In his NYT column today, Paul Krugman, writing about food prices’ recent rapid climb, sounds a grim, almost Malthusian note, concluding that “cheap food, like cheap oil, may be a thing of the past.” Wheat prices are astronomical already, and rice stores have become so depleted in Asia that many producing countries are threatening to stop exporting the grain. (I have seen the writing on the wall. Last weekend, I went to Pacific Supermarket and bought a 20-pound bag of Nishiki brown rice. Get it while you can; that’s all I am saying.) Krugman cites a few factors contributing to the problem—oil prices, droughts—and really lays into the biofuel industrial complex.

The subsidized conversion of crops into fuel was supposed to promote energy independence and help limit global warming. But this promise was, as Time magazine bluntly put it, a “scam.”
This is especially true of corn ethanol: even on optimistic estimates, producing a gallon of ethanol from corn uses most of the energy the gallon contains. But it turns out that even seemingly “good” biofuel policies, like Brazil’s use of ethanol from sugar cane, accelerate the pace of climate change by promoting deforestation.
And meanwhile, land used to grow biofuel feedstock is land not available to grow food, so subsidies to biofuels are a major factor in the food crisis. You might put it this way: people are starving in Africa so that American politicians can court votes in farm states.

Alongside the theme of neutralizing the farm lobby is a hint of population-control politics that we haven’t heard much about since its heyday in the late 1960s, when widespread affluence was considered a problem in the West and books like Paul Ehrlich’s The Population Bomb were being sold in drugstores in pocket-size paperbacks. The idea that food prices will remain high (i.e. that food supply will remain scarce, that we have reached some new plateau of productive capacity that caps that supply) could be seen as a harbinger of food rationing and famine, and an indicator that Malthus’s scenario is finally coming to pass—namely that food supplies can’t keep up with a population that grows exponentially. But now the problem takes a slightly different form; with so many people wanting to eat luxuriously, the resources necessary for everyone to eat at all are being hoarded and consumed by the more affluent. Krugman calls it “the march of the meat-eating Chinese” and notes “the growing number of people in emerging economies who are, for the first time, rich enough to start eating like Westerners. Since it takes about 700 calories’ worth of animal feed to produce a 100-calorie piece of beef, this change in diet increases the overall demand for grains.” In other words, developing countries want to imitate the standards of living that Americans have inaugurated as the prerequisites of economic maturity. National diet (as with wasteful patterns of energy consumption) can function as mark of national status and can stifle potential political unrest with luxuries, and this leaves little room for conservation.

The problem, then, is not so much a population explosion, but an explosion of those who expect middle-class comforts (and those who use those comforts for political control). Not a Malthusian issue so much as a Veblenesque one: That package of expectations and the ideology of entitlement that goes along with it, will probably come under increasing fire. Hence the cult of asceticism that has derived from the environmental movement—the way to be even more middle-class in terms of prestige, from this point of view, is to deprive yourself for a noble cause—limit your choices by viewing them through the lens of “sustainability.” (Whether that can be adequately defined to make it an operational distinction is an open question.) With this ideology, at least the status hierarchy is being leveraged to accomplish some good.

Oh, and on a related note, Jon Taplin points to Merrill Lynch analysts explaining that American households spend more on debt service than food.

—Rob Horning

I found this NYT op-ed, by Sandra Aamodt and Sam Wang, about strengthening one’s willpower incredibly creepy. Mainly, the experiments used to test willpower seem strange, obliquely laden with all sorts of ideological assumptions about what takes will and what doesn’t:

In one pioneering study, some people were asked to eat radishes while others received freshly baked chocolate chip cookies before trying to solve an impossible puzzle. The radish-eaters abandoned the puzzle in eight minutes on average, working less than half as long as people who got cookies or those who were excused from eating radishes. Similarly, people who were asked to circle every “e” on a page of text then showed less persistence in watching a video of an unchanging table and wall.

Who is signing up for these studies? Can they be considered representative if they volunteer for this sort of thing? Does it require willpower to do a pointless task a scientist demands of you? Isn’t personal incentive important in this context, or is the thrust of the study to suggest that willpower is most needed when a person is unmotivated, indifferent—that will has precisely to do with doing the tasks society demands?

That seems backward to me; I lack will precisely with the things that are important to me and threaten the possibility of deep-rooted failure, at the core level of my aspirations. If I failed to circle some e’s, what difference would that make? Willpower seems to me something that can’t be observed in a laboratory and could probably only be studied through a proxy, something like completing a dissertation or running marathons. But even then, the definition of willpower is problematic. Is it the will to resist temptation, or the will to complete unpleasant tasks, or the will to overcome obstacles presented by the wills of other people?

This semantic confusion leads to crazy sounding recommendations like this, where incomparable goals are all jumbled together as if they are all notions to be plugged into an algebraic equation: “In the short term, you should spend your limited willpower budget wisely. For example, if you do not want to drink too much at a party, then on the way to the festivities, you should not deplete your willpower by window shopping for items you cannot afford. Taking an alternative route to avoid passing the store would be a better strategy. On the other hand, if you need to study for a big exam, it might be smart to let the housecleaning slide to conserve your willpower for the more important job. Similarly, it can be counterproductive to work toward multiple goals at the same time if your willpower cannot cover all the efforts that are required. Concentrating your effort on one or at most a few goals at a time increases the odds of success.”

