Thursday, April 30, 2015

Chipotle and GMOs: Irrational Fear or Genius Marketing?

Recently Chipotle announced that its menu will now be entirely GMO free. This is just the latest in a string of actions and announcements that have thrilled anti-GMO groups and drawn the ire of U.S. producers. Their apparent ideological commitment isn't all political; it has had some financial consequences as well. The chain is unable to stock one of their primary meat items and has gone all the way to the Land Down Under for their beef because they ostensibly don't believe U.S.-produced meat is good enough for their customers.

While some may conclude that Chipotle's management are a bunch of anti-science morons, I think they're something like the opposite. The management knows full well, as most of us do, that all the available scientific evidence points to the safety of genetically modified organisms. In fact, a recent study has shown that sweet potatoes have "naturally" (whatever that means) modified their own genome with bacterial genes. Humans have been modifying the genes of our food via cross breeding for a very, very long time. We've simply found a better way to do it.

The anti-GMO movement has created an extremely valuable market opportunity that Chipotle is exploiting with great skill. Chipotle is able to simultaneously appeal to the most extreme anti-GMOers as well as the vast majority of us who only want good-tasting food at a decent price (hold the politics, please).

So are Chipotle's managers pushing an anti-science agenda? Are they preying on the irrational fears of people who live in an echo chamber and refuse to take a dispassionate look at scientific evidence? Some people may like that sort of language, but it really doesn't describe the state of things any better than I have above. Chipotle has acted in an entrepreneurial fashion to provide a product that many people want: tasty food and many others seemingly can't live without: GMO-free food. The consumer truly is king and Chipotle's success is proof positive of that.

Saturday, April 25, 2015


David Widmar has an interesting post detailing the usage of irrigation water across the country. The bottom line? The use of irrigation has increased in the Corn Belt and Southeast but has declined in the Southwest and West.

Matt Bogard asks (and answers) some big questions on the effects of ag policies. Matt argues that the distortions of policy in terms of the production of GMOs are relatively minor.

Jayson Lusk presents some summary information from the Food Demand Survey (FooDS). Increases in beef demand over the last two years are particularly apparent.

Shawn Regan dissects the claim that National Park attendance is at an all time high.

Matt O'Brien has an article summarizing new research on unemployment. A better measure of unemployment indicates that the U.S. economy is short 3.5 million jobs, not the 1 million jobs that headline unemployment would indicate. This implies that the economy is weaker than some might believe and that Federal Reserve policy is likely to remain accommodative longer than many expect.

Sunday, April 19, 2015

Arnold Kling on Regulation

Arnold Kling has a new piece up on EconLib in which he discusses banking regulation and regulation in general. Since regulation is an oft-discussed topic on this blog, I thought I'd share a short synopsis of the article. Of course, the whole thing is certainly worth reading.

Kling's article centers around the idea that regulators face an information problem known as the "socialist calculation problem." No, he's not saying all regulators are socialists. Kling writes: "As Ludwig von Mises and Friedrich Hayek pointed out during the socialist calculation debate, central planners lack the information that is produced by markets. By over-riding market prices and substituting their own judgment, regulators incur the same loss of information." Since prices communicate information about the relative scarcities and demands for resources throughout the economy, ignoring or supplanting them can have serious negative consequences.

Saturday, April 18, 2015

Study: Farmland in a Tech-Boom-Sized Bubble

A recent article (older, ungated version here)published in the American Journal of Agricultural Economics and co-authored by one of our contributors, Michael Langemeier, discusses long-term trends in agricultural land values nationwide. The paper draws on data from 1911 to 2012 and measures the risk, returns, as well as relationships between land values and inflation.

Much discussion in recent months (years?) has centered on the possibility of a bubble in land values. While the results of this paper suggest that ag land provides a hedge against both expected and unexpected inflation and is a relatively safe investment, the authors find that “the farmland P/rent ratio has reached historical highs and is currently at the level of the P/E ratio of the S&P 500 during the tech bubble.” The P/E ratio is the ratio of the price of a stock to its earnings or profit. A comparable ratio for ag land is the ratio of land price to cash rent (P/rent).

Tuesday, April 14, 2015


Jayson Lusk provides an update and some thoughts on meat prices. Beef prices are predicted to stay relatively high due to biological factors affecting supply.

Here's an interesting comparison of unemployment rates for European countries with and without the minimum wage. The standard supply/demand story apparently applies in the case of wage controls.

Matt Bogard productively and convincingly tackles the inequality puzzle. Real wealth consists in the goods/services available to us, not our dollar incomes.

Don Boudreaux dissects the "You didn't build that!" meme.

Sunday, April 12, 2015

Neonics and the Farmer as Peacemaker

Neonicotinoid (neonic) pesticides are a commonly-used class of pesticides that have stirred up their share of controversy in the last few years. These pesticides have come under fire for their alleged negative impact on bee populations. The issue is typically framed as a war between the environmental groups, who are concerned about bee population health, and the agrochemical companies, who are concerned about their revenue stream. Research institutions play the role of the black market arms dealer supplying ammunition to both sides.

A recent article in the Guardian takes aim at the political aspects of the issue, focusing on the debate in the UK and the EU. Thankfully, the article considers the view of an often-ignored party in the debate: farmers. The article seems to give a slight edge in the war to the chemical companies, if only because the scientific evidence seems to be currently shaking out in their favor, but the most interesting participants in this war are farmers.

Friday, April 3, 2015

Demsetz on Comparative Institutions

Last weekend I had a chance to read Harold Demsetz's famous 1969 article* in the Journal of Law and Economics entitled "Information and Efficiency: Another Viewpoint." The article is written as a critique of Ken Arrow's 1962 paper "Economic Welfare and the Allocation of Resources for Invention" but functions as a broader critique of the use of standard IO theory in policy analysis. Demsetz identifies this standard policy analysis as the "nirvana approach" and juxtaposes it against what he calls the "comparative institution approach."
The view that now pervades much public policy economics implicitly presents the relevant choice as between an ideal norm and an existing "imperfect" institutional arrangement. This nirvana approach differs considerably from a comparative institution approach in which the relevant choice is between alternative real institutional arrangements. In practice, those who adopt the nirvana viewpoint seek to discover discrepancies between the ideal and the real and if discrepancies are found, they deduce that the real is inefficient. Users of the comparative institutional approach attempt to assess which alternative real institutional arrangement seems best able to cope with the economic problem; practitioners of this approach may use an ideal norm to provide standards from which divergences are assessed for all practical alternatives of interest and select as efficient that alternative which seems most likely to minimize the divergence.