Reflections on Market Eggonomics

By J.F. McKenna

 

My first lesson in market economics came courtesy of my Uncle Don, who oversaw the family poultry-dairy farm in nearby Columbia Station. For yours truly, the youngest of the next-generation McKennas, the farm was my 35-acre venue for wandering aimlessly, jumping off hay bales in the barn, playing with the latest brood of puppies and collecting raw material for many of the memories I treasure today.

And, of course, that simple, one-time avuncular request to candle some eggs.

Charging an 11-year-old with the task of product assurance related to eggs—that is, holding up the aforementioned product units to a light source for evaluation—should not be considered on a par with today’s advanced strategies of quality control. But this 11-year-old huckleberry sought to take the relatively simple task to new levels of speed and complexity.

The consequences were swift as well as certain: broken eggs, an unhappy Uncle Don and no further requests to participate in entrepreneurship down on the family farm.

I offer this homey vignette as a cautionary tale to those in government who wield business regulations the way I once misapplied the otherwise simple task of candling chicken eggs. All this came into sharp focus (yes, pun intended) while I was reading about the new California law that takes a Holiday Inn approach to egg production.

As the Associated Press explained earlier this month, “…California starts requiring farmers to house hens in cages with enough space to move around and stretch their wings…. To comply, farmers have to put fewer hens into each cage or invest in revamped henhouses, passing along the expense to consumers shopping at grocery stores.”

While the well-intentioned folks who backed this so-called humane gesture congratulate themselves, folks on the frontline of the ag industry point to that old axiom of no good deed going unpunished in the marketplace. Let me lay on you (another pun intended) these additional comments from the AP article: “The new standard backed by animal rights advocates has drawn ire nationwide because farmers in Iowa, Ohio and other states who sell eggs in California have to abide by the same requirements. To comply, farmers have to put fewer hens into each cage or invest in revamped henhouses, passing along the expense to consumers shopping at grocery stores. California is the nation’s largest consumer of eggs and imports about one-third of its supply.

“Jim Dean, president and CEO of Centrum Valley Farms in Iowa and Ohio, said one of his buildings that holds 1.5 million hens is now about half-full to meet California’s standards, and another building may have to be completely overhauled. Farmers like him in cold climates will have to install heaters to replace warmth formerly generated by the chickens living close together. Dean said that’s something people in sunny California didn’t consider. ‘You’re talking about millions upon millions of dollars,’ he said. ‘It’s not anything that’s cheap or that can be modified easily, not in the Midwest.’”

Makes my youthful economic indiscretion look downright puny, doesn’t it?

On a more serious note, let me add that this hard-boiled regulation underscores what economist Thomas Sowell writes in his wonderful book Basic Economics: A Common Sense Guide to the Economy. “The Garden of Eden,” Sowell insists, “was a system for the production and distribution of goods and services, but it was not an economy, because everything was available in unlimited abundance. Without scarcity, there is no need to economize—and therefore no economics. A distinguished British economist named Lionel Robbins gave the classic definition of economics: Economics is the study of the use of scarce resources which have alternative uses.

“In other words,” Sowell continues, “economics studies the consequences of decisions that are made about the use of land, labor, capital and other resources that go into producing the volume of output which determines a country’s standard of living….When a politician promises that his policies will increase the supply of some desirable goods or services, the question to be asked is: At the cost of less of what other goods and services?”

Before state reps, Congressional chairmen and White House whiz kids begin their next round of well-intentioned legislative candling J.F. McKenna style, they might consider spending a little time inside the pages of Sowell’s tome.

I’m certain Uncle Don would approve.

 

J.F. McKenna, a former resident of Cleveland’s West Park, has worked as a reporter, business editor and communication specialist. He is a former staff editor of such magazines as Industry Week and Northern Ohio Live. His online work also appears on the site Steinbeck Now. The Cleveland native and his wife, Carol, now live in Pittsburgh with their dogs, Duchess Holly and Lord Max. Reach him at jfmckwriter23@yahoo.com .

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Comments

  1. J.F. McKenna says:

    Allow me to share this backstory about a CBR reader who cried fowl regarding my latest column.

    “Should we have any regard for the chickens?” he asked. “Is 69 square inches enough? Or is it no difference to them what size cage and how tightly they are packed in? Do we have any moral obligation to these animals? Longstanding law says we do. ”

    Here’s a portion of my response:

    The 800-word canvas is a relatively small one for a columnist in print or online, and one can only hope that the broad reflections generated by a piece will encourage the reader to make more detailed studies about a topic, including preferences for layers over other types in the so-called poultry salon. Of course, the larger point I was taking to my audience is that real-world economic decisions always have tradeoffs and consequences—from the farm to the factory to the international forum.

    As Dr. Sowell says, “The Garden of Eden was a system for the production and distribution of goods and services, but it was not an economy, because everything was available in unlimited abundance. Without scarcity, there is no need to economize—and therefore no economics. A distinguished British economist named Lionel Robbins gave the classic definition of economics: Economics is the study of the use of scarce resources which have alternative uses.”

    Or as my friend Robbie Adair says, “It’s tough choices every day. Then again, I didn’t create the world, I’m just leasing temporarily.”

    To the matter of voters passing laws about poultry accomodations or nuclear warhead throw-weights, let me say—as a grandchild of a pragmatic Irish politician—that I’m generally in agreement with H.L. Mencken, who once observed that no one ever went broke underestimating the intelligence of the American public.

    Harsh but too often an accurate post-election analysis, no?

    Seriously, though, you address many detailed questions regarding raising chickens and the consequences for ethics and economics. Your humble corespondent will have to pass on answering, citing both lack of time and lack of serious ag expertise. I will nonetheless note that warmth and light always seem critical to the formula for chicken-raising success. And that comes from the simple observation of chickens themselves.

    Which leads me to quote Simon Saunders’ 1868 treatise on poultry: “The best guide in all these things is nature, and an observer will always find that poultry choose a sheltered spot. They also carefully avoid being exposed to cold winds.”

    My Uncle Leo, another of the seven McKenna boys, would point out that the strongest, coldest winds blow from the government’s direction.

    And if I may add a final observation, isn’t it a telling point that we take endless time and mental energy to weigh the consequences of our humane treatment of chickens today but give little consideration to the long-term ethical, moral and economic consequences arising from a 42-year-old court ruling—a decision marked by rhetorical and legal legerdemain—that most likely has deprived us of Einsteins, MLKs and Salks?

  2. Len Diamond says:

    I do go along with the post-(2014)-election analysis. Little else,though.

  3. Doug Magill, the genius behind CBR, caught the following in the WSJ–

    California’s Scrambled Eggs

    The state’s new chicken-coop law is hitting human beings hard.
    California has a way of living up to the worst regulatory expectations, as grocery shoppers across the country are discovering. The state’s latest animal-rights march is levying a punishing new food tax on the nation’s poor.

    Egg prices are soaring in California, where the USDA says the average price for a dozen jumbo eggs is $3.16, up from $1.18 a dozen a year ago, and in some parts of the state it’s more than $5. The Iowa State University Egg Industry Center says retail egg prices in California are 66% higher than in…

    See http://www.wsj.com/articles/californias-scrambled-eggs-1422232494

    Nothing to cackle about, eh?

  4. Janice Gibbs says:

    Money is not the root of all evil man is. Greed can lead to disease and flutters of “I coulda, shoulda” wishes given by one who is on their death bed.

  5. Which makes me recall a Twainian observation — Some men worship rank, some worship heroes, some worship power, some worship God, & over these ideals they dispute & cannot unite–but they all worship money.

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