Streetwise Professor

July 28, 2011

No Brussels Sprouts, Thanks: Just Show Me the Dessert Tray

Filed under: Economics,Politics,Russia — The Professor @ 1:47 pm

I’ve written before that Russia–and Putin specifically–has said that it will not change its protectionist rules for goods like autos even if it gets into the WTO.  Now Medvedev has chipped in with another sector that is off-limits:  agriculture.

Medvedev also said Russia retains the rights to increase import duties on some products to help farmers.

“We are not talking about any restrictions on state support of agricultural producers after (Russia’s) accession to WTO, ” Medvedev told a meeting on crops and grain markets.

Apparently Russia is taking the view that the WTO is an a la carte menu: you order what you like, and just ignore the stuff you don’t.  In this, alas, it is not alone, especially when it comes to agriculture.

Print Friendly

31 Comments »

  1. What about the many tens of billions of dollars do the the EU, Japan, and the US spend on agricultural subsidies every year?

    Why should they be allowed to do it while telling Russia to drop it from its menu?

    Comment by Sublime Oblivion — July 28, 2011 @ 2:38 pm

  2. S/O–read the goddam last sentence, please, before shooting off your mouth.

    The ProfessorComment by The Professor — July 28, 2011 @ 4:01 pm

  3. But it’s good to see that your whatabout reflex is still industrial strength.

    The ProfessorComment by The Professor — July 28, 2011 @ 4:15 pm

  4. “S/O–read the goddam last sentence, please, before shooting off your mouth.” Professor, before you cry whataboutism and get all testy, remember that Uncle Sam and VP ‘we can let em’ in if they accept our chicken exports’ Biden have set the condition of Russia’s WTO membership that they accept all that chlorinated Tyson chicken.

    If you think I’m just being all hippie-ish organic here, you can look it up: dozens of workers in Arkansas were sickened last month when somebody poured the wrong chemical into a big vat of chlorine. I can safely say that none of the chicken I bought at Perekrostik or Ashan in Moscow ever turned green from chlorine exposure. Not true for the U.S. non-organic chicken.

    And when I see you start slamming the keep Foreign Drugs Away FDA folks for blatant protectionism in keeping out all those cheap Indian and even Cuban/Mexican generics while letting in tons of tainted crap from China to Wal-Marts across the land, then you’ll have some credibility as something other than a Jacksonian who gets mindlessly exploited by the NWO globalists who want to loot America the way they did Russia during the 1990s.

    Comment by Mr. X — July 28, 2011 @ 5:08 pm

  5. Mr. X. You’re missing the point too. The point of the last sentence is that pretty much every country is a hypocrite on protectionism, esp. wrt ag. And re FDA, I’m a long time critic, going back to my days in grad school. If I don’t talk about it on the blog it’s b/c there are so many subjects and only so much time. But you may rest assured that my presumption (rebuttable, but a presumption nonetheless) is that if the gov’t is involved, it’s probably a form of theft masquerading as a grand humanitarian gesture. That goes double if Joe Biden is involved. Or triple.

    And re whataboutism–er, S/O did say “what about?” Literally. How could I resist?

    The ProfessorComment by The Professor — July 28, 2011 @ 5:58 pm

  6. It’s totally ridiculous to suggest that Russia has a right to behave just like Japan, America and the EU. It certainly does NOT.

    If they day ever dawns when Russia is remotely as civilized and democratic and free-market as those places, then Russia will be entitled to its own fair share of protectionism.

    Until then, Russia is the heir of the USSR run by a proud KGB spy, and it has to prove itself to the world of civilized nations. Russia’s actions clearly show it is not qualified to be a member of the WTO and will no more embrace its values than it embraces the values of the European Court for Human Rights. Russia should never have been admitted to the Council of Europe, it is far too barbaric and hostile to basic European values for that.

    http://larussophobe.wordpress.com/2011/07/07/editorial-boot-russia-out-of-the-council-of-europe/

    Russia will not be treated as if it were a peer of Japan, the USA and Europe until it EARNS that treatment. Anyone who suggests otherwise is a vulgar neo-Soviet propagandist who cares nothing for the fate of the people of Russia.

