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Regenerative Agriculture and the Denial of Comparative Advantage: Part 2

Public Granaries
Writing in 1770, the French economist and statesman Anne-Robert-Jacques Turgot observed that there were two ways to deal with a price spike that followed a bad harvest. The first was to transport “grain from provinces where the harvest…

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Public Granaries

Writing in 1770, the French economist and statesman Anne-Robert-Jacques Turgot observed that there were two ways to deal with a price spike that followed a bad harvest. The first was to transport “grain from provinces where the harvest is good to those where it is bad.” The other was to “store it up in abundant years for use in famine years.” Turgot wrote that the “two methods entail costs, and free trade will always choose that which, all told, entails the least cost.” He added, that “barring special circum­stances,” transportation was usually preferable since “the return of the funds is speedier” and the “waste product is less considerable, the grain being consumed the sooner.” Very often though, governments placed “obstacles in the way of transportation” and tipped the balance in favor of storage.

In the two centuries and a half since Turgot wrote these lines, debates about food security have essentially been along similar lines. On the one hand are supporters of the so-called trade-based approach who promise a more abundant, affordable and reliable food supply through reliance on multiple foreign suppliers with comparative advantages in agricultural production. On the other are supporters of greater autarky and regional self-sufficiency. While the former had the upper hand at the end of the twentieth century, the latter have found new audiences in the wake of the 2007-2008 food crisis and the COVID-19 pandemic.

One key problem for supporters of increased local self-reliance, however, is that because of natural calamities ranging from droughts and floods to pests and diseases, no traditional agricultural systems could consistently produce enough food to eliminate malnutrition and recurring famine and starvation. The Roman poet Virgil alluded to some of these problems in his Georgics. Weeds invaded the land. Voles and mice spoiled the threshing floor. Cranes and geese attacked the crops. Goats ate the young vines. Moles, toads and ants feasted on or undermined the farmer’s work. Although he did not mention fungus and insect pests, Virgil added that whatever production survived this onslaught could then be damaged or wiped out by summer droughts and winter windstorms, snow, hail or heavy rain. Even in good years, he added, a field might be accidentally set on fire.

Even in good years, the key challenge of traditional agricultural systems was to make it through the “lean season” between crops, meaning the period of greatest scarcity before the first availability of new crops. For instance, in England the late spring, and especially the month of May, was historically referred to as the “starving time” or the “hungry gap.” This is why granaries were invented over ten thousand years ago. Going back at least to Pharaonic Egypt and Han China, some of these were built and controlled by the state, either for provisioning bureaucrats and soldiers or else for the stated rationale of being filled in good harvest seasons and emptied in lean ones, thus softening hunger cycles and price spikes.

Some prominent present-day proponents of greater local food production have picked up on the absolute necessity of greater storage capacity to fulfill their vision. Journalist Michael Pollan thus argued in an influential essay that the “the food security of billions of people around the world” would benefit from a government-run strategic grain reserve which would “prevent huge swings in commodity prices” and “provide some cushion for world food stocks.” By buying and storing grain “when it is cheap and sell it when it is dear,” he points out, public-minded bureaucrats would “moderat[e] price swings in both directions and discourage[e] speculation.” Needless to say, in recent decades public granaries and “strategic” reserves were also often a key component of foreign aid and protectionist agricultural strategies. Their supporters have included the prestigious International Food Policy Research Institute (IFPRI); NGOs such as the Institute for Agriculture and Trade Policy (ITAP), OXFAM and Share the World’s Resources; several American consumer, environmental, religious and development groups and producers’ cartels; and the people in charge of the large-scale food reserves of India and China. Although recent proposals often take the form of special emergency reserves, international reserves, and “virtual reserves” controlled via commodity futures and options trading, their basic rationale remains the same.

Government-run food reserves, however, have a long history of failure. As several analysts have documented in more recent times, they typically proved “expensive, ineffective, and generally short-lived.” They also proved unable to outperform futures markets that, through the buying and selling of commodities and their future delivery contracts, already smooth out long-term price volatility. Recent failures include Sahelian community-managed cereal banks that are small subsidized warehouses located in subsistence farming communities. As could be expected, their managers are tasked to buy grain when it is cheap and to sell it later at a discounted (but nonetheless profitable) price when it is dear. In practice though, cereal “community-run banks often run out of money. Borrowers default; bank managers price-gouge or simply steal money, leaving villages as hungry as before.” As one former NGO employee observed, people “stole, managers disappeared, or the bank was located too far for some villagers to get their food.” Supporters who acknowledged these problems could only defend this strategy by arguing that a “flawed solution to fight hunger is better than no solution.”

