Why farms die and should die

Vincent Geloso Economics, Liberty, , , , ,

In Canada, I have the frustrating habit of criticizing government support to the agricultural sector especially entry-barriers in the form of production quotas. Most of those policies are regressive in the sense that they reallocate income from the poorest to the richest. In fact, their entire aim is to artificially increase the income of farmers (especially dairy and poultry farmers) at the expense of the rest of the population. However, when lobbyists for these subsidies come out in public, they do so under different disguises. Their favorite? Farms are dying.

In each radio debate where that boogeyman is raised, I reply that “yes, they are dying and its a good thing”. If we can feed more and more people with less and less farmers using less and less land, that’s a good thing. In fact, it’s the greatest thing that happened in economic history. Less two centuries ago, 90% of the workers in some western economies were involved in agricultural activities. Today, that proportion has fallen to less than 1.5%. Thousands of farms disappeared, we liberated millions of acres of land to return to their natural state and in the process, we became rich and well-fed!

In testimony of this fact, which is my favorite economic history fact, I decided to recompute a graph by Mark Perry of the American Enterprise Institute but I added the GDP per capita figures for the same period (1790 to 2013).

GDPagriculture

Yes, let the farms die. Let the most productive stay in the fields and let them feed humanity while the others become engineers, doctors, teachers, businessmen, welders, carpenters or whatever trade they are best at!

7 thoughts on “Why farms die and should die”

  1. I saw a doco , a few years back, filmed in Tasmania – it’s an island state , part of Australia and to the south of us. This guy was a potato farmer on the coast, was going broke, and then he saw a thing on TV which described the “Golfers Bucket List ” , so he turned his beach side farm into a golf course. He has done well out of it, and drives a brand new Toyota Landcruiser. He just has to mow it. The golf course employs your normal hotel staff, a chef, and some room service people. Seems like a sensible enough idea.

    Reply

  2. There are a lot of one-dimensional people who love to fall for single facts like “farms are dying” without understanding trade specialization and the effects of greater efficiency. But people don’t need to understand these things, that’s the real magic of the free market. Act as you would freely, work to survive, and other doing the same will help you. Tell others how to help themselves, or say that something like farms can not decrease and you’re harming everyone.

    Reply

  5. Indeed, farms should die off! If more GDP can be generated by letting EVERY farm wither & die, then so be it. Just transfer the “surplus population” of labourers into more economically productive tasks that pay similar wages; such as Dollar Stores, or Payday Loan centres. What’s so special about food production anyway? Farmland is a waste of space that could be more productively used as parking for big-box stores, or as country clubs that reward society’s most productive citizens. My local country club charges about the same for ONE annual membership fee as the farmer who used to own the property made in an average year. Unfortunately for the farmer, he lacked the vision to see this and sold his property for about 10 club memberships.

    The reality is that 50 acres of parking generates FAR more GDP than 50 acres of farmland ever will. Where I live, your average parking space rents for $2.50-$3.00 (albeit Canadian) per half hour. With just 3 full parking spots, you could easily cover the salary of a farm worker whose annual production might only feed a couple thousand people. As farmland, that property would generate only a fraction of the wealth that putting hundreds of parking spaces on it would. Not only that, thanks to automation, the parking lot would require NO employees at all. The GDP per employee ratio would shoot through the roof!

    Both the above examples show how blatantly obvious the correct economic decision is. However, the Economic Necromancers out there will still say, “But food production is essential. We must interfere with the Free Market to keep farms alive.” But that’s pure folly. As we all know, price is the most sure-fire method of measuring what society truly values. If food was so damned important, its economic value would be FAR higher than it is. Farms would not be struggling. They would be exceedingly profitable, just as they were centuries ago. Sorry food, but your day has come & gone. The Market has spoken. Time to close up shop and head home!