    Comment by La Russophobe — July 28, 2011 @ 7:11 pm

  7. How can ANYONE (even an insane person) suggest Russia has a right to be treated like a civilized country when . . .

    http://blogs.ft.com/beyond-brics/2011/07/28/in-russia-a-pair-of-lost-trousers-can-cost-you-your-freedom/#axzz1TS76CSXX

    RUSSIA DENIES PAROL BECAUSE PRISONER LOST HIS PANTS.

    http://www.foxnews.com/scitech/2011/07/28/russia-backtracks-on-international-space-station-sink-date/?test=latestnews

    RUSSIA SAYS IT WILL BOMB THE INTERNATIONAL SPACE STATION, THEN CHANGES ITS MIND.

    http://online.wsj.com/article/SB10001424053111904888304576474464102518744.html

    RUSSIA RESPONDS TO MAGNITSKY BLACKLIST BY BLACKLISTING AMERICANS FOR NO REASON WHATSOEVER.

    http://www.investors.com/NewsAndAnalysis/Article/579825/201107281902/Cold-War-II-.htm

    RUSSIA BOMBS THE US EMBASSY IN GEORGIA.

    Comment by La Russophobe — July 28, 2011 @ 7:14 pm

  8. Considering the US has been the Big Loser from free trade I do not see protectionism as a bad word. I cannot understand why the loss of manufacturing jobs do to free trade agreements favoring very cheap labor is in a giant blind spot for so many well educated and influential people. It is becoming ever more evident that the globalist utopian vision requires first and foremost the destruction of the USA that we know and love.

    Comment by pahoben — July 28, 2011 @ 8:58 pm

  9. OK, sorry about that – I really did skim by the last sentence.

    Okay, second question, SWP. Why is it wrong for countries to subsidize their agriculture and in so doing improving their food security?

    Comment by Sublime Oblivion — July 28, 2011 @ 10:13 pm

  10. Why is it wrong for countries to subsidize their agriculture and in so doing improving their food security?

    Because the costs far outweigh the benefits.

    Comment by Tim Newman — July 28, 2011 @ 11:56 pm

  11. Indeed Mr Newman. How else to ensure the proper distribution of income, rather than wasting it on wages for trailer trash.

    Comment by a — July 29, 2011 @ 2:39 am

  12. How else to ensure the proper distribution of income, rather than wasting it on wages for trailer trash.

    Fail.

    Comment by Tim Newman — July 29, 2011 @ 5:00 am

  13. How long until Putin/Medvedev join the Sarkozy/Gensler/Chilton bandwagon on position limits? I know Russia doesn’t have a fully functioning commodity market, but that hasn’t stopped OPEC from chiming in on “excessive speculation”.

    Wonder what the NYT headline would look like? Russia Joins Global Call to Stop Food Speculation!

    More of the same.

    Comment by Lion — July 29, 2011 @ 6:10 am

  14. Because the costs far outweigh the benefits.

    Well, taking out fire insurance, or building flood levees, are also situations in which “the costs far outweigh the benefits.”

    That is, until your house burns down or the local river becomes swollen with record rainfall.

    Comment by Sublime Oblivion — July 29, 2011 @ 4:54 pm

  15. Well, taking out fire insurance, or building flood levees, are also situations in which “the costs far outweigh the benefits.”

    No, they’re not. Were you to divide the cost of fire insurance by the risk a fire represents (risk being a product of likelihood and consequence) then most often the costs would appear reasonable (which is, as it happens, why lots of people buy fire insurance). Economics 101.

    Comment by Tim Newman — July 29, 2011 @ 11:11 pm

  16. Not at all Mr. Newman, vital. Through free trade and globalization, income has at last been properly distributed in the U.S.

    http://bilbo.economicoutlook.net/blog/?p=15438

    Corporate profits, the DJI, and S&P500 are up 40-45% since the middle of 2009.