Similar outcomes were observed in the strategic grain reserves set up throughout Africa under the aegis of the Food and Agricultural Organization of the United Nations after the first oil shock of the 1970s. As described by geographer Evan Fraser and journalist Andrew Rimas, two analysts not particularly enamored of market forces, the “seemingly limitless hoard” in silos proved “too tempting for local officials to ignore, and the program was plagued by politicking, mismanagement, and corruption.” A decade ago, an internal note suggested that about a third of the grain stock reserve under the supervision of the Food Corporation of India (FCI) was rotting in the open because of a lack of adequate storage space. Despite the “full knowledge of the precarious condition of food grains, governments, both at the centre and in states, were unable to protect the country’s precious food reserves.” The FCI was also accused of being unable to move stocks after acquiring them and having difficulty carrying out fumigation, “thus making preservation difficult.” According to the news report, the “apathy of the people and officials responsible for feeding millions may result in more losses in years to come. The big question which needs to be answered is whether anyone would be held responsible for this seemingly criminal negligence.”

Far from being aberrations, however, such outcomes are typical of the history of government-run food reserves. Apart from the perennial temptation of public officials to dip into them for their personal benefit, they also proved extremely costly and technically challenging, especially before the development of modern technologies. Among other challenges, their operators had to aerate and turn the grain, control moisture levels, sell and replace the grain frequently if it was to be used as seeds, and repair and maintain large structures. Not surprisingly, Turgot observed that the large granaries built by the French state always increased “the share of the rats and weevils to no purpose.” At about the same time, the Englishman Walter Harte considered “public granaries quite detrimental, rather than useful in a free state” for “[n]ational and even provincial magazines of corn” quite naturally produced monopoly, an “undue fear of famine” and “much anxiety about hoarding up grain” that would then inevitably create pressures to stop exports. These factors, he added, were “one of the surest methods I know of bringing on a dearth.”

The political philosopher and politician Edmund Burke similarly observed in 1795 that

the construction of such granaries throughout the kingdom, would be at an expense beyond all calculation. The keeping them up would be at a great charge. The management and attendance would require an army of agents, store-keepers, clerks, and servants. The capital to be employed in the purchase of grain would be enormous. The waste, decay, and corruption, would be a dreadful drawback on the whole dealing; and the dissatisfaction of the people, at having decayed, tainted, or corrupted corn sold to them, as must be the case, would be serious. This climate (whatever others may be) is not favourable to granaries, where wheat is to be kept for any time. The best, and indeed the only good granary, is the rick-yard of the farmer…

The Belgian historian Louis Torfs further added in 1839 that public granary managers who could rely on the public purse were never as careful in their purchases as private individuals who spent their own money. Other problems were that massive state-sponsored purchases drove up prices for everyone and safeguarding large warehouses during turbulent times always proved nearly impossible. Besides, while the building and maintenance of massive structures entailed enormous sums of money, it paled in comparison to the amounts required to provision a decent sized city for even a short period of time. As such, Torfs stated, the very notion of effective public granaries had always been impractical (“sans aucune valeur pratique”). Efficient provisioning, he concluded, should be left in the hands of farmers and merchants, with government intervention limited to guaranteeing freedom to trade and private property rights. In the end, as William Harte argued, the best public granaries were “vast tracts of country covered with corn,” wherever they may be.

With the benefit of hindsight, we now know that trade liberalization and technical advances have delivered an ever more abundant, cheaper and more secure food supply. Promoting “solutions” that have always been plagued with unavoidable problems can only deliver the more expensive, scarcer and less food secure world of yesterday.

 


Pierre Desrochers, is Associate Professor of Geography, University of Toronto Mississauga.

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Easyjet share price down 3% as pandemic losses hit £2.2 billion

The EasyJet share price shed over 3% today to give up a chunk of…
The post Easyjet share price down 3% as pandemic losses hit £2.2 billion first appeared on Trading and Investment News.

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The EasyJet share price shed over 3% today to give up a chunk of the gains the budget airline had made earlier in the week. The new slide came after it announced a £213 loss for the last quarter of the year covering the Christmas period, taking losses for the Covid-19 pandemic period to £2.2 billion. The airline also told investors it is still burning through £150 million in cash every month as it struggles to build capacity back up.

