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Unlimited Competition Is Not Sustainable

by Gunnar Rundgren

Large farms are increasingly dominating crop production in the United States. In the early 1980s, most farms produced crops on less than 600 acres, but the majority of today’s farms grow crops on at least 1,100 acres. And many farms are ten times that size. Furthermore, in 1987 the midpoint dairy herd size was 80 cows; by 2007 it was 570 cows. The change in hogs is even more striking, from 1,200 hogs produced per year to 30,000. This long-term shift in farm size has been accompanied by greater specialization. Beginning in the latter half of the twentieth century, livestock operations were moved to sites away from crops. In 1900 there were dairy cows and hogs on three-fourths of all farms, but in 2005 only one farm in twenty had either dairy cows or hogs. This separation has allowed crop farmers to devote more time and resources to crop production and gradually increase yields and acreages.

Larger crop farms perform better financially, on average, than smaller farms. The difference is mainly in the cost of production. According to a report of the U.S. Department of Agriculture:

Larger farms appear to be able to realize more production per unit of labor and capital. These financial advantages have persisted over time, which suggests that shifts of production to larger crop farms will likely continue in the future.

Research shows that farms with more than 2,000 acres use 2.7 hours of work per acre of corn and pay equipment costs of $432. In contrast, farms with 100 to 249 acres require more than four times as much labor and spend double the amount for equipment.

This scaling-up of farms causes a seldom recognized paradox in agriculture. Increases in farm productivity coincide with periods of poor returns for farmers. The U.S. Secretary of Agriculture, in his 1910 annual report, wrote, “Year after year it has been my privilege to record another prosperous year in agriculture.” What has been called a golden age for American agriculture — the period between 1900 and 1914 — was a period of almost no growth in the sector. Output per worker increased by only one percent between 1900 and 1910, and total farm output by only eight percent. Meanwhile the population increased by a whopping 21 percent. The result was higher food prices and thus the prosperous years.

Conversely in the 1950s, agricultural output increased at a rapid pace as a result of increased productivity. However, the decade is remembered as a time of hardship for most farm families. Input prices went up and farm product prices fell. A million and a half families ultimately gave up farming in this decade as they couldn’t make ends meet. Those that survived were able to buy up the land from those that lost out. A similar period came in the 1980s when productivity grew three percent annually, product prices fell, and input prices and interest rates soared. Willard Cochrane writes, “In terms of agricultural development for the national economy the decade of 1980s was a huge success; in terms of the financial well-being of most farmers it was an economic nightmare.”

Combines on a big farm

Can the benefits of increasing scale on farms cover the social and environmental costs? (photo credit: T.P. Martins)

Farmers are stuck on a treadmill. Competition forces them to increase productivity, but the increased productivity leads to lower prices and economic hardship for the farmers. This treadmill is the reason for enormous increases in both farm size and productivity. The vanguard farmers adapt, mostly by increasing size, at the expense of their less successful colleagues.

For farmers who can’t compete, there is no way out — or rather there is only one way out — get out! This weeding out of small farms has happened locally and regionally, but the system ultimately works the same way globally, where all farmers compete with each other. Compare, for instance, conditions in Europe to the largest grain-growing areas around the world. For a European farmer, the landscape is varied, and roads, rivulets, hills, and buildings cause fields to be small. Because of land scarcity, land prices are also high and not determined primarily by agricultural productivity. The scale of acreage and machinery can never be as large as on the plains of the United States, Russia, or Argentina. European costs will be higher, even if European farmers can intensify production and get higher yields per acre.

The treadmill is driven by specialization and drives further specialization, filling each farm with just one or two crops or huge livestock operations. The economic and social implications are huge, but the environmental implications are even bigger. Large-scale landscapes get stripped of variation and biodiversity. These lands don’t produce the ecosystem services we need, and we’re left to try producing them elsewhere at high costs, assuming that’s possible.

This large-scale, linear, industrial model of farming has replaced a local, cyclical, and ecological model. The new model has yielded undeniable short-term economic success as measured by financial figures, but unlimited competition will never be sustainable. It’s amazing how running in place on a treadmill can lead us further and further astray.

Gunnar Rundgren has worked in organic farming for more than thirty years. He established the Torfolk farm together with Kari Örjavik, and he is the author of Garden Earth – From Hunter and Gatherer to Global Capitalism and Thereafter.

To Change the Global Economy, Start by Changing the Olympics

by Rob Dietz

At the 1980 Winter Olympics in Lake Placid, New York, the Soviet hockey team took the ice as overwhelming favorites — they were a juggernaut, having won the gold medal in 1956, 1964, 1968, 1972, and 1976. In fact, the Soviets were on a 21-game Olympic winning streak, posting lopsided victories along the way, including a 16-0 shutout of Japan and a 17-4 drubbing of the Netherlands during the 1980 tournament. Team USA, featuring a collection of unknown college players, couldn’t possibly win. But the unthinkable happened, and the team’s scrappy play carried the day. Announcer Al Michaels’s captured the emotion with his famous play-by-play call:

Eleven seconds, you’ve got ten seconds, the countdown going on right now! Morrow, up to Silk. Five seconds left in the game. DO YOU BELIEVE IN MIRACLES? YES!

It’s hard to find someone who appreciates competition as much as a sports fan (or a frenzied sports announcer), unless you happen to be in a college economics department. Every student who has suffered through Econ 101 knows the theory of perfect competition: perfectly competitive markets produce the most efficient allocation of goods and services. Never mind that you’re more likely to meet the Easter Bunny than a perfectly competitive market. So for years, economists have been pushing for unregulated markets, and business leaders and policy makers have followed suit.