    Various measures of employment and wage growth range from 1% decline to a 0.6% rise.

    The trailer trash would only multiply further is given growing wages, adding to the surplus population.

    Comment by a — July 30, 2011 @ 5:18 am

  17. “Considering the US has been the Big Loser from free trade I do not see protectionism as a bad word. I cannot understand why the loss of manufacturing jobs do to free trade agreements favoring very cheap labor is in a giant blind spot for so many well educated and influential people.”

    Pahoben, they know well who pays them, and it isnt wage-earners. It is very difficult to get a person to see something when his salary depends on not seeing it. Thank goodness.

    ” It is becoming ever more evident that the globalist utopian vision requires first and foremost the destruction of the USA that we know and love.”

    Maintaining that USA required far too much of the gains of productivity growth to be paid out as wages. As you can see above, it now accrues overwhelmingly to capital, as is proper. Our servant Barack has paid careful attention to maintaining this seemingly new, but actually very old, distribution of the gains of productivity growth.

    And for entertainment, our colleague Rupert has persuaded the trailer trash that our servant Barack is an Islamist Socialist from Kenya. Very amusing.

    This new USA is turning out much better than Russia has. We still shake our heads that our junior partners Boris B. and Mikhail Kh. gave assurance that our rebellious servant Vladimir was reliable. The nerve, to maintain growing wages and social spending! Unforgivable!

    Comment by a — July 30, 2011 @ 10:47 am

  18. Indeed, Tim. Indeed.

    You seem to get the gist of it.

    Now, why is it NOT reasonable to insure one’s country from things such as soaring food prices, or cessation of food imports – e.g. as other countries ban food exports – and the attendant dearth and famine?

    Comment by Sublime Oblivion — July 30, 2011 @ 11:15 am

  19. Indeed, Tim. Indeed.

    So you have now reversed your earlier opinion that the cost of fire insurance outweighs the benefits? Nice of you to say so!

    Now, why is it NOT reasonable to insure one’s country from things such as soaring food prices, or cessation of food imports – e.g. as other countries ban food exports – and the attendant dearth and famine?

    Because unlike fires, there has not been a single instance of a country not being able to import food in the past 50 years which has not been the result of an idiotic policy of the government of that same country, i.e. the risk of a country not being able to import food when it wants to is negligible. Can you cite a single example of a country banning exports resulting in famine elsewhere? No, you can’t. Yet the costs of such protectionism are enormous, and carried by both the poorest citizens of the country in question and those of the developing world. Food protectionism simply doesn’t pass a cost-benefit analysis, and the only reason it is employed is because policiticans have few qualms about spending other people’s money in shoring up their own positions.

    Comment by Tim Newman — July 30, 2011 @ 11:07 pm

  20. Tim, you don’t seem to understand. The Soviet people are taught from kindergarten and on that all them nasty foreigners are thinking about is how to destroy their Great Motherland. And they know very well how effective artificial famine is to that effect: they used it against Ukraine. If good Comrade Stalin did it, why would not bad foreigners do it?

    Comment by Ivan — July 30, 2011 @ 11:37 pm

  21. So you have now reversed your earlier opinion that the cost of fire insurance outweighs the benefits?

    That was not an earlier opinion. You seem to have a chronic inability to grasp sarcasm, which is pretty sad seeing as its the lowest form of wit there is.

    Can you cite a single example of a country banning exports resulting in famine elsewhere?

    The turkey lived 999 days, got fed every day. It became fat and happy, with an incorrigibly optimistic outlook on the future – things could only get better and grander, it thought.

    The next day it was butchered and eaten. It was Christmas!

    Comment by Sublime Oblivion — July 31, 2011 @ 12:34 am

  22. That was not an earlier opinion. You seem to have a chronic inability to grasp sarcasm, which is pretty sad seeing as its the lowest form of wit there is.

    Oh, of course. Having made a blitheringly stupid comment in all seriousness, we are now to believe you were being sarcastic. I didn’t mean it, guv!

