Thursday, August 26, 2010
What is Real, What is Normal?
Graphs Courtesy of Robert Shiller
(click on images to enlarge)
Robert Shiller is a world renowned economist from Yale University. He is particularly known for his work on the housing bubble.
In a June 2009 Project Syndicate editorial, Shiller concludes, "The sobering truth is that the current world economic crisis was substantially caused by the collapse of speculative bubbles in real estate (and stock) markets."
Every dairy farmer should understand, the world economic crisis brought about a crash in dairy farm milk price.
Essentially, what the above graphs are really showing is greed and concentrated power.
Now everybody wants to know when things will return to normal? The above graphs indicate some problem in defining normal. For dairy, what has passed for market economics is really "slash and burn" economics. There is no way what has been considered normal can continue.
This leaves us to contemplate how farm milk should be priced. Furthermore, we need to contemplate whose voices should be heard in the discussion on the future of farm milk pricing.
The political establishment takes great pains to point out the importance Of the 2012 Farm Bill. In fact, to go to Washington DC cost a minimum of $500 for most people. Few dairy farmers have the spare, multiple,$500.
Unless things change dramatically, the voice of the dairy farmer will not be a real part of the discussion for the upcoming 2012 Farm Bill.