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Author Topic: Agriculture and GDP Per Capita PPP  (Read 2548 times)
phk
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« on: June 19, 2010, 08:53:01 pm »
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I was in a debate with a girl somewhere and this is what I used to help prove a point.

All stats on the bottom.






summ

    Variable |       Obs        Mean    Std. Dev.       Min        Max
-------------+--------------------------------------------------------
     Country |         0
GDP_PPP_pe~a |       185    13405.65    14559.11        332      83841
   PercentAg |       186    .1540054    .1501916          0       .769


. reg  GDP_PPP_per_Capita PercentAg

      Source |       SS       df       MS              Number of obs =     185
-------------+------------------------------           F(  1,   183) =  107.19
       Model |  1.4407e+10     1  1.4407e+10           Prob > F      =  0.0000
    Residual |  2.4596e+10   183   134401768           R-squared     =  0.3694
-------------+------------------------------           Adj R-squared =  0.3659
       Total |  3.9002e+10   184   211967715           Root MSE      =   11593

------------------------------------------------------------------------------
GDP_PPP_pe~a |      Coef.   Std. Err.      t    P>|t|     [95% Conf. Interval]
-------------+----------------------------------------------------------------
   PercentAg |  -58818.12   5681.119   -10.35   0.000    -70027.04   -47609.21
       _cons |   22493.85   1223.538    18.38   0.000     20079.79     24907.9
------------------------------------------------------------------------------

« Last Edit: June 19, 2010, 09:03:21 pm by phknrocket1k »Logged

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« Reply #1 on: June 20, 2010, 06:43:52 pm »
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what point were you trying to prove?
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« Reply #2 on: June 20, 2010, 07:38:18 pm »
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what point were you trying to prove?

Some people think a country can be made prosperous by more agriculture, or more people working in agriculture. It's quite idiotic. But of course Phknrocket might be trying to prove some other point, I dunno.
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phk
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« Reply #3 on: June 20, 2010, 07:47:40 pm »
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what point were you trying to prove?

Some people think a country can be made prosperous by more agriculture, or more people working in agriculture. It's quite idiotic. But of course Phknrocket might be trying to prove some other point, I dunno.

Exactly it.

My data set is from the IMF, which I forgot to disclose in my first post.

Btw if you're stuck in a heated debate, learn stata and econometrics and find data sets. Nice graphs are a great way to get your point across.
« Last Edit: June 20, 2010, 09:27:45 pm by phknrocket1k »Logged

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« Reply #4 on: June 20, 2010, 10:06:08 pm »
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Is a linear estimator really the best choice for this data? Nonrandom distribution of the error term, such as heteroskedasticity, which seems apparent as the errors are much more highly clustered around high PPP_per_capita will bias your OLS estimates.
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« Reply #5 on: June 21, 2010, 04:20:42 am »
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I still think it would be beneficial to grow more of our own food for obvious reasons.
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« Reply #6 on: June 23, 2010, 04:02:30 am »
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I still think it would be beneficial to grow more of our own food for obvious reasons.
Sure..but not if it makes food more expensive to buy.
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« Reply #7 on: June 24, 2010, 02:13:56 pm »
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Is a linear estimator really the best choice for this data?

That was my first thought as well.  Apparently mediocre minds think alike.

The data would obviously fit an exponential decay much better.  Try f(x) = A e^(-Bx) where A and B are the paramters, rather than f(x) = Ax+B.

Other than the poor choice of regression function, the point is well made with the graphs.  But to put a finer point on it, you might consider separating subsistence agriculture from production agriculture.  I have no doubt that those societies in which agriculture is performed primarily by small farmers who feed only themselves would have a low per-capita GDP, but what about comparing economies of scale as PPP versus %non-farm employees, where "farm" is defined by corporate farms.  You'd still probably be right, but it'd be a more compelling argument to make because no one will accuse you of comparing apples to oranges, so to speak.
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« Reply #8 on: June 25, 2010, 12:47:41 am »
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It looks like GDP per capita * percent of workers in Agriculture might be relatively constant as a function of GDP per capita.
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Snowguy716
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« Reply #9 on: June 25, 2010, 07:03:03 am »
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what point were you trying to prove?