    The turkey lived 999 days, got fed every day. It became fat and happy, with an incorrigibly optimistic outlook on the future – things could only get better and grander, it thought.

    A simple “No” would suffice. And you don’t appear to understand how risks are caculated for the purposes of insuring against them.

    Comment by Tim Newman — July 31, 2011 @ 1:14 am

  23. Not very original, are you Tim?

    And you don’t appear to understand how risks are caculated for the purposes of insuring against them.

    The banks, professional economists, etc. think they “understand” how risks should be calculated, and I’m sure they’re all doing just splendidly.

    But some would prefer to eschew their calculations on issues as vital as food security.

    Comment by Sublime Oblivion — July 31, 2011 @ 1:47 am

  24. Not very original, are you Tim?

    When it comes to pointing out your wrongness followed by blatant lying, I don’t need to be. If you want people to react differently to your witterings, try changing your MO.

    The banks, professional economists, etc. think they “understand” how risks should be calculated, and I’m sure they’re all doing just splendidly.

    Right, so because banks can’t calculate financial risk properly everyone should stop calculating risks altogether and base policy on…what, exactly? Entrail readings? Tea leaves?

    But some would prefer to eschew their calculations on issues as vital as food security.

    True. Hysterical paranoia based on nothing whatsoever is a far better alternative. I bet you wouldn’t even know what a risk calculation looked like, let alone how to perform one.

    Comment by Tim Newman — July 31, 2011 @ 12:15 pm

  25. When it comes to pointing out your wrongness followed by blatant lying, I don’t need to be. If you want people to react differently to your witterings, try changing your MO.

    Thank you for your kind advice, however, the problem lies not with me but in your chronic inability to comprehend nuance. In other words, you insist on taking everything I say literally.

    A third observer on the last thread agreed that I clearly made my argument by analogy. As for here, we don’t even need a third observer. Just quoting what I said would do:

    Well, taking out fire insurance, or building flood levees, are also situations in which “the costs far outweigh the benefits.”

    That is, until your house burns down or the local river becomes swollen with record rainfall.

    This indicates, to anyone with basic reading comprehension skills, that author believes taking out fire insurance is indeed very beneficial. So your playing Captain Obvious was quite redundant.

    I really can’t figure out if you’re consistently misinterpreting me on purpose, or whether you’re just too thick to understand concepts like analogy or the rhetorical question.

    Comment by Sublime Oblivion — July 31, 2011 @ 12:54 pm

  26. Thank you for your kind advice, however, the problem lies not with me but in your chronic inability to comprehend nuance.

    Oh, I can comprehend nuance. It is not the nuance I have a problem with, it is the rubbish you are spouting independent of how you present it.

    A third observer on the last thread agreed that I clearly made my argument by analogy.

    And? Several other commenters agree that you are a twat. How does cherry-picking the opinions of others help your argument?

    Well, taking out fire insurance, or building flood levees, are also situations in which “the costs far outweigh the benefits.”

    That is, until your house burns down or the local river becomes swollen with record rainfall.

    And this is where you are wrong, wrong, wrong! Buying fire insurance is beneficial even if your house does not burn down, as it mitigates the risk. So, when you say:

    “This indicates, to anyone with basic reading comprehension skills, that author believes taking out fire insurance is indeed very beneficial.”

    it doesn’t do anything of the sort. It indicates that the author thinks the cost-benefit analysis of fire insurance is only favourable if a fire occurs, and indicates that the author misses the fundamental point that the benefit of insurance is in mitigating the risk, not merely the payout in the event of a fire. This is important, because you are claiming food protection measures are worth implementing as a form of insurance similar to that of fire insurance. However, a cost-benefit analysis would likely reveal that there is no risk to mitigate; you are basing your idea on the incorrect notion that such an analysis would consider only the consequences of the event happening.

    I really can’t figure out if you’re consistently misinterpreting me on purpose, or whether you’re just too thick to understand concepts like analogy or the rhetorical question.

