309 (22 March 2017)

Welcome to week 309!  The articles below caught my attention this week.  Please note that what are intended to be relatively objective “briefs” are preceded by dashes (——–), whereas additional material or relatively subjective comments are preceded by asterisks (********).  The links to articles preceded by [SR] require a subscription to be read in their entirety, although complete articles may frequently be found by an Internet title search.

(17 March 2017): “Wages rise on California farms.  Americans still don’t want the job” (http://www.latimes.com/projects/la-fi-farms-immigration/)

——–Farmers in California “are being forced to make difficult choices about whether to abandon some of the state’s hallmark fruits and vegetables, move operations abroad, import workers under a special visa or replace them altogether with machines.  Growers who can afford it have already begun raising worker pay well beyond minimum wage.  Wages for crop production in California increased by 13% from 2010 to 2015, twice as fast as average pay in the state . . . Some farmers are even giving laborers benefits normally reserved for white-collar professionals, like 401(k) plans, health insurance, subsidized housing and profit-sharing bonuses. . . . But the raises and new perks have not tempted native-born Americans to leave their day jobs for the fields.  Nin in 10 agriculture workers in California are still foreign born, and more than half are undocumented, according to a federal survey.”  Growers with high-value crops, such as the Cabernet Sauvignon grapes of Napa Valley, “are luring employees from fields in places like Stockton that produce cheaper wine grapes or less profitable fruits and vegetables.  Growers who can’t raise wages are losing their employees and dealing with it by mechanizing, downsizing or switching to less labor-intensive crops.”

********A clear example of the impact of more restrictions on the international movement of labor.  Much of the article is built around the experience of growers of “low value” grapes near Stockton and that of growers of “high value” grapes in Napa.  Low-value growers are losing their workers because they are being bid away by high-value growers.  Although higher wages might be expected to entice American workers to compete for these jobs, even hourly wages of $19.50 have been unable to draw and retain them.  Low-value grape growers who are unable to higher workers are looking to mechanize their processes or move into products like almonds and olives that require much less labor.  Growers who mechanize will have some transition costs, too, as the planting of vines—spacing of plants and the like—will need to be adjusted so they can be mechanically harvested.  For a look at another domestic industry being affected by a reduction in international workers, see the Wisconsin-focused article “Dairy farms fear Trump’s immigration policies” (http://www.jsonline.com/story/money/business/2017/03/06/dairy-farms-fear-trumps-immigration-policies/98700808/).  “By some estimates, up to about 80% of the hired help on large Wisconsin dairy operations is immigrant labor — with a large percentage of those workers being undocumented. . . . Dairy farmers say they get almost “zero response” from native-born job applicants, even when the pay is comparable with nearby factories.

********The agricultural labor situation in California is being affected directly by a decrease in the supply of agricultural labor due to changes in federal government policy regarding the international movement of labor.  Decisions made by the European Union regarding the production of beet sugar in the EU will affect the supply of sugar in the EU and bring about significant turmoil in countries that have traditionally large-scale exported of cane sugar.  This topic is developed at reasonable length in “Europe Is Waving Goodbye to Sugar Cane” (https://www.bloomberg.com/news/articles/2017-03-16/sugar-trade-that-made-our-modern-world-longs-for-sweet-hereafter).  As the article notes, “The European Union’s decision to remove limits on its own beet-sugar output from October means less demand for cane growers from Jamaica in the Caribbean, to the Pacific Island of Fiji, and Swaziland in southern Africa.”  Especially hard hit will be high-cost producers like Belize and Guyana, which “produce less than 6 tons of sugar per hectare cultivated, compared with an average of about 10 for giants like Brazil.”  On the international scene, Belize and Guyana are in much the same position as low-value grape growers in Stockton, California.

(17 March 2017): “The Upshot: What if Sociologists Had as Much Influence as Economists?” (https://www.nytimes.com/2017/03/17/upshot/what-if-sociologists-had-as-much-influence-as-economists.html)

——–“Walk half a city block in downtown Washington, and there is a good change that you will pass an economist.  People with advanced training in the field shape policy on subjects as varied as how health care is provided, broadcast licenses auctioned or air pollution regulated. . . . And there are economists sprinkled throughout the government—there is an entire council of them advising the president in most administrations [the Council of Economic Advisers], if not yet in this one.  But . . . there just may be a downside to this one academic discipline having such primacy in shaping public policy. . . . Another academic discipline may not have the ear of presidents but may actually do a better job of explaining what has gone wrong in large swaths of the United States and other advanced nations in recent years.”  The discipline?  Sociology.  This is not a new idea.  “In 1967, [Minnesota] Senator Walter Mondale actually proposed a White House Council of Social Advisers; he envisioned it as a counterpart to the well-entrenched Council of Economic Advisers.”  The CSA was never created, but if it had been it would have broadened the perspective beyond that of the CEA.  “For starters, while economists tend to view a job as a straightforward exchange of labor for money, a wide body of sociological research shows how tied up work is with a sense of purpose and identity.”

********You can read a one-paragraph description of the CSA at: http://moses.law.umn.edu/mondale/publicwelfare.php.  If you then google “The Full Opportunity and Social Accounting Act” you will find much information about the proposed act, which never passed despite repeated submissions in 1967, 1969, 1971, and 1973.  It would be very interesting to study the history of the proposal, especially the questioning and testimony of the hearings.  Can the arguments for a CSA be much different in 2017 than in 1967?  I just noticed that it is the fiftieth anniversary of the proposed act.

(20 March 2017): “U.K. Trade Policy After Brexit Must Reckon With Gravity” (https://www.wsj.com/articles/u-k-trade-policy-after-brexit-must-reckon-with-gravity-1489928402)

——–“Economists have for decades observed that the volume of trade between economies is tightly linked to their size and proximity.  Countries export more to big economies than they do to small ones, and they trade more with neighbors than with markets further away.  For the economists who first discerned them, these patterns recalled the effect of gravity on celestial bodies in classical physics, where the force exerted by one object on another is determined by mass and distance. . . . The role of gravity in international trade highlights a potential problem for Prime Minister Theresa May as she begins complex negotiations to withdraw the U.K. from the European Union.  The EU is big and nearby, making it a critically important trade partner for the U.K.”  Dutch economist Jan Tinbergen, who shared the first (1969) Nobel Memorial Prize in economics, is typically credited with the idea of describing international trade as a gravity-like relationship between countries.

********The gravity model of international trade is discussed and formalized in Wikipedia (https://en.wikipedia.org/wiki/Gravity_model_of_trade).  You can learn more about Tinbergen’s life and work at: http://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/1969/tinbergen-facts.html.

May you have a good week!

Bruce

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