Some people think a country can be made prosperous by more agriculture, or more people working in agriculture. It's quite idiotic. But of course Phknrocket might be trying to prove some other point, I dunno.
Well, there is no doubt that increased ag employment would help rural America.  And while the correlation is absolutely clear, a robust ag sector is vital to our economy.  We have some of the best farm land on earth and we'd be stupid not to take advantage of that simply because somebody in a third world country could produce less vigorous, less nutritionally balanced foods more cheaply.

The other problem comes down to infrastructure:  While the massive move to cities has created countless jobs just by that movement (building homes, infrastructure, highways, etc.), in the long term it is an inefficient use of resources.. especially in rural areas where the infrastructure was built for a larger population.

Roads and schools are two great examples of inefficient use of infrastructure.  People look at population growth as the driver of economic growth.  More people means more consumers which means more potential for profit.  We look at shrinking populations as having the opposite effect on economies.. and we somehow fool ourselves into thinking that we need to maintain the rural infrastructure that has a lot of excess capacity.

The main reason is that building more appropriate and more efficient levels of infrastructure has high up front costs that rural residents are wont to oppose because their property taxes are likely already disproportionally high compared to their incomes.

"Subsidizing" rural America to a point will likely have benefits for the economy as a whole.  We can use existing infrastructure and it keeps communities together, which reduces crime.

Also, with the advent of the internet, people can "telecommute" and many rural areas are now home to a surprising amount of high tech industry.

Some of the wins for rural Minnesota recently have been the construction of a Windmill factory in SW Minnesota as well as several small biotech companies in rural areas that can operate thanks to excellent rural high speed internet connectivity.  (Japan looked to us as a model when they wanted to upgrade and expand their rural fiber optics network).

Of course, eventually nearly all Americans will live in medium and large cities with only small numbers living in rural areas.  Rural communities have accepted they won't have any kind of major population growth.. but rather, they are focusing on quality of life for the people already living there and using technology to allow people to stay and still be productive in today's economy.  Preservation and development through technology is the strategy rather than vainly attempting to attract all sorts of new residents.. which inevitably fails nearly every time.
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« Reply #10 on: June 25, 2010, 03:31:22 pm »
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what point were you trying to prove?

Some people think a country can be made prosperous by more agriculture, or more people working in agriculture. It's quite idiotic. But of course Phknrocket might be trying to prove some other point, I dunno.
Well, there is no doubt that increased ag employment would help rural America.  And while the correlation is absolutely clear, a robust ag sector is vital to our economy.  We have some of the best farm land on earth and we'd be stupid not to take advantage of that simply because somebody in a third world country could produce less vigorous, less nutritionally balanced foods more cheaply.

America already has the most farmlands in the world. And also the most productive, though that might have more to do with vastly better irrigation and better infrastructure to get the food to market. And we get it done with much less manual labor than developing countries. Don't you think that is better, since it's being produced at a cheaper cost? You could argue we need more farming in America, but it shouldn't and won't be a major source of employment. It should remain right around 2-3%, where it is currently.
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phk
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« Reply #11 on: June 25, 2010, 05:48:09 pm »
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what point were you trying to prove?

Some people think a country can be made prosperous by more agriculture, or more people working in agriculture. It's quite idiotic. But of course Phknrocket might be trying to prove some other point, I dunno.
Well, there is no doubt that increased ag employment would help rural America.  And while the correlation is absolutely clear, a robust ag sector is vital to our economy.  We have some of the best farm land on earth and we'd be stupid not to take advantage of that simply because somebody in a third world country could produce less vigorous, less nutritionally balanced foods more cheaply.

America already has the most farmlands in the world. And also the most productive, though that might have more to do with vastly better irrigation and better infrastructure to get the food to market. And we get it done with much less manual labor than developing countries. Don't you think that is better, since it's being produced at a cheaper cost? You could argue we need more farming in America, but it shouldn't and won't be a major source of employment. It should remain right around 2-3%, where it is currently.

Bear in mind, production of food is not a problem. With that said productivity in agriculture is already sky high due to mechanization which is the reason why there isn't much more job creation in that sector.

