Locavores versus roundabout production

This page is inspired by the following:

http://www.fee.org/in%5Fbrief/?id=51

The above URL is an essay by eminent economic policy analyst Russ Korves. To give you an idea where www.fee.org and Korves are coming from, here are the keywords given (in the keywords meta-tag) for the page:

liberty, economics, education, freedom, free-market, In Brief, capitalism, private property, free, newsletter, email, daily, commentary

I'll give them the benefit of the doubt and assume the adjective "free" modifies the noun "newsletter," or perhaps "education."

The gist of the argument is that locavores (defined as people who value minimal travel distance for their food, perhaps with high priority) are mistaken in believing that minimization of food travel goes hand in hand with efficiency. This evaluation is based on the apparent rejection by the locavores of the theory of "roundabout production" expounded by famed Austrian economist B&ouml;hm-Bawerk. The purpose of this mensaje is not to critique the locavores from the standpoint of Austrian economics; rather it is to critique them based on considerations of feasibility.

First, let's address the notion of a nonzero tolerance policy. This policy is based on the assumption that any normative parameter (see norm spec) is subject to being compromised in the interest of the normspec as a whole (or norm set or ortho norm as a whole in the case of group norms.

Korves describes the locavores as people who resolve to try to limit their dietary intake to commodities within a fixed radius of home. This binarily categorizes grocery items into the categories "acceptable" and "unacceptable," effectively creating a zero tolerance policy.

Using the maxhi schema, the objective would be quantified differently. For a one-item market basket, straight-line distance from point of origin to point of consumption might be a parameter to be minimized with high or low priority. The assumption of a linear relationship between distance so measured and financial or other costs of transport is, of course, na&iuml;ve. Nevertheless, the neutrality principle means respect and toleration for the assumption that minimization of distance, in itself, is of value. Without loss of generality, of course, the same could be said of maximization of distance, perhaps in the interest of increasing efficiencies due to roundabout production... :) Ideally partisans of both signa will be running simulations against the same databases at some point in time.

Straight line distance (very approximate, based on (say) country-of-origin labeling) might be a more database-feasible "raw" parameter (especially given pervasive GIS and the like) than informational unknowns (or little knowns) such as odometer mileage on the truck, energy consumption, internal supply chain trade secrets, etc.

For a multiple-item market basket such as one represented by an efficient shopping list, the question arises of what number most uniquely and appropriately represents the "distance" travelled by the market basket (or the items on the shopping list) as a whole. I offer two suggestions. One is a sum of terms, each term being the distance traveled by one item (in SI distance unit meters), multiplied by the mass of the item (in kg), giving a weighted travel distance measured in "meter-kilograms." A second suggestion is to calculate a sum weighted by dollar value. Being highly partisan (for economic purposes, normative) and somewhat willing to sacrifice bang/buck ratio (per my own "self interest") for making "political statements" through vendor and product selections, I might be inclined to prioritize minimizing the dollar-weighted distance parameter with high priority (minhi) and minimizing the kilogram-weighted one with low priority (minlo).

The Korves essay goes through a typical textbook demonstration of how affluence begets more varied tastes, as well as explanation of differential comparative advantages of various geographic regions to optimization of various crops. I found this presentation vaguely reminiscent of an ADM PR-fomercial I once heard one about "each food being grown where it grows best" or something.

To quote Korves:

Try anything close to the locavore approach in Tokyo or Helsinki, and it would be a disaster.

Here's a suggestion for an informational research project: Plot (on a map of the world) "feasibility (or efficiency of outcomes) of normset 'locavore'" as a function of (longitude,latitude).

Korves again:

Public-policy activists who are skeptical of roundabout production methods can play an important role in ensuring economic efficiency by not supporting government policies that distort market prices for goods and services. Both producers and consumers respond to price signals. The only way to judge which of two supply chains is the most efficient at using resources is to have market prices that reflect the cost of the goods and services used in production, processing, storage, and transportation.

In English:

Public policy activists who are skeptical of roundabout production methods should get a clue, see the light and become instead public policy activists who are skeptical of public policy.

I can't speak for the locavores, but there should never be an assumption that economic efficiency (however defined) is or is not a goal of a normset used for analysis as part of a public domain data mining project.

My own proposed research projects actually are based on an assumption that both producers and consumers respond to price signals. I'm not a "liberal," but I'm not a fundamentalist either. I wouldn't propose the creation of a database if I didn't value positive empirics. While I can endorse the notion that some kind of "efficiency" is inherent in the market mechanism, I am biased (for largely emotional i.e. normative reasons) toward the notion that this efficiency is highly compromised (i.e. price signals highly distorted) by government policies, but also (significantly, and importantly) by information asymmetry, opacity, trade secrecy, package dealing (i.e. "bundling"), nonlinear pricing, critter ships, etc.

The purpose of this essay is not to advocate for or against deregulation of prices or other phenomena of the economic sphere. One definite purpose is to "valuate" certain intangibles such as the "price" (once "unbundled" from other prices) of preferring a locally-produced market basket, or indeed the cost of holding any normative preference.