Bonne nuit.
Best Seminar Title You’ll Read Today
| Peter Klein |
It’s “Manure Entrepreneurs: Turning Brown to Green,” the theme for today’s Breimyer Seminar here at the University of Missouri. I promise, it won’t be just the same old . . . you know.
Incidentally, the seminar series is named for Harold F. Breimyer, a prominent agricultural economist of the last century. A friend described him to me this way:
He was an original New Deal agricultural economist who was absolutely and positively convinced of the inability of farmers and ranchers to compete without government because of their “obvious” lack of market power. His main issue was who will “control” agriculture. This conviction was so deep-seated that he could not appreciate or comprehend other perspectives. We corresponded in the late 1970s and it was as if we were from different planets. Promoting free-market agriculture, I was to him either a fool or a tool, or both.
An Organization and a Market
| Randy Westgren |
Yesterday I visited a unique auction in the small town of Roeselare, in Western Flanders. A cooperative organization of vegetable and strawberry growers, REO Veiling, operates a 7 hectare receiving and shipping facility that serves their members and buyers (wholesale, supermarkets, export) from all over northern Europe. The trading floor has six electronic Dutch auction clocks that operate simultaneously, two for the Roeselare site, two for a sister site in Mechelen, and two for small lots/direct delivery. Mechelen has a matching facility and there are dozens of remote terminals for buyers. Prices are pooled across lots within a given crop and quality category; all growers receive an identical payout, even if their particular lot of a given quality drew a higher/lower bid. All transactions clear within the day. All product is turned and shipped within 18 hours of delivery. The combined exchange has a 95% market share for Belgium.
The grower/owners pay the exchange costs from their revenues. This includes third-party grading and sorting and third-party production monitoring.They own a brand name in common for the top quality shipped from the facility (which earns a significant premium) and individual growers may pack for a private label and accept the pool price from the day of delivery. The exchange will collect from the private label buyer upon shipment from the auction warehouse.
A very innovative hybrid organization. I’ll have to formalize a case study.
State-Enforced Cartels
| Peter Klein |
Theory and evidence suggest that firms cannot form effective cartels on the free market. So, when producers wish to cartelize, they naturally turn to the state for help. Pennsylvania’s recent decision to forbid dairies from advertising hormone-free milk provides a vivid example. “It’s kind of like a nuclear arms race,” said State Agriculture Secretary Dennis C. Wolff in November. “One dairy does it and the next tries to outdo them. It’s absolutely crazy.” Right, next thing you know firms will be lowering prices, increasing output, improving quality — who knows what else! If only they could agree not to compete. . . . (Andrew Samwick helpfully declared Wolff’s office a “Microeconomics Free Zone.”)
The classic example of state-enforced cartelization is, of course, the National Industrial Recovery Act of 1933. The Depression, argued President Roosevelt, was exacerbated by excessive competition among firms, so firms must be compelled to form cartels to keep nominal prices and wages high (exactly the opposite, unfortunately, of what was needed to reduce unemployment). Despite a massive propaganda campaign to enforce participation the NIRA cartels largely fell apart by early 1934. Jason Taylor and I have a new paper exploring the role of expectations and enforcement in the collapse of the NIRA. Abstract below the fold: (more…)
Was Whole Foods Choking On Their -5% Net?
| David Hoopes |
I’ve used a couple of Ben and Jerry’s cases over the years. One of the interesting things about B&J is that they seem to suffocate under their desire to “do good.” In general, it seems they would have been able to donate a good deal more to charity if they had run their business to be a good business. Then, Ben and Jerry could have taken their salaries or capital gains or dividends and given them to their favorite charities.
Whole Foods, like B&J had a concentrated ownership for quite a while. I don’t know what it’s like now. For a long time John Mackey and his Dad owned 51%. John did not take a large salary. So, giving away Whole Foods’ profits was like he was spending his own money anyway. And, anyone involved with WFM after John got rid of his co-founders knew WFM was John’s thing.
The point with WFM is that it’s an unusual example of corporate charity in part because of concentrated ownership, the marketing benefits of donating money, and the political inclinations of many if not most of its employees (far more left-wing than J. Mackey). Unlike B&J, WFM did not suffocate itself by not paying professional executives. Also, Mackey never felt guilty about turning a profit and is a tried and true capitalist (guilt free).
I worked for Whole Foods when they only had two stores in Austin (oh so long ago). I’m afraid John considered me a pest (I suppose I was).
Did they ever buy Wild Oats? That’s another story.