    But to be fair to the Economic Necromancers, the evidence you presented here to support your bold declaration is admittedly…underwhelming. Yes, that graph is really just 2 completely unrelated lines heading in opposite directions over centuries. The lines could just as easily be replaced with “Percentage Decline in Regular Churchgoers” verses “Money Spent on Cat Sweaters Per Capita”. And yes, the units of measurement are scaled in such a way that makes the post-WW2 farm labour rates appear to drop almost exponentially, when the numbers were actually much closer to levelling off. Meanwhile, the GDP Per Capita line was scaled in such a way as to minimize its massive post-WW2 rise, thus making the 2 lines appear to directly correspond with each other. It’s completely misleading, but good work nonetheless.

    That’s because all that really matters is that the graph aligns with what we all already knew to be true; that there’s a direct correlation between farm labour decline and a rise in GDP. We just needed a more demonstrative chart to confirm it. But this artistic licence in no way changes the economic reality that fewer workers mean more GDP. This is why, not just farming, but ALL sectors of the economy should do their level best to eliminate every employee possible in order to increase GDP. The manufacturing sector has done a fantastic job. It’s plummeted to less than 10% of the workforce in mere decades, centuries faster than it took farming. And thanks to automation & computer technology, a virtually employee-free future will soon be possible for nearly ALL sectors of the economy. As a result, GDP will undoubtedly rocket into the stratosphere.

    But again, the Economic Necromancers will say “What should we do with those unemployed farm labourers?” They will call for tremendous amounts of money to be wasted trying to resist the power of the Free Market. But resistance is futile. Just let nature take its course. As you say, farm unemployment is a GOOD thing for society. The surplus population of labourers will naturally gravitate toward more productive occupations that they excel at. As you say, most farm labourers would be just as capable as doctors, engineers, teachers, or businessmen. Certainly, they couldn’t do a worse job than the folks running AIG, Lehman Brothers, or a Too Big To Fail bank. (If they didn’t have servants who did it for them, one wonders if they could figure out how to get dressed in the morning.)

    But unfortunately, just as with quota-restricted farming, there are entrance barriers to these alternative jobs. Barriers that limit entry into a field only reduce production and artificially drive up prices. Imagine how much cheaper milk would be if dairy quotas didn’t restrict supply and allow dairy farmers to make a decent income. Likewise, imagine if you didn’t need a (state subsidized) university degree to perform surgery, design skyscrapers, teach chemistry, or invent Credit Default Swaps. Just think of how much cheaper all these products would be without artificial barriers preventing entry into these sectors. Sure, there might be some quality control issues, but like with farming, the wheat will eventually be separated from the chaff. As always, the best will rise to the top without interfering with The Market.

    Unfortunately, there will be some dislocated workers who excel at nothing else, or at least nothing economically viable. They may be forced to withdraw from The Human Marketplace altogether. Now, I’m not suggesting for a moment they be forcibly taken by train to camps. That’s Fascism, not Libertarianism! I’m thinking more along the lines of the Madison Square Garden scene from Soylent Green, where surplus labourers voluntarily choose to be sent to the Great Marketplace in the sky in a humane& caring way, surrounded by friends & family members of 70’s sitcoms.
    But just like with farms dying off, this die-off should be welcomed with open arms. Just as with unproductive farms, keeping unproductive labourers alive merely increases the costs of everything to the rest of us. A die-off of surplus labour is far more economically productive than it being a burden on society. Not only will government resources stop being drained, it will immediately increase the GDP per capita. As an added bonus, the permanent withdrawal of surplus supply in the labour market will have an upward impact on wages for all labourers remaining. As I’m sure you will agree, this is a positive thing for society as a whole.

    More & more sectors of the economy neither need, nor want, nearly as many labourers as they once did. As a result, dealing with labour surpluses with be an increasingly important issue going into the future. As with farming, making the right decision (the decision to do nothing) will be vital to the economy. Over time, history will undoubtedly prove our “Irish Wake” approach to be the correct one!

    Reply

Please keep it civil