Making goals into arbitrary variables is perhaps the purpose of framing philosophical ideas in this cryptoscientific fashion. The quotation reveals what seems to be the underlying consequence of research like this, to reify willpower, to change it from an active mental process to a commodity, something you stockpile and count. Only then can it be seen as an activity rather than an inert substance. It is troped as fitness, which is the biochemical correlative of consumerism: “Like a muscle, willpower seems to become stronger with use. The idea of exercising willpower is seen in military boot camp, where recruits are trained to overcome one challenge after another.”

How long will it be before someone monetizes this particular finding? “Weak-kneed and irresolute? Send your brain to boot camp! 50 Willpower Exercises to Transform Your Life and Bring Out the Determined YOU!”
1. Circle every e in the metro section of The New York Times. Why? To concentrate, silly!
2. Eat nothing but radishes for lunch. Yes, it’s icky, but how else will you develop the mental fortitude you need for the important tasks in life, like dieting?
3. Force yourself to look at page after page of shoes on Zappos, but wait, here’s the thing: Don’t buy any! It’s weird, I know, but then you will have the determination to buy only the shoes you really need.
4. Brush your teeth with your left hand (or your right if you’re a southpaw!). That will teach you to be determined about the really important things.

You get the idea. Maybe they can have mental gymnasiums where you can pay for the privilege of doing pointless things for a few hours. Make into an exclusive status product (make it expensive and have eligibility requirements) and it can really take off.

The will was once regarded as the essence of a person’s soul—“free will” reputedly had a lot of theological import at one time. One’s will was valuable for its own sake, as the mark of someone who had achieved some kind of self-determination, a purpose in life. Now, apparently, the will is to be regarded as just another resource, to be hoarded for special occasions—a big exam or when you need to turn down chocolate. Now I am going to see if I can muster up the determination to read the rest of the paper. Too bad all the e‘s are blotted out.

—Rob Horning

Further evidence for the insanity of the “ownership society.” Just about everyone in the econoblogosphere has weighed in on this NYT article by Louis Uchitelle about how the housing market is affecting the labor pool.

Mobility opens up job opportunities, allowing workers to go where they are most needed. When housing is not an obstacle, more than five million men and women, nearly 4 percent of the nation’s work force, move annually from one place to another — to a new job after a layoff, or to higher-paying work, or to the next rung in a career, often the goal of a corporate transfer.... Now that mobility is increasingly restricted. Unable to sell their homes easily and move on, tens of thousands of people ... are making the labor force less flexible just as a weakening economy puts pressure on workers to move to wherever companies are still hiring.

Moving is a transaction cost in the labor market, and the housing bubble aftermath has made that cost exceedingly high. This is leading to more of what economists call frictional unemployment, raising the jobless numbers and undermining economic confidence and reinforcing the cyclical factors that sustain recessions. As Calculated Risk notes, “Less worker mobility is kind of like arteriosclerosis of the economy. It lowers the overall growth potential.”

One way to ensure a more mobile labor pool is to encourage people to rent rather than own, so nothing ties them down to moribund regions like, say, Detroit, where the housing problems are perhaps the worst. Instead, the government does what it can to discourage renting, subsidizing interest payments made on real estate purchases. (David Leonhardt examines the foolishness of this in this NYT piece.) As Tim Harford pointed out in a Slate piece, “English economist Andrew Oswald has shown that across European countries, and across U.S. states, high levels of home ownership are correlated with high levels of unemployment. More conventional factors such as generous welfare benefits or high levels of unionization don’t explain unemployment nearly as well as the tendency to own houses. Renting your home and staying flexible do wonders for your chances of always finding an interesting job to do.” (He also notes that some people don’t care about interesting work or don’t believe they’ll find it, and would rather have a cheap home with no job prospects; this creates sinks of discouraged workers in certain regions.)

Yves Smith adds this excellent point: “Uchitelle fails to acknowledge that home ownership has been discussed in the economic literature and found to inhibit labor mobility even in good times. Guess we can’t question that American dream.” The point is that Uchitelle’s story is about the hardships of selling and owning homes in downturns, as if there were no alternative to home ownership. There is one: renting. But in America, it seems taboo to mention in a normative fashion. Only weirdos rent.

—Rob Horning

I’m generally skeptical of social networks—they seem to me primarily ways to commercialize and monetize one’s presumable bevy of friends and get competitive over how social you are—but I find this trend (via Marginal Revolution) toward using them to play games heartening. It makes me understand for the first time why people bother to sign up for them. (I don’t understand why so many people play Scrabble on them though, a game I find to be no fun and very nearly antisocial.)