    You can’t figure it out because rather than listening to what you’re being told, you are arrogantly assuming you are both correct and funny. Here is what is happening. You are addressing a subject of which you know little, but think you do. Rather than saying something sensible, you make a pathetic attempt at sarcasm, presumably to demonstrate how clever you are. However, in doing so you make errors and end up saying something rather silly to those who know what they’re talking about. When these people point out your errors, you automatically assume they have failed to see your irony and thus missed the brilliance of your point, hereas in actual fact they are quite uninterested in how you have cloaked your sentences in supposed wit.

    Comment by Tim Newman — July 31, 2011 @ 9:50 pm

  27. Several other commenters agree that you are a twat.

    You mean yourself and La Russophobe? I don’t dispute it, and consider it a vindication of sorts.

    How does cherry-picking the opinions of others help your argument?

    Please explain how this is cherry picking. Both Mr. X and Ostap recognized the point I was making easily. You didn’t, and once I spelled it out for you, you blamed me for your own inadequacies.

    Next.

    You are dogmatically applying Econ 101 concepts without thinking through whether they are appropriate to the situation at hand, like a true Bildungsphilister. In particular, you argue that conventional risk assessments are applicable to food security, assuming that probabilities can be accurately calculated based on past experience (“…there has not been a single instance of a country not being able to import food in the past 50 years…”); as you expect this probability to be around zero, and hence – even despite the vast damage a famine would do – this means that agricultural protectionism isn’t worth it.

    But this assumes that your c.0% probability, based on observations over the past 50 years, is valid. Is it really? The real world is a complex system that rules out such certainties; not least at a time when prices are soaring to record highs, with no improvement in sight as drought frequency increases across multiple grain baskets.

    Hence my example of the Christmas turkey. Based on 999 prior observations, and having no basis for comparison (e.g. with the histories of other turkeys), it believes very safe and secure. It’s world is simple, with no perturbations from the mean. On the 1000th day it gets the surprise of its life, but it isn’t a surprise to the butcher and other observers cognizant of the fates of Christmas turkeys.

    And I didn’t even go into the other benefits of agricultural subsidies, such as its potential for rejuvenating the Russian countryside by offering rural jobs; the possibility of its self-sustained expansion once agricultural businesses become sufficiently capitalized to expand production without state aid; etc.

    Comment by Sublime Oblivion — July 31, 2011 @ 11:33 pm

  28. You mean yourself and La Russophobe? I don’t dispute it, and consider it a vindication of sorts.

    You don’t dispute that you’re a twat? Okay!

    ou are dogmatically applying Econ 101 concepts without thinking through whether they are appropriate to the situation at hand, like a true Bildungsphilister.

    No, the assumption that I am not thinking through their appropriateness of applicability is yours alone, and it is incorrect.

    you argue that conventional risk assessments are applicable to food security, assuming that probabilities can be accurately calculated based on past experience

    Again, your lack of knowledge of what an risk assessment entails is showing. All risk assessments, not just conventional ones (whatever they are) must involve, in the calculation of likelihood, a consideration of past data. Even at the qualitative stage of a risk assessment, the “has it happened before” question is asked during the initial risk ranking. This does not automatically mean the risk is considered acceptable if it hasn’t, but it helps inform the person doing the risk assessment to rank the risks accordingly. If it is still considered a high risk when taken to the quantitative stage then the likelihood needs to be calculated, which brings us to this:

    as you expect this probability to be around zero, and hence – even despite the vast damage a famine would do – this means that agricultural protectionism isn’t worth it.

    Yes, because – as I have already explained, but you either missed or did not fully understand – risk is the product of likelihood and consequence. So, if the probability of something is zero then the risk it presents is zero, regardless of the consequences. Now, I don’t necessarily think the probabiliity of a country not being able to import food is zero, but any quantitative risk assessment would require a figure being put on it (for completeness, a qualitative risk assessment would return “Low Risk”, requiring no further action). When putting a figure on the likelihood of a future event, the first step MUST BE to ascertain the likelihood from past data. If this is zero, then attempts must be made to ascertain a sequence of events which could lead to the main scenario and determine the likelihood of these based on past data, multiplying the probabilities as you go. This would almost certainly lead to a figure of almost negligible likelihood, rendering the risk minimal despite the potential severe consequences. If one of the intermediate steps had not occurred before, then the whole exercise would become of academic interest only.