To some degree the economists are on the right track. Competition can drive people (and companies) to the peak of performance. We like it when companies compete with each other to see who can produce the highest-quality products and provide them at the lowest prices. But as much as there is to admire about competition, there are limits to its usefulness. You probably know someone who’s hyper-competitive, one of those people who has to turn everything into a competition. Just like most things in life, we need to find the balance — the amount of competition that achieves positive results without overdoing it. It’s the equilibrium between competition and cooperation.

Teamwork (or cooperation) is how Team USA pulled off the “Miracle on Ice.” Sure, there were commendable individual performances. In goal, Jim Craig kept 36 of 39 Soviet shots out of the net. Mark Johnson, with grit and hustle, scored two goals. Team captain and emotional leader Mike Eruzione, whose name in Italian means “eruption” knocked in the winning goal. And coach Herb Brooks found the right tactics and motivation to put his team in a position to win. But all of these people have acknowledged that it was a true team effort – some participants have even expressed the feeling that all of America was skating together for that game.

The need for a balance between competition and cooperation exists within the economy. You can see it at the microeconomic scale. Within a company, the employees need to cooperate in order to achieve their goals. A company must figure out how to cooperate, not only internally, but also with other companies, with customers, and with government agencies in order to succeed.

You can also see the need for this competition/cooperation balance at the macroeconomic scale. In a world of finite resources, overly competitive nations can be dangerous. Aggressive competition for control of critical resources like land, water, and oil leads to serious conflicts and degraded social conditions. The last thing we need is an amped-up competition to wring the final drops of growth out of an already overgrown global economy. But in order for nations to find peaceful ways of sharing resources, they need to improve their track record for cooperating with one another. We’ve witnessed so many failures of international cooperation (look to the negotiations on climate change for a recent example), that it’s hard not to be cynical about humanity’s ability to collaborate at this scale. We’ve got to do something to change this track record, and the Olympics provide a venue for getting started.

It is difficult to argue with the ideals of the Olympic Movement. According to the Olympic Charter, “Olympism seeks to create a way of life based on the joy of effort, the educational value of good example, social responsibility and respect for universal fundamental ethical principles.” Although the charter expresses many lofty ideals, and the Olympics provide astounding examples of sportsmanship, the Games are, at the simplest level, a global competition among countries seeking glory through athletic achievement. And most of the world is eager to watch and cheer their teams. Sometimes the cheering can have overtones of nationalistic fanaticism, as in Germany during the 1936 Berlin Games. Other times the Olympics showcase political games as prominently as athletic ones, like the 1980 Moscow Games (boycotted by the United States) and the 1984 Los Angeles Games (boycotted by the Soviet Union). And the transition from amateur to professional athletes in the Games has eroded the Olympic spirit a little more. You’d never see something like the Miracle on Ice today.

At the same time, success at the Olympics has become predictable, maybe not for individual athletes, but for nations. As Andrew Bernard and Meghan Busse have described, the nations with the highest medal counts tend to have both a large population and a high per capita GDP. This means that the most economically overgrown countries have an advantage at the Olympics, just like they have an advantage in the scramble for world resources.

But there’s an unconventional (yet practical) way to rekindle Olympic ideals, encourage greater international cooperation, and mitigate the unfair advantage of “economic bigness” in the Games — all without taking away the spirit of competition or squashing the joy of rooting for your home nation.

What if we paired two nations as a unified team for each cycle of the summer and winter Games? Instead of Team USA, we could have Team Zimbabwe and USA (or Team Zimbusa). The teams in all sports, from gymnastics to skiing to water polo would consist of a mix of Zimbabwean and American athletes. Think of how much more knowledge and understanding would be shared between Zimbabweans and Americans. Medal counts would be totaled for both nations as if they were a single country, making the medals race more competitive and interesting. The paired countries could host joint training sessions in their respective homelands. Imagine the good will that could be generated around the globe as fans root for the athletes of their partner countries just as earnestly as their homegrown athletes — it’s enough to reduce Al Michaels to tears of joy!

Of course the International Olympic Committee (IOC) would have many new rules to establish, such as how teams are paired. Pairings could be random. Picture the United States with Iran, or India with Pakistan. Four years of athletic cooperation could lead to cooperation on more important fronts. Willingness to accept politically or culturally incongruous pairings by all countries would be part of the deal. Another possibility for forming pairs is to rank all nations by GDP and match the highest with the lowest, the second highest with the second lowest, and so on. The IOC would have to work out other details as well, such as the minimum percentage of athletes competing in a given sport that must come from one of the two countries.

The idea to pair nations may seem like an idealistic non-starter, but the Olympics are just a bunch of people getting together to play sports. Would the athletes feel like they represented themselves and their countries any less convincingly if they did so in teamwork with athletes from another country? Would fans support their teams less enthusiastically if they were engaged in such a partnership?

The proposed change in Olympic format could serve as a prominent step toward building the global cooperative spirit that is symbolized by the colorful interlocking rings of the Olympic flag. Such a step could help create balance between competition and cooperation not just in sports arenas, but also in policy arenas where decisions profoundly affect humanity’s prospects.

Besides, who could resist cheering for another miracle as Team Zimbusa takes the ice?

If you like this idea, feel free to pass it along to Jacques Rogge, President of the International Olympic Committee, in one of these ways:

Write a letter…
Château de Vidy
Case postale 356
1001 Lausanne
Switzerland

Make a phone call…
+41 21 621 61 11

Post a comment on the Facebook page for the Olympic Games.