The Importance of Things Not Easily Measured

Our schools don’t teach us about some of the most important government actions, ones that built the foundations of our prosperity. The reason is that most important trend are slow growing, their results evident only with the passages of time, sometimes generations. They also are cooperative enterprises. The very best that any individual can hope to achieve is to be necessary but not sufficient. Politicians have a lot of trouble taking credit for these things and historians have trouble fitting narratives to them. These are not stories without heroes, but rather that there are too many heroes to count, each playing a role, often unaware of the role they are playing. How do you explain it a few words, in one lecture?

So, we neglect the important stories and tell instead exciting tales of great political and military struggles won and lost. Everybody likes them better. They are easier to understand, and we can take sides, imagining we would have made the right choices. But we really should spend time understanding the ground our heroes are standing on, sometimes literally the ground they stand on.

"Natural" Abundance the Result of Human Innovation, Imagination and Intelligence

I thought these things as I heard Philip Pardey & Vincent H. Smith talk about the importance of agricultural R&D at AEI. My comments are based on their comments and riffs on their themes, but I suggest you read for yourselves their paper.There is original research and lots of interesting and disturbing graphs and information. Follow this link.

Few of us appreciate how much our prosperity and our very physical survival depend on agricultural research and development. We sort of assume that things just grow, more of less a gift from nature, and that farming techniques are inheritances of the past, in fact, it might be better for us and the environment if we just "went back" to simpler techniques of our grandparents.

Well, that is not how it goes. Most of America's "natural" abundance is the creation of human innovation, imagination and intelligence. When we do our best, we work with natural processes, but he results are not natural. Natural forces are often out to frustrate our efforts. Bugs are programmed to eat our crops; diseases develop to decimate them; soils quickly lose their fertility and when not appreciated properly run downhill to clog streams and estuaries. This was the history of agriculture. People moved, and civilizations collapsed when they ran out of soil. How did we get around this ancient problem? We did it with that innovation, imagination and intelligence mentioned above and we did it by channeling these things through strong programs & institutions.

1862: A Year of Horror & Hope

1862 was a horrible year in America. Americans were killing each other and destroying property as never before in the second year of a great civil war. President Abraham Lincoln and his government could have been excused if all their attention was occupied with this. But they were looking forward to better times. Beyond the carnage at place like Fredericksburg or Shiloh, in 1862 the United States Congress passed, and President Lincoln signed legislation that helped create American prosperity for the next century. The Homestead Act ensured that the plains would be occupied mainly by the many yeoman farmers rather than large estates owned by the few. The Morrill Act created land grant colleges to support research and dissemination of useful arts of mechanics and agriculture. And Lincoln created the U.S. Department of Agriculture.

The USDA and the land grant universities created in the same year by the Morrill Act were and are more intimately connected than we generally appreciate. The land grant colleges produced and still produce most of the research and development that makes our agricultural abundance possible and when the USDA was founded, its main reason for being, specifically spelled out in its charter, was to "... established at the seat of government of the United States a Department of Agriculture, the general designs and duties of which shall be to acquire and to diffuse among the people of the United States useful information on subjects connected with agriculture in the most general and comprehensive sense of that word, and to procure, propagate, and distribute among the people new and valuable seeds and plants." Research and the diffusion of innovation remained the main purpose of USDA for the next century.

Agricultural R&D Pays Off Big

Few investments are consistently as profitable as agricultural R&D. Phillip Pardey pointed to research that shows it pays back a minimum of around 30% a year. And this is no temporary phenomenon. His data go back more than a century. A dollar invested in public research at a land grant university can be expected to pay back $30-32 worth of benefits to society. He addressed the concern that maybe we have already done the easy parts and that gains would drop off in future. After all, the law of diminishing returns is a key - and depressing - factor of economic thought. There is no evidence that this is happening with agricultural R&D.

For the century after the founding of the USDA and the land grant colleges, America dominated agricultural research and the application of it to farms and fields. We were so successful that we were able to forget the basis of our prosperity that filled our stomachs, take it for granted. We started to see the Department of Agriculture as more a way to divide the pie, distribute the affluence, than to enhance and grow it.

Other countries have stepped up. American agricultural R&D has declined in relative AND even in absolute terms. In the last few years, China has invested more than the U.S. and others like India and Brazil have stepped up their investments. This is not a bad thing. We can all benefit when science advances and we certainly can take advantage of partnerships with others. I have long believed in the utility of sharing and worked toward that goal when I served in Brazil and elsewhere. But we do need to be concerned with our agricultural exports. We should not sacrifice our leadership in agriculture and the science of agriculture for lack of attention or neglecting the need to renew ourselves.

And all of us are interested in improvement in agriculture. As Phillip Pardey commented, some of us farm and all of us eat.

Not to Move Forward is to Go Backward, and Not Only Relatively

It is an illusion when we feel ourselves going backwards as bus or a train passes us, but it is not illusion that we lose our place when others move faster than we do. We might be willing to accept this, as long as we keep what we have, but that is not the reality.