The short-haul airline that makes most of its income shuttling holidaymakers and business travellers around Europe said it is still only operating at around half of its pre-pandemic capacity. However, it is hopeful that pent-up demand and an end to travel restrictions mean it will return to pre-pandemic levels by summer and enjoy much brisker trade than of late over the Easter and spring period.

easy jet plc

But before then the airline company will again have to absorb deep losses over the current quarter, which is traditionally its weakest of the year. Even a strong summer period, think most analysts, will be insufficient to see the company return to profit this year. EasyJet’s value is still less than half of what it was in February 2020 before the coronavirus-induced market sell-off that hit later that month and saw markets dive into March before starting to recover. The share prices of rival budget airlines Ryanair and WizzAir have recovered much more strongly in comparison to EasyJet’s and are now close to their pre-pandemic levels. There have been concerns around whether EasyJet could survive the pandemic but investors contributed £1.2 billion last autumn to bolster its balance sheet.

The EasyJet share price is closing the week at around £6.15 compared to over £15 before the pandemic. However, there is now hope the worst may be behind the airline and it can begin its, potentially long, journey back to health. Chief executive John Lundgren attempted to soften the announcement of another hefty loss with a bullish statement on where things go from here for his company:

“Booking volumes jumped in the UK following the welcome reduction of travel restrictions announced on January 5, which have been sustained and given a further boost from the UK government’s decision this week to remove all testing requirements.”

“We believe testing for travel across our network should soon become a thing of the past. We see a strong summer ahead, with pent-up demand that will see easyJet returning to near-2019 levels of capacity, with UK beach and leisure routes performing particularly well.”

For now, however, forward guidance for the immediate quarter remains cautious with the company admitting it has fallen short of its expectations to be at 80% capacity by this quarter, sitting at just 67%. However, with most analysts confident the company will eventually return to strength, and profit in the 2022-23 financial year, EasyJet shares could offer a good buying opportunity at current levels.

The post Easyjet share price down 3% as pandemic losses hit £2.2 billion first appeared on Trading and Investment News.

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Xi Jinping Seeking “Global Domination”: Mike Pompeo

Xi Jinping Seeking "Global Domination": Mike Pompeo

Authored by Nathan Worcester via The Epoch Times,

Mike Pompeo said Chinese leader Xi Jinping wants “global domination—hegemony for the Chinese Communist Party,” warning that the…

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Xi Jinping Seeking "Global Domination": Mike Pompeo

Authored by Nathan Worcester via The Epoch Times,

Mike Pompeo said Chinese leader Xi Jinping wants “global domination—hegemony for the Chinese Communist Party,” warning that the rise of the Chinese Communist Party (CCP) could destroy the rules-based international order in place since the end of World War II.

“It’s not about putting a Chinese tank division in Taiwan. It’s about accreting political power and influence throughout the world,” Pompeo said.

Pompeo, who served first as CIA director and later as Secretary of State under President Donald Trump, made the statement in an appearance at the Argus Americas Crude Summit 2022.

He said his tenure as CIA director came at a time when U.S. attention had to shift from terrorism to other threats, foremost among them the CCP.

He added that a “global awakening” is taking place about what he sees as the ambitions of the CCP.

“Most of the credit goes to Xi Jinping. He foisted a virus on the world, for goodness’ sake, and refuses to let anybody go figure out where it came from,” Pompeo said.

The CCP has met with international criticism for blocking access to the Wuhan Institute of Virology (WIV) and related facilities in Wuhan by the United Nations. Many scientists and journalists suspect the CCP virus that causes COVID-19 originated at the WIV.

Pompeo also commented on ongoing trade-related conflict between the United States and China, raising questions about the United States’ initial decision to open up to China in the context of its primary Cold War conflict with China’s then-rival, the Soviet Union.

“The trade war began maybe in 1972,” he said, referring to Henry Kissinger and President Richard Nixon’s visit to the People’s Republic of China in the context of restoring diplomatic ties.

“Maybe it was the right thing to do in 1972—but the trade war long predates the Trump administration.”

“We encouraged business together. I don’t fault the businesses who went there. Notice the past tense of this. America’s policy encouraged connectivity with the Chinese Communist Party. Today, that is an enormous liability for the world, and Xi Jinping knows that,” Pompeo said.