    So, once you have your risk figure (yes, it is a quantity expressed in any unit you like) then you compare it to the costs of mitigating this risk. If the costs are prohibitive, you don’t do it, which is why sensible countries don’t attempt to mitigate against the risk of not being able to import food for economic reasons (they are stupid enough to do it for political reasons). What you have done is look at the consequences of a country not being able to import food, realised they are appalling, and decided that enormous costs should be shouldered to prevent it. This is an understandable emotional reaction, but alas one that is irrational from a risk analysis point of view: indeed, it does not consider risk at all, only consequences.

    The real world is a complex system that rules out such certainties; not least at a time when prices are soaring to record highs, with no improvement in sight as drought frequency increases across multiple grain baskets.

    Right, so – taking into account what I said earlier – what is the sequence of events which could lead to a country experiencing famine because it could not import? Droughts, is one, you say. Okay, so when did droughts in one country cause people in another to be unable to import? Droughts have actually occurred, so we have real data to show what the effect is, and it is not the one you say it is. No need to be looking at tea-leaves for this event.*

    Hence my example of the Christmas turkey. Based on 999 prior observations, and having no basis for comparison (e.g. with the histories of other turkeys), it believes very safe and secure. It’s world is simple, with no perturbations from the mean. On the 1000th day it gets the surprise of its life, but it isn’t a surprise to the butcher and other observers cognizant of the fates of Christmas turkeys.

    Again, your lack of understanding of risk calculations is evident. The turkey is unable to calculate the risk of the system in which it is living because it is part of that system. This is why the banks’ risk assessment failed so miserably, because they were stood inside the system. However, because somebody who is part of a system cannot adequately calculate risk it does not follow that nobody else can. Your analogy with the turkey is silly because you seem to think that it does.

    And I didn’t even go into the other benefits of agricultural subsidies, such as its potential for rejuvenating the Russian countryside by offering rural jobs…

    So you want Russians to go and work in the fields, eh? Why does that not surprise me?

    *The irony of promoting domestic production and reducing or banning imports as a method to avoid crop failures due to drought is noted.

    Comment by Tim Newman — August 1, 2011 @ 12:27 am

  29. I’m unable to reply at length during weekdays, but one clarification.

    So you want Russians to go and work in the fields, eh? Why does that not surprise me?

    Again, please don’t put words in my mouth. In real life, the alternative for many people in small rural settlements is underemployment with alcoholism.

    Stimulating the agricultural sector is one way to partially remedy this.

    Comment by Sublime Oblivion — August 1, 2011 @ 5:36 pm

  30. In real life, the alternative for many people in small rural settlements is underemployment with alcoholism.

    Stimulating the agricultural sector is one way to partially remedy this.

    No, it isn’t. Modern agriculture employs few people (I know, I grew up on a farm and worked on the UK’s largest vegetable farm for a summer). True, the old back-breaking peasant agriculture of yesteryear (and seasonal fruit picking) employs a lot of people, but I’m not convinced that’s a life the educated Russians should be aiming for. What would help those rural Russians is an expansion of secondary and tertiary industry, but for that to happen the enormous barriers to entry would need to be demolished, something which is not going to be achieved under any government which thinks food protectionism is a good idea.

    Comment by Tim Newman — August 1, 2011 @ 9:38 pm

  31. I can see Tim going back to Sakhalin and saying, “I for one, welcome our new Nipponese overlords! Bloody lot will finally get things done right around here!” Too bad the Japanese are getting too old despite the Western Ruling class’s bad need for a big war to distract everyone right now to oblige.

    Comment by Mr. X — August 7, 2011 @ 7:47 pm

RSS feed for comments on this post. TrackBack URI

Leave a comment

Powered by WordPress