Nature is constantly conspiring against us. We are in a perpetual arms race with bugs, weeds and pathogens of all description. We adapt to them with new crop varieties, innovative management techniques or chemicals. They adapt to us by evolving ways to get around our best efforts. It is depressing to realize that we sometimes have to run as fast as we can just to stay in place, but that is the sort of world we have.

This means that we need to do research and development not only to move ahead but also not to lose ground. Smith & Pardey estimate that at least 50% & maybe as much as 70% of agricultural R&D is just enough for us to keep what we have.

Private Public Partnerships

We did better in the past, but nobody advocates going back or assumes that we can recreate a golden age. As will most golden ages, it reads and is remembered better than it was lived, but beyond that conditions have changed. What worked then may not be appropriate now. We have more and a greater variety of resources and challenges. A generation ago, we needed to concentrate brains, facilities and money, and we could divide tasks into discrete units. Today, knowledge, experts and resources are more distributed, and tasks are multi-disciplinary in new ways. Instead of concentrating the brains and scientific brawn, we may have to lend and borrow. Some people call this a "churn;" others "brain sharing." No matter what you call it, it requires a more open and collaborative system.

Government can and must play a big role in this intellectual ecosystem. Private firms and organizations may borrow and lend brains and resources, but many of the best development are difficult to monetize or may take too many years to pay off. Many agricultural innovations may take a quarter century or more to show results. No private firm can wait that out. And the benefits will likely be dispersed, a product or development freely open to many in general tends to be profitable to nobody in particular.

And we should not overlook government's role as a convenor and connector, a catalyst that can make it possible for other to create. No private firm can consistently play this role and getting potential competitors together to collaborate may even violate anti-trust laws. In other words, government often needs a seat at this table and sometimes needs to provide the table.

Figuring out how and where to divide intellectual property is something beyond my pay grade. And I -again - recommend the research done by Smith & Pardey and maybe stop over at AEI next time they have a program like this.

Posted by Christine & John at December 12, 2017 8:26 PM
Comment #422359

So C&J, the thrust of the message from AEI seems to be China is spending more than us on agricultural research so we need to cut other programs from the agricultural dept. so we can spend more… Is that what they are saying?

Posted by: j2t2 at December 13, 2017 12:00 AM
Comment #422378


That is just one part of a complex interrelationships.

I would advocate cutting subsidies for crop insurance, which is mostly a giveaway to rich farmers, since there is not cap, and encourages risky behaviors. It also encourages expansion of cropping on marginal lands, so the insurance actually subsidizes ecological destruction. I would advocate cutting those subsidies even if the money was not redirected.

I am not so concerned that China is spending more. I have long advocated increased cross fertilization, as I allude above. It is about time other countries stepped up and pulled their own weight. But I think it important for our own country to remain a leader.

Posted by: Christine & John at December 13, 2017 9:12 AM
Comment #422383

Crop insurance seems to only pay for some of the costs to plant a field after the crop is destroyed by hail or so such. Not sure how it has anything to do with risky behaviors unless you consider farming a risky business. Which of course it is a risky venture with small profit margins for most farmers in this country. Hail can hit any field and if it does the farmer is stuck with a failed crop in the ground, the costs to get the failed crop out of the field and the loss of profit from the crop. IMHO the crop insurance should be expanded and help the smaller farmer whose livelihood is dependent on the money from the crop to be able to plant the next season.

Are you sure this isn’t some veiled attempt to get rid of food stamp programs at the dept. of agriculture?

Posted by: j2t2 at December 13, 2017 10:45 AM
Comment #422385


There are risks in any business. If you want to hedge or insure, you can do that. Absent subsidies, the rates you pay will reflect the risk you take. With subsidies, your risk is … subsidized.

Think of it in the gambling paradigm because that is what it resembles. If you flip a fair coin, you have a 50-50 chance. You are unlikely to bet on these odds, since the expected value of the payoff is zero. You expect to only get your money back and so there is no value in the work.

If you wanted to get “insurance” against a bad outcome, it would cost you more than you could expect to gain. BUT if someone would subsidize your premiums, making the otherwise bad bet becomes a good one.

Example, you subsidize my insurance against flipping a tails. Maybe you pay 70% of the premium. So I bet. If heads comes up, I double my money. If tails comes up, my insurance pays up. In a public policy context, we have privatized gains and socialized losses. My bet becomes a sure thing. Essentially, it costs me 30% to win 100% all the time.

Farming is a risky business. We can, should and do many things to help. But we should not encourage excess risk taking by subsidizing it.

I would have thought a leftist like you would be against these subsidies too, since the vast bulk of them go to rich farmers or corporations, probably mostly Republicans.

Re Food Stamps - I think that system is easily abused, but I am not considering that as part of this equation. It is politically too hot to touch. I am interested in improving R&D and devoting more to conservation. I don’t need to fight the Food Stamp battle too, so I decline the engagement. There is sufficient waste, fraud and abuse in other places.

Posted by: Christine & John at December 13, 2017 12:42 PM
Comment #422407

I thought food stamps are a part of the dept. of Agriculture C&J. How can we discuss eliminating programs in the dept. of agriculture without acknowledging the food stamp program. Especially with conservatives in charge of the government?