Tyler Durden Fri, 01/28/2022 - 23:00

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Authoritarian Madness: The Slippery Slope From Lockdowns To Concentration Camps

Authoritarian Madness: The Slippery Slope From Lockdowns To Concentration Camps

Authored by John W. Whitehead & Nisha Whitehead via The Rutherford Institute,

“All the Dachaus must remain standing. The Dachaus, the Belsens, the Buchenwal

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Authoritarian Madness: The Slippery Slope From Lockdowns To Concentration Camps

Authored by John W. Whitehead & Nisha Whitehead via The Rutherford Institute,

“All the Dachaus must remain standing. The Dachaus, the Belsens, the Buchenwald, the Auschwitzes—all of them. They must remain standing because they are a monument to a moment in time when some men decided to turn the Earth into a graveyard. Into it they shoveled all of their reason, their logic, their knowledge, but worst of all, their conscience. And the moment we forget this, the moment we cease to be haunted by its remembrance, then we become the gravediggers.”

- Rod Serling, Deaths-Head Revisited

In the politically charged, polarizing tug-of-war that is the debate over COVID-19, we find ourselves buffeted by fear over a viral pandemic that continues to wreak havoc with lives and the economy, threats of vaccine mandates and financial penalties for noncompliance, and discord over how to legislate the public good without sacrificing individual liberty.

The discord is getting more discordant by the day.

Just recently, for instance, the Salt Lake Tribune Editorial Board suggested that government officials should mandate mass vaccinations and deploy the National Guard “to ensure that people without proof of vaccination would not be allowed, well, anywhere.”

In other words, lock up the unvaccinated and use the military to determine who gets to be “free.”

These tactics have been used before.

This is why significant numbers of people are worried: because this is the slippery slope that starts with well-meaning intentions for the greater good and ends with tyrannical abuses no one should tolerate.

For a glimpse at what the future might look like if such a policy were to be enforced, look beyond America’s borders.

In Italy, the unvaccinated are banned from restaurants, bars and public transportation, and could face suspensions from work and monthly fines. Similarly, France will ban the unvaccinated from most public venues.

In Austria, anyone who has not complied with the vaccine mandate could face fines up to $4100. Police will be authorized to carry out routine checks and demand proof of vaccination, with penalties of as much as $685 for failure to do so.

In China, which has adopted a zero tolerance, “zero COVID” strategy, whole cities—some with populations in the tens of millions—are being forced into home lockdowns for weeks on end, resulting in mass shortages of food and household supplies. Reports have surfaced of residents “trading cigarettes for cabbage, dishwashing liquid for apples and sanitary pads for a small pile of vegetables. One resident traded a Nintendo Switch console for a packet of instant noodles and two steamed buns.”

For those unfortunate enough to contract COVID-19, China has constructed “quarantine camps” throughout the country: massive complexes boasting thousands of small, metal boxes containing little more than a bed and a toilet. Detainees—including children, pregnant women and the elderly— were reportedly ordered to leave their homes in the middle of the night, transported to the quarantine camps in buses and held in isolation.

If this last scenario sounds chillingly familiar, it should.

Eighty years ago, another authoritarian regime established more than 44,000 quarantine camps for those perceived as “enemies of the state”: racially inferior, politically unacceptable or simply noncompliant.

While the majority of those imprisoned in the Nazi concentration camps, forced labor camps, incarceration sites and ghettos were Jews, there were also Polish nationals, gypsies, Russians, political dissidents, resistance fighters, Jehovah’s Witnesses, and homosexuals.

Culturally, we have become so fixated on the mass murders of Jewish prisoners by the Nazis that we overlook the fact that the purpose of these concentration camps were initially intended to “incarcerate and intimidate the leaders of political, social, and cultural movements that the Nazis perceived to be a threat to the survival of the regime.”

As the U.S. Holocaust Memorial Museum explains:

“Most prisoners in the early concentration camps were political prisoners—German Communists, Socialists, Social Democrats—as well as Roma (Gypsies), Jehovah's Witnesses, homosexuals, and persons accused of ‘asocial’ or socially deviant behavior. Many of these sites were called concentration camps. The term concentration camp refers to a camp in which people are detained or confined, usually under harsh conditions and without regard to legal norms of arrest and imprisonment that are acceptable in a constitutional democracy.”

How do you get from there to here, from Auschwitz concentration camps to COVID quarantine centers?

Connect the dots.

You don’t have to be unvaccinated or a conspiracy theorist or even anti-government to be worried about what lies ahead. You just have to recognize the truth in the warning: power corrupts, and absolute power corrupts absolutely.

This is not about COVID-19. Nor is it about politics, populist movements, or any particular country.

This is about what happens when good, generally decent people—distracted by manufactured crises, polarizing politics, and fighting that divides the populace into warring “us vs. them” camps—fail to take note of the looming danger that threatens to wipe freedom from the map and place us all in chains.