Reflections on the McQuinn Entrepreneurship Conference
| Peter Klein |
Last week’s McQuinn Center conference on entrepreneurship in Kansas City was a great success, with some 75 participants from places like Nepal, Norway, the UK, and Peru as well as the US and Canada. Keynoters Cornelia Flora, Pierre Desrochers, Sandy Kemper, and Randy Westgren challenged and inspired the group and the papers and discussions highlighted a variety of innovative entrepreneurship research topics, theories, and methods. Papers and presentations are now available on the conference website.
I had the pleasure of offering introductory and closing remarks, and I’ll share here some reflections about the state of the field and suggestions for moving forward. (more…)
Nye on Wine and Trade
| Peter Klein |
John Nye is a very interesting economic historian. I still remember his fiery (and controversial) talk at the inaugural ISNIE conference in 1997, in which he urged new institutional economists to separate themselves from their brothers and sisters in mainstream economics. (Other participants, such as Paul Joskow, thought this was a bad idea.)
John’s new book, War, Wine, and Taxes: The Political Economy of Anglo-French Trade, 1689-1900 (Princeton, 2007) argues that Britain was not, contrary to popular perception, devoted to free trade after the repeal of the Corn Laws in 1846. The British retained high tariffs on French wine, among other goods, leading to substantial welfare losses among Britons. (more…)
São Paulo Workshop on Institutions and Organizations
| Peter Klein |
Three Brazilian institutions — Fundação Getúlio Vargas São Paulo, IBMEC São Paulo, and the University of São Paulo — are jointly sponsoring a “Research Workshop on Institutions and Organizations” in São Paulo, 2-4 September 2007. Keynote speakers are Jackson Nickerson, Armando Castelar, and me. From the blurb:
Seminar participants will discuss recent developments in the analysis of institutions and organizations through the lenses of Economics, Management, Sociology, Law and other social sciences. Instead of focusing on the contributions of specific disciplines dealing with institutions and organizations, workshop participants will emphasize differences and commonalities among different approaches, leading to potential advances and refinements in the field.
Here is registration information and a preliminary schedule.
The “Age of Cobden”
| Peter Klein |
Leonard Liggio reviews a new collection of essays on Richard Cobden, the great English liberal and free trader who led the movement to eliminate the protectionist Corn Laws. Notes Liggio:
The contemporary world is focused on the issues Cobden raised. According to co-editor, Anthony Howe’s “Introduction”: “For the modern preoccupations with globalization, free markets, the retreat of the state, the importance of civil society are all ideas which took political shape in the ‘age of Cobden.’ While post-modernists may find in Cobden’s liberalism too many of the emblems of the ‘modernity’ project from which they are keen to distance themselves, historians and the public may still have much to learn from one of the first practical attempts to implant the ‘Enlightenment project’ within the fabric of the world order.” Cobden’s affinity with European Liberals reflected their shared heritage of the Enlightenment in the works of Vattel, Grotius, Voltaire, Rousseau, Franklin, Jefferson, Bentham and James Mill.
For more on Cobden and his contemporaries John Bright and Charles Dunoyer see these papers by Liggio and Ralph Raico and listen to Raico’s 2005 lecture “Classical Liberalism in War and Peace: The Case of Richard Cobden” (scroll down).
Interactive Maps
| Peter Klein |
Those of you into maps will enjoy Social Explorer, a neat tool that generates detailed maps using US census data from 1940 to 2000. (Thanks to Cliff for the pointer.)
My colleagues at the Center for Agricultural, Resource, and Environmental Systems (CARES), just down the hall from my office, also produce some amazing maps. (I keep waiting for them to take on a joint project with the World Health Organization, to be titled WHO-CARES.)
Congratulations to Drs. Chambers, Chapman, and Xue
| Peter Klein |
Three PhD students whose dissertation committees I chaired or co-chaired completed their work this semester. Molly Chambers (University of Missouri) studied the emergence of “new generation” cooperatives in Renville County, Minnesota and developed a conceptual model of team or “collective” entrepreneurship. The new generation cooperative is a patron-owned firm characterized by closed membership, appreciable and partially transferable equity shares, binding delivery obligations, and an emphasis on value creation, rather than the protection of existing rents — a model designed to mitigate the problems of vaguely defined property rights that characterize traditionally organized cooperative. Molly used a survey and structured interviews to compare the effects of transaction costs, ownership costs, and spawning conditions on the development of the Renville cluster during the 1990s. (more…)
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