Btw agricultural employment in the US is <1%.
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Snowguy716
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« Reply #12 on: June 25, 2010, 08:38:29 pm »
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what point were you trying to prove?

Some people think a country can be made prosperous by more agriculture, or more people working in agriculture. It's quite idiotic. But of course Phknrocket might be trying to prove some other point, I dunno.
Well, there is no doubt that increased ag employment would help rural America.  And while the correlation is absolutely clear, a robust ag sector is vital to our economy.  We have some of the best farm land on earth and we'd be stupid not to take advantage of that simply because somebody in a third world country could produce less vigorous, less nutritionally balanced foods more cheaply.

America already has the most farmlands in the world. And also the most productive, though that might have more to do with vastly better irrigation and better infrastructure to get the food to market. And we get it done with much less manual labor than developing countries. Don't you think that is better, since it's being produced at a cheaper cost? You could argue we need more farming in America, but it shouldn't and won't be a major source of employment. It should remain right around 2-3%, where it is currently.

I detest this kind of agriculture


This is much more natural
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« Reply #13 on: June 26, 2010, 03:29:11 am »
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I also prefer the latter, but in many cases we need to use irrigation to grow crops. I of course don't support growing rice in the desert, but I don't think the entire California agriculture industry should be shut down (and let's not forget California has some of the most fertile land in America, but it has a shortage of water).

And it's not as if this kind of agriculture is happening at the expense of agriculture on land with more rainfall. America has the most farmed land in the world because it has been successful at turning semi-arid areas into productive farmland in addition to land that is seemingly more fit for farming.

Is there some massive under utilization of farmland in the midwest that I am not aware of? Otherwise I am not grasping the point you are trying to make.
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« Reply #14 on: June 26, 2010, 12:40:13 pm »
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Is there some massive under utilization of farmland in the midwest that I am not aware of? Otherwise I am not grasping the point you are trying to make.

Uncle Sam pays billions in subsidies for farmers *not* to grow crops, which is morally reprehensible as well as a massive waste of tax dollars.
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« Reply #15 on: June 26, 2010, 12:47:25 pm »
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Even the second picture looks a little modern for my taste Tongue

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I think the point he's trying to make is that it would be better for society in the rural Midwest if more people worked on the land.
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« Reply #16 on: June 26, 2010, 02:21:31 pm »
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Is there some massive under utilization of farmland in the midwest that I am not aware of? Otherwise I am not grasping the point you are trying to make.

Uncle Sam pays billions in subsidies for farmers *not* to grow crops, which is morally reprehensible as well as a massive waste of tax dollars.

Oh yeah, that. But even in that case we don't need to expand the amount of arable land. We just need to actually grow food on it.
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« Reply #17 on: June 26, 2010, 02:24:27 pm »
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I think the point he's trying to make is that it would be better for society in the rural Midwest if more people worked on the land.

What's wrong with mechanization making agriculture less labor intensive? It makes food cheaper for all of us. If more people in the rural midwest worked on the land, either food prices would go up or wages would go down (but since minimum wage laws won't allow it beyond a certain point, food prices will go up).
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« Reply #18 on: June 26, 2010, 05:51:07 pm »
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During the Maoist era in China, a western economist visited a dam construction site, where thousands of workers are using shovels to dig the dam. He asks the supervisor why they are not using bulldozers to build the dam as it would be much easier and faster. The supervisor replies that if they used bulldozers, thousands of people will be out of work.

The economist replies, "why don't you take away their shovels and let them dig with spoons?"
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phk
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« Reply #19 on: July 05, 2010, 03:11:17 am »
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This is probably another reason.

Year to date volatility is quite high with respect to agricultural commodities. Rice and Sugar farmers would face a depression while Coffee farmers would be riding a bubble.

« Last Edit: July 05, 2010, 03:13:01 am by phknrocket1k »Logged

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« Reply #20 on: July 05, 2010, 11:05:03 pm »
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Is there some massive under utilization of farmland in the midwest that I am not aware of? Otherwise I am not grasping the point you are trying to make.

Uncle Sam pays billions in subsidies for farmers *not* to grow crops, which is morally reprehensible as well as a massive waste of tax dollars.

