I've read that setting your blog aside is a mistake, but I've had a good excuse. December is always a stressful and busy month, but last year was the worst as my father began having some health issues and was diagnosed with cancer just before Christmas. After two months of struggle including surgery at the University of Michigan, he is now enjoying sunny Scottsdale and the excellent care of the Mayo Clinic there.
I am a worrier. And a pessimist. I admit it. And this is why I worry about the economy for the next few decades. Yes. Decades.
As the EconomicPic blog points out:
Until the recent crisis, consumer credit had exploded, now accounting for ~17% of nominal GDP, about twice the level from 50 years ago. All in, household debt is now more than 120% of GDP, twice the the level of just 25 years ago.
Think about that. It took 50 years for consumer credit to double. It has taken 25 years for total household debt to double. Perhaps we don't have to go back to the debt levels of 1959 or 1984. But we need to get a good deal of the way back, and with consumers representing 70% of US GDP that means household dollars going into debt reduction rather than nuts and chocolates. Or cars, houses, and clothing.
As EconomicPic points out, our options for fixing this are extremely limited. And I'll point out: it will take years and years.
Source: EconomicPic, http://econompicdata.blogspot.com/2009/12/deleveraging-consumer-and-economic.html
It seems I'm not alone. The National Federation of Independent Business says small business optimism is in the tank. Read Bonddad Blog full post here. This is especially bad news on the jobs front, as small businesses are key to future job creation.
In response to my last post, my turkey raising partner sent me the following email. He argues that small scale farming is inherently a communal activity:
It's not only lack of ag. infrastructure, but also the lack of a
coherent and functioning ag community.
Unlike 25 years ago, I have not one farm experienced neighbor to call on
to assist me in anything. Luckily Spaans from SD moved in.
Many farm tasks, by their nature are communal in flavor, haying and
harvesting mainly, but also on a lesser scale, moving stock, stretching
fence, heavy machinery repairs, borrowing equipment in an emergency and
on and on.
There is no one. We are all gone. At best, the neighbors are remedial,
white collar idiots who would all perish of hunger in a month. Do you
think for one second I could call up one of those folks and rely on them
to come down and actually help me, I mean help me in a way that is
meaningful, which means they know what to do? To have them help me rope
down a sick beef, give him and injection and castrate him at the same
It's all ruined and gone bad and there is no saving it.
In an article on heritage turkeys appearing in the Thanksgiving New York Times there is a telling comment:
Mr. Reese ran into problems this year when the slaughterhouse he had used shut, forcing him to truck his turkeys to Illinois and Ohio for processing, increasing his "costs by about 10 percent.
“Our turkeys are very expensive, not because of the turkey but because of the processing and shipping,” he said. “The problem is the infrastructure to support truly honest-to-God sustainable agriculture is not there.”
You don't think about needing "infrastructure" for small scale agriculture, but you do. Here's how I learned this: Two years ago a buddy and I went in on ten turkeys when he came upon a deal for some heritage-breed birds to raise. When it came time to butcher them, we went up to the feed mill (20 miles away) to inquire about getting them slaughtered.
We heard that there was an Amish guy who would do it for a few dollars a bird. Great, because he was our only option other than doing it ourselves. The Amish don't have phones, so we had to drive another 25 miles further up the road to talk to him about it and set an appointment. Then drive home. Then drive the turkeys up there, then drive home. Then drive up there to pick up the turkeys the next day. Then drive home.
The next year we dialed back to 5 turkeys and did the butchering ourselves with the help of a neighbor. This is far from easy. (10 would have been a bit of nightmare. More out of the question.)
This year, no turkeys.
By this story I mean to illustrate that local food requires an infrastructure of suppliers and services to really be practical. This little story just covers slaughtering. Depending on what you are doing -- and at what scale -- there can be issues with feed, seed, farm equipment, supplies, veterinary care, distribution -- the list is long.
As large scale agriculture has come to dominate, the infrastructure that makes small scale food production practical in many communities has evaporated.
Those who know me know that I hate Powerpoint. I refuse to use it and have attempted to ban it internally at Koeze Company, Koeze Direct, and Nuthatch Software. My co-workers always giggle nervously when a salesperson hauls out the slides, but I'm usually quite nice about it.
Among the things I hate about Powerpoint is that its use encourages passivity, as VC Fred Wilson points out in his blog:
A presentation is like a TV show. It's a lean back experience. A discussion is like an online chat room. It is a lean forward experience. They are not the same thing and in many cases they work against each other.
The last word on Powerpoint is Edward Tufte's essay The Cognitive Style of Powerpoint. Federal law should prohibit use of slide/presentation software by those who have not read and passed a test based on this essay.
An amazing animated graphic of the spread of unemployment in America: The Decline: Geography of a Recession, by Latoya Egwuekwe
Check out my Cream-Nut Clusters on Oprah's gift-finder!
Navigating this business downturn is has been difficult, but the unemployment situation is simply tragic.
I was struck today by this chart from Calculated Risk, which shows the decline in employment from the prior peak in several recessions graphed against the number of months of the decline.
(Click on the chart to make it huge.)
One look at this tells us that the road back is going to be long. I'd hate to see what this chart would look like for Michigan, with unemployment over 15%.
This lead economist Paul Krugman to suggest in his blog that we consider bringing back the WPA and CCC work programs. Giving the suffering this kind of unemployment entails, and the length of time it looks like it will be with us, I'm for it.
The controversy over the Smart Choices program has me thinking about consumers' growing interest knowing more about their food and the people involved in producing and selling it. This has created an exploding number of rating systems and certifications from the grand-daddy of them all, kosher certification, through labor certifications, organic certifications, fair trade certifications, environmental certifications, animal welfare certifications, and so on. This all on top of the variety of local, state, and federal regulatory schemes with which businesses are supposed to comply.
Today I learned about two interesting programs which attempt to go beyond the welter of fairly narrow "single issue," if you will, certifications to attempt more comprehensive looks at corporate behavior. The Good Guide works from the level of individual consumer products, but beyond narrow issues of health and nutrition it purports to evaluate manufacturers on a wide variety of social and environmental factors. The B Corporation works from the corporate level, and has what I would call a governance focus.
This is a fascinating area of development, and it will be interesting to see if any of these efforts gains sufficient traction to be a meaningful force for change -- approaching the mind share of the "Good Housekeeping Seal." (I wonder if that is meaningful anymore? I remember hearing it as a child, but not recently.)
My own guess is that none of these efforts will penetrate the fog of constant consumer marketing and provide enough consumer market muscle to be worth much, thoough I think a few of the "single-issue" certifications will gain traction with consumers passionate about those issues. The rest, especially the broader ones, will fade out, with the possible exception of the "local" movement. More on that later...
More good things in Leelanau County, Michigan. Kilcherman's Christmas Cove Farm grows around 250 varieties of antique apple varieties, and produces fabulous tart cider.
To work up a bit of a thirst for the cider, we had earlier taken a hike at one of the coolest places on the planet, the forested dunes of Houdek Dunes Natural Area, a property owned by the Leelanau Conservancy (of which my wife and I are members).
When he was small, my son, Hugh, used to call this "the desert in the middle of the woods."
This large maple is a particularly interesting tree. The open, spreading shape indicates that it matured before there were other trees around it. I learned to spot features like this from a book called Reading the Forested Landscape by Tom Wessels. If you hike on land that has formerly been farmed or logged (as almost everybody in the East does), this book will increase your understanding of the landscapes you are observing.