Games have become some of the most popular applications to be introduced. While some programs have quickly flamed out, games have drawn repeat users who keep coming back for more. And games have steadily amassed new recruits as players invite their friends.
Unlike traditional online casual games, users playing inside a social network aren’t competing against strangers who happen to be online at the same time, but against their friends. It’s a significant distinction: Segal said he had tried playing backgammon online in the past, but didn’t have a good experience. If he played well, his opponents sometimes would just abandon the game and disappear. That doesn’t happen among his friends.
Social gaming has become yet another means to keep in touch.
“It delivers the message, ‘I’m thinking about you’ without having to think of something to say,” said Jeremy Liew, a general partner at Lightspeed Venture Partners, who has blogged extensively about social gaming. “You can’t always instant message (your friends) or write to them, but playing games with them is one way of expressing that they’re important to you.”

I completely relate to that last part. I used to play bridge (wished I still was playing bridge, actually) and part of the pleasure was definitely the structured social activity, which allowed conversation to be subordinate, and fill in the gaps naturally. It’s very hard to make an activity out of “keeping in touch”—it ends up feeling forced and off-putting; there’s just no context for knowing what a friend who is not integrated into your everyday life would want to hear about. How I went to the hardware store to get screens for my windows? How I spent hours combing over fantasy baseball news? These were among the big personal events for me recently. But a game obviates the need for pretexts, lets a connection exist without contrived chitchat.

I don’t quite get this though:

San Francisco startup Serious Business, founded by 23-year-old Alexander Le and 24-year-old Siqi Chen, believes that a new genre of games could be mined from tapping into social networks.
In November, the duo created Friends for Sale, now one of Facebook’s most popular games with nearly 700,000 daily players. Users buy, sell and own their friends, as though their friends were pets or stocks. Owners can control their acquisitions, forcing them to do or say things, as well as sell them and turn a profit. Those being bought and sold are also part of the game, going up and down in value.

This sounds like Slave Trade, the home game.

—Rob Horning

Last Friday, the WSJ ran an intentionally inflammatory article about “trash-outs,” when foreclosed homeowners vandalize their homes before being forced to abandon them to the banks. The opening gambit of the article is to depict how some banks have taken to bribing foreclosed occupants not to trash the homes before leaving.

These days, bankers and mortgage companies often find that by the time they get the keys back, embittered homeowners have stripped out appliances, punched holes in walls, dumped paint on carpets and, as a parting gift, locked their pets inside to wreak further havoc. Real-estate agents estimate that about half of foreclosed properties to be sold by mortgage companies nationwide have “substantial” damage, according to a new survey by Campbell Communications, a marketing and research firm based in Washington, D.C.
The most practical way to ensure the houses are returned in decent shape, lenders and their agents say, is to pay homeowners hundreds or even thousands of dollars to put their anger in escrow and leave quietly. A ransom? A bribe? “Yeah, somewhat,” says John Carver, an agent specializing in foreclosed homes for Prudential Americana Group in Las Vegas. But “you lose a house, and then you get some financial help—it’s a good thing...It’s a win-win for both parties.”

Yes, a real “win” for the people who have lost their house, who are “losing the dream” in the words of a real-estate agent quoted in the story. A tough break, to be sure. Still, it is also natural for readers to respond to an article gleefully detailing the spiteful destruction on the part of delinquent borrowers with perplexity. You might even be inspired to think, What a bunch of assholes.

At Calculated Risk, Tanta takes issue with this short-sighted attitude and seizes on the phrase foreclosed tenants to provide the rationale behind such vandalism.

When you take an interest-only no-down-payment loan to buy a house at market price--that is, at anything other than a significant discount to market price--you are in effect, if not in fact, merely “leasing” the house from the bank....
Possibly some borrowers are coming to the belated recognition that they were, de facto, not much more than tenants who were paying well above “market rent,” but the market no longer allows them to “sell” the “lease” to the next sucker, and the law does not allow them to simply forfeit the security deposit and move away. To be a “foreclosed tenant” is to live in the worst of both worlds.... They begin to grasp that they had only ever been given a short-term lease on the “American Dream,” not a piece of the “ownership society” pie. More than a few of them are very, very, crabby.

If success and respectability in America is popularly predicated on homeownership, then losing a home is much more likely to make someone lose regard for restraining mores. They tried to “work hard and play by the rules” that said you start by securing a home for your family. But then forces beyond their control—shifts in interest rates and financial risk management, in the economic climate and the future of house prices (which everyone was virtually guaranteeing couldn’t come down)—made the mortgage payments untenable and refinancing impossible. So the conclusion that following unspoken rules about conduct is a waste of time is actually fairly understandable. The joke of the American dream was on them, and they want to turn the tables by taking the implication of that one step further: If we can’t realistically aspire to society’s rewards, we won’t adhere to its codes.

It is within the realm of possibility that some folks engaging in “trash-out refinances” are, well, making the point that the joke’s on you, Mr. Bank. You might consider it a kind of performance art of the gallows-humor subgenre.

Subprime borrowers: the return of Lazlo Toth?

—Rob Horning