Behind on my homeopathic blogging
18 Oct 2015 Leave a comment
in applied price theory, economics of information, economics of media and culture, economics of regulation, health economics Tags: consumer fraud, homeopathy, quackery, Quacks
Organic farming is a rebranding of pre-industrial revolution agriculture
09 May 2015 Leave a comment
in economics of information, economics of media and culture, economics of regulation, health economics, technological progress Tags: agricultural economics, consumer fraud, industrial revolution, organic farming, quackery, The Great Enrichment, The Great Escape
Profits Are So High, Why Don’t More Farmers Switch To Organic?
02 Feb 2015 Leave a comment
in economics of information, economics of religion, health economics, occupational regulation Tags: compensating differentials, consumer fraud, entrepreneurial alertness, expressive voting, food snobs, organic farming, reputational capital, social norms
HT: Yet Again, Organic Ag Proves Just as Productive as Chemical Ag | Mother Jones.
The increase is partly because more farmers are taking advantage of the healthier profit margins and partly because organic marketing groups sell a health food mythology where cost is not a factor, so costs can rise along with more product. It is a miracle of capitalism.
But given a consumer-base that is wealthy and that is educated by advertising so completely, why don’t all farmers switch?It just takes paying for a sticker and promising to use an organic toxic chemical rather than a synthetic one, there is no testing of organic food, so it would be easy to just make more money.
The reason more don’t move to organic, according to a paper in the Journal of Marketing, is because conventional farmers know in their hearts and minds they are deceiving the public if they switch – making that change is like switching belief systems.
via “Chemical Farmers”: Profits Are So High, Why Don’t More Farmers Switch To Organic?.
Adam Smith wrote about religion in the Wealth of Nations in part because how it infused moral fibre into market dealings. Smith offered a theory explaining the participation of individuals in religion based on his theory of human capital.
In particular, businessmen want to signal to customers that they were moral upstanding people who will not cheat them because that would be against their own moral code and sense of self-respect.
For this reason, Adam Smith suggested that religious sects proliferating in cities because people wanted to join them as a way of signalling they were morally upstanding people. These sects were demanding and rigourously policed the morals of their membership and expelled those who fell in any way short.
A reputation for honesty is both an entrepreneurial investment as well as a way of living a decent life.
People value their reputations and self-respect for being a good and decent man or woman, but some do so more than others. This is why the wage premium under the theory of compensating differentials is large enough only for the trailing edge of the business community. What is that premium?
In 2011, [the] organic premium for a bushel of wheat was 52.2% after factoring in reduced yield per acre of organic production versus total [chemical] average yield per acre. In other terms, [chemical] wheat would have had to have yielded over 53 bushels [a two-thirds increase] per acre to match organic return per acre. (Ted Craig, Wyoming Department of Agriculture, personal communication)
Being an organic farmer is somewhat trendy these days and raises you in the eyes of many but not all. As such, self-respect rather than reputation would be the bigger driver of how large the compensating differential must be before more move to organic farming.
Utopia, you are standing in it! 
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