I know AEI says the crop insurance subsidies are responsible for the farmers “gambling” on risky crops and less productive lands but they don’t seem to prove this in the study. One could just as easily point the finger at the low prices for crops and the need to maximize yields to make end meet as the culprit behind using less productive lands.

Increasing the R&D budget to help the giant corporations like Monsanto monopolize the market will take money. Do you propose the research be done by these corporations at their own expense because if they do it they would get the patent…right? We can’t expect the middle class to pay for it in taxes can we?

Or are you suggesting the land grant colleges do the R&D supported by grants from the DoA? I would support this effort more than the corporate grants as it would keep the new technologies heading in a “best for all” direction not into the “how can we maximize profit” direction corporations.

The question is why can’t we simply allocate more funds to R&D without dropping funding on other DoA programs? Under Trumps “America first” ideology we should be able to reduce the military budget as we bring the troops back to defend the homeland..right?

Posted by: j2t2 at December 14, 2017 3:14 PM
Comment #422416


Food stamps are indeed part of USDA and the biggest part.

The money spent on conservation and research is a very small part. We can set aside food stamps as politically untouchable. There is sufficient money that can be saved by moving money from crop insurance, which is mostly a subsidy for rich investors and has the added disadvantage of encouraging environmentally risky practices.

Re Monsanto - this is unaffected. Large firms like Monsanto already do their own R&D and they own the results. More public R&D would allow a greater access to new techniques and developments.

Land Grant colleges already do most of the USDA funded research. I advocate that they do more.

Re giving more money to USDA in general, I would be fine with that. Politically it is unlikely. Just as I have kept away from food stamps for political reasons, I understand that the politics of getting more money is something I could not count on and so do not venture an opinion.

Posted by: Christine & John at December 15, 2017 9:07 AM
Comment #422419


In an age when American institutions are under attack from many sides, it is refreshing to read such a full-throated defense of traditional agricultural R&D practices. People often get upset by the size of the Federal Government’s bureaucracy. While some highly visible pieces might be due for reform, it is easy to forget the many benefits emanating from the more hidden parts. Rightly so, these hidden successes are often the result of hard work from civil servants who know their place and don’t attempt to accomplish things better done in the private sector.

Thank you for sharing your summary of AEI’s work.

Posted by: Warren Porter at December 15, 2017 9:55 AM
Comment #422420


Most of the good stuff is behind the scenes and not well known. It is the politics that pollutes government.

Back in my old job, I had the chance to go to Geneva to work with some of the UN operations there. I am not a UN fan generally, but most of that impression comes from the New York branch, where tin pot dictators attack the USA and make up silly resolutions against Israel, while they oppress their people with their greed and incompetence (end of editorial comment).

BUT in Geneva there are all kinds of under-the-radar operations making the world work better. They are the unsexy oil that makes the machine go.

Posted by: Christine & John at December 15, 2017 10:04 AM
Comment #422424
People often get upset by the size of the Federal Government’s bureaucracy. Posted by: Warren Porter at December 15, 2017 9:55 AM

It’s been exactly the same size for decades. Private contractors are providing a much more expensive method of getting the same things done, like USIS, which vetted Snowden to work for Booz Allen Hamilton, a good example of the kind of job they do.

I’m completely in favor of the UN moving from NYC to Geneva. They’re only in NY because the Rockefellers wanted them there. It’s appropriate as our position in world leadership has ended at least until 2021.

Posted by: ohrealy at December 15, 2017 12:44 PM
Comment #422427


I do not advocate moving the NY operation to Geneva. That is likely to pollute the Geneva operation. I was just observing that UN offices located in Geneva are those that we do not see as often but do most of the useful work done by the UN. These are the “back office” programs.

Re Rockefeller - John D jr donated the land, for which the world was grateful. The UN was a good idea and worked well for a while. It still does some useful things. The fact that the New York branch is more bombastic and less useful has to do with UN politics, not location.

Posted by: Christine & John at December 15, 2017 1:09 PM
Comment #422436

Rockefeller was trying to make sure that site wasn’t built up by a competitor, so he considered the donation worthwhile. The UN would be better off someplace other than NY since our participation in it is now problematic, while other nations participate willingly. I couldn’t care less about the speeches, which most Americans would never hear about if they were happening elsewhere.

Posted by: ohrealy at December 15, 2017 4:01 PM
Comment #422443


Maybe East Asia would be a better place to situate the HQ? It’d be closer to the center of global human population and closer to the rising global powers.

Posted by: Warren Porter at December 15, 2017 5:54 PM
Comment #422444

WP, it always bugged me that India wasn’t a permanent member of the security council. The Potala Palace in Lhasa could be the perfect location for UN headquarters, on top of the world. Shanghai, the Mekong Delta, and many other Asian locations are being affected by rising seas, while we think about the value of real estate in Miami and Ft. Lauderdale. Every time they show someone in Miami on tv, they show the same backdrop. I keep thinking about someone who lives in that center tall building, the last of his name. He can live on his big yacht, or the smaller one.

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