Oh yeah, that. But even in that case we don't need to expand the amount of arable land. We just need to actually grow food on it.

I *think* this is the notion at the heart of the pro-agriculture argument, that we're really weakening an important sector of the economy by using arable land for other purposes. After all, arable land is one of the US's great natural resources. We have more arable land than any other country in the world, and both greater agricultural output and greater potential than any other country. While certainly agriculture would not create large numbers of jobs, it would still be a good idea to combat the replacement of agricultural land with economically non-productive residential sprawl, as has taken over so much rich agricultural land in the Central Valley and in parts of the Midwest.
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« Reply #21 on: July 06, 2010, 08:41:49 pm »
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While certainly agriculture would not create large numbers of jobs, it would still be a good idea to combat the replacement of agricultural land with economically non-productive residential sprawl, as has taken over so much rich agricultural land in the Central Valley and in parts of the Midwest.

The American dream is to live in your own single family home. We'd have to have a major shift in societal values and expectations before people from all income groups will be clamoring to live in apartment buildings again.
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phk
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« Reply #22 on: July 06, 2010, 08:54:09 pm »
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While certainly agriculture would not create large numbers of jobs, it would still be a good idea to combat the replacement of agricultural land with economically non-productive residential sprawl, as has taken over so much rich agricultural land in the Central Valley and in parts of the Midwest.

The American dream is to live in your own single family home. We'd have to have a major shift in societal values and expectations before people from all income groups will be clamoring to live in apartment buildings again.

Even than I'd argue there'd be excess farm output. We have an obesity problem here and are still net exporters of food.
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« Reply #23 on: July 07, 2010, 09:15:30 am »
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While certainly agriculture would not create large numbers of jobs, it would still be a good idea to combat the replacement of agricultural land with economically non-productive residential sprawl, as has taken over so much rich agricultural land in the Central Valley and in parts of the Midwest.

The American dream is to live in your own single family home. We'd have to have a major shift in societal values and expectations before people from all income groups will be clamoring to live in apartment buildings again.

That shouldn't matter. Proper public policy is about what is best (for the economy, for the people, etc.), not necessarily what the people want, which is often counterproductive and is why planning agencies tend to be far removed from the destructive reach of the voter.

In any case, the expectation is largely created by government subsidy and support for single-family development (and neglect for urban development) rather than some sort of inherent aspect of human psyche. The desires would change rapidly if government energy were directed properly.

Also, your objections make no sense, phknrocket. For one, Americans are certainly not obese simply due to producing a lot of food. True, low prices for some unhealthy foods contribute, but these foods are (1) not produced in California, where the most egregious loss of farmland is taking place and (2) heavily subsidized by the federal government, subsidies which must be eliminated for proper agricultural growth. Also, the US is no longer a net exporter of food and has not been since 2006.
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« Reply #24 on: July 07, 2010, 09:17:25 am »
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While certainly agriculture would not create large numbers of jobs, it would still be a good idea to combat the replacement of agricultural land with economically non-productive residential sprawl, as has taken over so much rich agricultural land in the Central Valley and in parts of the Midwest.

The American dream is to live in your own single family home. We'd have to have a major shift in societal values and expectations before people from all income groups will be clamoring to live in apartment buildings again.

That shouldn't matter. Proper public policy is about what is best (for the economy, for the people, etc.), not necessarily what the people want, which is often counterproductive and is why planning agencies tend to be far removed from the destructive reach of the voter.

In any case, the expectation is largely created by government subsidy and support for single-family development (and neglect for urban development) rather than some sort of inherent aspect of human psyche. The desires would change rapidly if government energy were directed properly.

Also, your objections make no sense, phknrocket. For one, Americans are certainly not obese simply due to producing a lot of food. True, low prices for some unhealthy foods contribute, but these foods are (1) not produced in California, where the most egregious loss of farmland is taking place and (2) heavily subsidized by the federal government, subsidies which must be eliminated or restructured for proper agricultural growth. Also, food is one of, perhaps the only, thing of which the US is a net exporter. We should play to our strengths to increase that advantage where we can.
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