Seed Corn

 I promised to talk more about seed corn before, so this seems like a good time to expound on that.

First... I was trying to look up a reference, but unfortunately my google searches returns results that aren't quite what I was looking for. 

I am not, at all, a farmer and I don't know much about ancient agriculture, so perhaps I'm misremembering something... but I remember hearing that when you plant a new fruit tree it's best to pinch off any fruit (and perhaps flowers? I know flowers are very energy intensive, so pinching them off can help a new plant devote more energy to growing it's roots and leaves and things) for the first couple of years. 

Which fits in with my theory that some biblical advice was actually a way of passing on practical knowledge. Remember - it's not like they had our concept of science or fact-based history back then. So if you discover that your fruit trees grow stronger if you prevent them from fruiting in their first few years, adding a religious law - like Leviticus 19:23-25 - is a great way of establishing the practice.

Oh, there's also some stuff about cultural identity and whatnot, but I personally find the Bible fascinating for how it shows a relationship between us and God and not because it's some infallible text wherein God dictated every word. (Certain hygienic practices helped prevent the spread of disease, so it's not hard to believe that humans saw a relationship between certain rituals of cleanliness and decided it indicated God's will in the matter. And an atheist might take that as proof that there isn't a god, and a believer might say that's just the actual way that God makes His will known, and I'll let you all decide which you prefer.)

 My main point is just that the knowledge captured in the Bible can be very practical.

And it's not just about agriculture, or practices that protected people from disease and illness. There's quite a bit of social engineering there, too. Reducing the risk of tribal warfare and escalating feuds, building a sense of compassion and empathy for our neighbors and foreigners in our midst and not just our particular families or tribes...

Too bad people use it to reinforce their own tribalism instead of getting what the Bible was teaching, but if I go into that any further I'll derail myself.

I wanted to talk about seed corn. That's basically corn meant to be saved from a harvest and used as seeds for the next year's crop.

Eating your seed corn was a sign of desperation, because it might allow you to survive this year... but meant you had nothing to plant in spring.

You can see why this fits in neatly with my previous commentary on husbandry, conservation management, etc.

But, in the States at least, so much of our agriculture is now automated that most people no longer understand such references. Not on the visceral level they used to, at least. (At Mom's funeral, she had made clear she wanted us to use the Bible voice about the sheep knowing God's voice... because Grandpa used to raise sheep, and she remembered quite clearly how the sheep would come at the sound of his voice.)

We have what, 1-2% of our population with jobs in agriculture any more?

Which means it's a lot harder to fit these stories into our modern lives.

So let's talk about seed corn... 

It's the idea that we should save some of our current resources, so that they will create even more for us in the future. That setting aside a fraction of our harvest now will allow us to plant and harvest again next year.

You can apply that on an individual level in any way you wish... I wanted to apply that on more of a macroeconomic scale.

Economists talk a lot about 'stimulus', and there's quite a debate over whether a government can shift the economy out of a depression by stimulating it with government spending. There's also discussion about whether it creates inflation, and there are others who disagree with Keynesianism (stimulating the economy with government spending, among other things)...

So this is a large and complex field and you probably ought to talk to two or three economists from different theoretical camps if you really want to understand it. I know a little, and as this is my blog I'll speculate and theorize as much as I want, but I would encourage you to seek out the experts if you really want to dig into this.

What I will tell you is that there have been some interesting studies on what's happened when cities raised their minimum wage, and that it did not lead to the dire consequences many economists predicted. Some say that there's been a reduction in compensation and that ultimately workers get less, others have said that the everyone (workers AND employers) benefited.  

I would give two additional thoughts to this debate. First, as some have pointed out, the impact probably varies depending on what the minimum wage is. Theoretically, it's entirely possible that really high wages will have all the negative effects economists predicted... and that the only reason we aren't seeing them here is because shrinking wages mean people at the lower end of the socioeconomic scale are making os little that it'd take a really significant increase before we'd see that sort of a problem.