It’s about what happens when any government is empowered to adopt a comply-or-suffer-the-consequences mindset that is enforced through mandates, lockdowns, penalties, detention centers, martial law, and a disregard for the rights of the individual.

The slippery slope begins in just this way, with propaganda campaigns about the public good being more important than individual liberty, and it ends with lockdowns and concentration camps.

The danger signs are everywhere.

Claudio Ronco, a 66-year-old Orthodox Jew and a specialist in 18th-century music, recognizes the signs. Because of his decision to remain unvaccinated, Ronco is trapped inside his house, unable to move about in public without a digital vaccination card. He can no longer board a plane, check into a hotel, eat at a restaurant or get a coffee at a bar. He has been ostracized by friends, shut out of public life, and will soon face monthly fines for insisting on his right to bodily integrity and individual freedom.

For all intents and purposes, Ronco has become an undesirable in the eyes of the government, forced into isolation so he doesn’t risk contaminating the rest of the populace.

This is the slippery slope: a government empowered to restrict movements, limit individual liberty, and isolate “undesirables” to prevent the spread of a disease is a government that has the power to lockdown a country, label whole segments of the population a danger to national security, and force those undesirables—a.k.a. extremists, dissidents, troublemakers, etc.—into isolation so they don’t contaminate the rest of the populace.

The world has been down this road before, too.

Others have ignored the warning signs. We cannot afford to do so.

As historian Milton Mayer recounts in his seminal book on Hitler’s rise to power, They Thought They Were Free:

“Most of us did not want to think about fundamental things and never had. There was no need to. Nazism gave us some dreadful, fundamental things to think about—we were decent people‑—and kept us so busy with continuous changes and 'crises' and so fascinated, yes, fascinated, by the machinations of the 'national enemies', without and within, that we had no time to think about these dreadful things that were growing, little by little, all around us.”

The German people chose to ignore the truth and believe the lie.

They were not oblivious to the horrors taking place around them. As historian Robert Gellately points out, “[A]nyone in Nazi Germany who wanted to find out about the Gestapo, the concentration camps, and the campaigns of discrimination and persecutions need only read the newspapers.”

The warning signs were there, blinking incessantly like large neon signs.

“Still,” Gellately writes, “the vast majority voted in favor of Nazism, and in spite of what they could read in the press and hear by word of mouth about the secret police, the concentration camps, official anti-Semitism, and so on. . . . [T]here is no getting away from the fact that at that moment, ‘the vast majority of the German people backed him.’”

Half a century later, the wife of a prominent German historian, neither of whom were members of the Nazi party, opined: “[O]n the whole, everyone felt well. . . . And there were certainly eighty percent who lived productively and positively throughout the time. . . . We also had good years. We had wonderful years.”

In other words, as long as their creature comforts remained undiminished, as long as their bank accounts remained flush, as long as they weren’t being locked up, locked down, discriminated against, persecuted, starved, beaten, shot, stripped, jailed or killed, life was good.

Life is good in America, too, as long as you’re able to keep cocooning yourself in political fantasies that depict a world in which your party is always right and everyone else is wrong, while distracting yourself with bread-and-circus entertainment that bears no resemblance to reality.

Indeed, life in America may be good for the privileged few who aren’t being locked up, locked down, discriminated against, persecuted, starved, beaten, shot, stripped, jailed or killed, but it’s getting worse by the day for the rest of us.

Which brings me back to the present crisis: COVID-19 is not the Holocaust, and those who advocate vaccine mandates, lockdowns and quarantine camps are not Hitler, but this still has the makings of a slippery slope.

The means do not justify the ends: we must find other ways of fighting a pandemic without resorting to mandates and lockdowns and concentration camps. To do otherwise is to lay the groundwork for another authoritarian monster to rise up and wreak havoc.

If we do not want to repeat the past, then we must learn from past mistakes.

January 27 marks Remembrance Day, the anniversary of the liberation of Auschwitz-Birkenau, a day for remembering those who died at the hands of Hitler’s henchmen and those who survived the horrors of the Nazi concentration camps.

Yet remembering is not enough. We can do better. We must do better.

As I make clear in my book Battlefield America: The War on the American People and in its fictional counterpart The Erik Blair Diaries, the world is teetering on the edge of authoritarian madness.

All it will take is one solid push for tyranny to prevail.

Tyler Durden Fri, 01/28/2022 - 23:40

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