The Next Globalization is Local:

Like any good Economics student, I start this article with a quote by Thomas Friedman in his definition in awkward-titled essay on “Glocalization”: “To absorb influences that naturally fit into and can enrich a culture: to resist those things that are truly alien and to compartmentalize those things that, while different, can be enjoyed and celebrated as different.” I now proceed to show the Economic justification for a more stable next generation of destructive free trade policies… [yes, it's more than just a trend.]

Julio

Check out the crazy new format! Inspired by twitter (follow me: http://twitter.com/eddiemill/), let me know what you think of it. Do you have time to read long posts?

Today’s post is about Julio, the man with the most beautiful farm in the world, my good friend and co-founder of a model farm that will change the world.

One to the team!

Just this Wednesday, I got a positive word from a long-time friend Jake Mercer. He studies Economics and non-profit management at Baldwin Wallace college, and is in to make this happen. This brings the team to two currently, and adds valuable fund-raising and farm experience to the venture. Let’s do this, Jake! Thanks for reading!

Things are happening very quickly now. The planning has passed the agriculture test, passed an economic analysis, with me in all the right places to make it happen. Next is deciding the structure: venturing into supply chain and cooperative design. This will be very well suited for my planned 7-month stay in Costa Rica, where I want to start. (For more information on this, visit:
Plan

This is an open invitation: do you want to join the team and work on this? There would be job options domestically or abroad, in any number of areas still to be defined. Please let me know on this, or any advice now before I go.

As an interim project, I’m taking a class with Oberlin College students in January on permaculture, an interesting variant on Organics. More on this soon!

-Eddie Miller
BU ‘10
http://eddiemill.wordpress.com/

International Trade doesn’t work for poor people

My mind was blown today with a critical fact of Economics.

Returns to scale are a market imperfection in competitive markets.

The entire theory of competition, markets, and trade is based on the assumption of constant or decreasing returns to scale. This concept defines all trade theory, and largely defines the policy that affects entire countries and allocation of the great bounty of the world’s resources.
But returns to scale are a fundamental aspect of international business. Returns to scale, the idea that cost is cheaper as a firm produces more, is what leads to giant consolidated multinationals, concentrated market power (and lobbying clout), and factory agriculture. These are the industries that dominate in foreign countries, the ones that can take advantage of returns to scale. In fact, when we tell developing countries to open themselves to foreign investment, it’s these types of industries that are built.

Governments acting for free trade is acting for industry.

Then we have returns to capital. The people who own more, are more likely to grow. What if allocation of resources is originally uneven? And information is uneven? That might lead to initial conditions being exaggerated in the form of country inequality: rather than poor countries being able to catch up they are already behind on the big scalable high-wage jobs.

What about comparative advantage? Poor people have no comparative advantage. There is no perfect awareness among non-Americans, as Winters et. al write “there is evidence that poorer households are less able to protect themselves or take advantage of positive opportunities by trade reform” (emphasis mine). Who produces these comparative-advantage goods? Savvy foreign entrepreneurs who CAN take advantage of opportunity. For them, they see cheap labor. And bring in technology that raises total country output/head. The poor not only lose what they were doing to import competition, but get unskilled, low wage jobs, the benefits of which go to capital owners and middle men who understand international systems, and their resources are used more intensively, not for them. Inequality is exaggerated (returns to scale, again) and most of the profit is siphoned into foreigners hands or reinvested in growth (capitalists are rarely satisfied to just make a profit). For what end does this growth aim? “Those that do benefit directly increase their input consumption, production, and consumption of goods and services.” The winners get to consume more. But CEOs and developed countries consistently score the saddest on international surveys! By making money, the poor remain a given (their wage will increase once everyone in the world’s does…) and externalize the things that do matter in the name of increased world consumption.

Jobs do not equal growth. Poor are not creators in capitalism. Those who earn more do not know happiness.

All free trade is based on fundamental assumptions. Decreasing returns to scale is one of them. In International Economics, everyone has perfect awareness of opportunities, and access to international demand if your idea is good enough. Unfortunately they’re stuck behind learning curves, and we tell them not to subsidize their domestic industry. This dynamic inequality impacts thousands of millions of people; the international flow of all goods and capital is based on a lie.

How can this fundamental feature be overlooked at phase 1 of Economic theory? How can the concepts of increasing returns to scale and market power be an oversight before any microeconomics graph is drawn? This changes everything.

I don’t know whether to cry or be angry at the institutions we’ve created. Thousands of people are starving, while their countries make exports for rich people. Poor people are told they can’t farm, because rich farmers and plantation owners are better at cutting costs. Poor people are not creators. And helping them isn’t profitable for business. Then we’d have to pay them more for our jobs.

-Eddie Miller
Boston University
A Global Organic Mindset: eddiemill.wordpress.com/

The “Next Big Thing”: Bioregional Organic for international community and development

As you may know, food has been the main focus of my life now for some time. Improving the inefficiencies that exist has been a priority since my journey to Costa Rica one year ago. Tonight I had a moment unlike many others, a vision of what’s next and my role in it: a transitional role to a new market optimal.

First a brief overview, then the idea.
How conventional food systems work (I’ll use coffee for the example) is that farmers produce the crop, sell to a local intermediary who then arranges for it to be picked up, processed, and sold through various [anonymous] supply chains. Essentially, before the coffee is brought to a supermarket it is combined into some “least-common-denominator-quality” brown grind and then set into cans that can compete on lowest price (think big Maxwell House tin). The farmer gets almost nothing for his crop (while in exchange not much is expected of him) and is subject to the price variability of the free market, not to mention the mercy of nature on his plot. Unorganized producers selling to intermediaries is the worst, and has resulted in many small farmers going out of business to larger plantations. It’s simply too inefficient.

Fair Trade can be seen as a direct response to that. Its goals are to a) ensure a more constant price for farmers b) raise awareness through consumers about the product they buy, and c) encourage cooperative selling and investment among small farmers. On these scales it performs very well in providing a more just cup of coffee. Unfortunately it requires that farmers already be organized, which excludes most smallholders.

Organic production is another step up. It is certified for its a) gains to farm and crop biodiversity, b) soil health and sustainability, and c) minimized reliance on external inputs which are energy-intensive, unessential, and harm the environment. If a farmer is fair trade and organic, he gets a better price. In the US, an organic farmer is likely a happier one that sells locally. It’s also a beloved industry that has been growing 12-20% per year for its [perceived] benefits to food quality, freshness, health, and safety. Take a minute to look at these goals, until you see a farm system that is advantageous to the abomination of factory farming.

…if it’s feasible..