The second thing - is that economics is truly a socioeconomic field. That is, our society and the norms and expectations of everyone in it shapes the results. I say this in part because I have seen how, in the US, certain regulatory requirements (like for healthcare, etc) have led to employers cutting hours so that employees didn't qualify. If you have to give healthcare to anyone working 40 hours or more, you just make sure they never work more than 40 hours... right? (Yet another reason why I hate having our healthcare tied to employment, but that's another digression).

And  yet other societies, with different norms and expectations, don't see those sorts of results. You can argue whether those societies are more community oriented, or whether people who run businesses care more about their fellow citizens, or whether they aren't trying to get around the spirit of the law with shady practices...

Whatever the reason, there's clearly a cultural difference that affects how successful such policies are.

On a macroeconomic level, what's our seed corn?

Tbh - it's probably a combination of things. After all, you need consumers consuming... you need banks lending... you need money to invest and build and actual resources to manufacture. 

Really, the economy is complex and interconnected... and most parts have their role. 

It's just that (to use garden analogies again) some parts need periodically pruned  back, and run the risk of overrunning the rest. 

This is part of why it's impossible to create hard and fast rules. It's more a question of 'which parts are out of whack'. 

So let's talk a bit about stimulus and monetary expansion.

A dollar is a dollar, but a dollar can lead to MORE dollars.

I'll try to keep this at a very basic level, so bear with me.

If you put money in a savings account, the bank actually uses a portion of that money to lend to other people. That's part of why you collect interest on the account. So you're dollar in the bank is also used to help someone else start a business (as one example), which means it's used to help buy raw materials and hire other people and thus creates more than just $1.

The same goes for last year's pandemic checks... and since most people spend it right away, it almost all stimulates the economy. Someone uses their check to buy their kids school clothes, which gives more money to the retailer and the manufacturer, who hire more people, who have money to spend on things like video games, which means video games sell well and the retailers and manufacturers hire more people... around and around it goes. 

Some people also blame our current inflation on this. More money chasing fewer resources. Again I'd say talk to an expert, but I personally think the Russian war on Ukraine and the supply chain disruption from the pandemic have more to do with it than that... and one other thing. Businesses who try to pass on wage increases to the customer. 

This goes back to what I said above, about socioeconomic practices and norms and expectations. If workers demand more money (and the labor market is tight because of the pandemic, so workers have been doing exactly that) then a business either has to accept less profit.. or pass the added expense along to the customer by raising prices.

This is where complaints about 'price gouging', 'monopolies', and 'corporate greed' come from. After all, how can you have record profits when gas and labor costs more? Answer: By jacking up prices.

Anyways. I do think that wage increases provide more stimulus than giving a billionaire another million bucks...

What sort of additional spending is Elon Musk going to do if he makes even more money? Or Jeff Bezos? They are already more than capable of spending everything they want, and to be honest a little bit more money here or there isn't going to make a difference.

But giving the bottom 40% more money? Not just in a once or twice a year stimulus check, but reliably? With every paycheck?

That's more money to spend on going to the movies. Or buying a new car. Or getting new appliances. Or eating out a little bit more often. Or buying a new book. Or getting another video game.

You get the idea...

The economy will do better all around if people at the bottom have discretionary money.

Which is why I want to slap some of the people I've stumbled across on social media. They were talking about the rule of thumb that you should only spend 1/3rd of your paycheck on housing, and seemed to think it was a silly rule.

People can just move to a cheaper location, or get roommates, or pay more... 

Even though paying more means less money for all those 'extra' things. Things that make life a little bit more enjoyable, and also help the economy grow.

Even though moving to a cheaper location may mean more challenges getting to and from work.

And as for roommates... that can work well, and can also be extremely stressful. It's fine when people are doing it by choice, but I don't think any adult should be forced to do so simply because it's impossible to find affordable housing any other way.

They're basically finding ways to justify the status quo, to say that everything is fine, and that there's nothing wrong.

And so we have an economy that's eating it's seed corn.