Tidbits Quotations
To Accompany the May 9, 2011 edition of Tidbits
Bob Jensen at Trinity University

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    Fight of the Century: Keynes vs. Hayek Round Two  --- https://mail.google.com/mail/?shva=1#inbox/12f9cd7161794568


    "It's Getting Harder to Bring Home the Bacon:  C. Larry Pope, CEO of the world's largest pork producer, explains why food prices are rising and why they are likely to stay high for a long time," by Mary Kissel, The Wall Street Journal, April 30, 2011 ---

    Bobbie Jean Pope, the 81-year-old mother of C. Larry Pope of Newport News, Va., can't afford her bacon.

    "I said, 'Mom, I'll get you some bacon.' And she goes, 'I can't afford y'all's meat anymore! Why is y'all's meat so expensive?' And I said, 'Mom, you ought to understand why it's expensive—it's 'cause our costs are so expensive.'"

    Mr. Pope is the chief executive officer of Smithfield Foods Inc., the world's largest pork processor and hog producer by volume. He doesn't mince words when it comes to rapidly rising food prices. The 56-year-old accountant by training has been in the business for more than three decades, and he warns that the higher costs may be here to stay.

    Courtesy of? "I'm not going to say, 'a political policy,'" he tells me. (His senior vice president, a lawyer by training, sits close by, ready to "kick his leg" if his garrulous boss speaks too plainly.) But politics indeed plays a large role, as Congress subsidizes favorite industries and the Federal Reserve pursues an expansive monetary policy.

    Ours is a timely chat, given the burst of food inflation the world is living through. Mr. Pope is running a multibillion-dollar business in the midst of economic turmoil, and he has strong views about why prices are rising and what can be done about it.

    The Southerner is an old hand when it comes to food. He graduated from William and Mary in 1975, spent a few years at an accountancy, then joined Smithfield and worked his way up the ranks. He's something of an evangelist about his trade: He boasts that Smithfield employs some 50,000 people, many of whom are high-school graduates and immigrants others would consider "hard to hire." It's a "good business" that "gives people a good start."

    It's also a business under enormous strain. Some "60 to 70% of the cost of raising a hog is tied up in the grains," Mr. Pope explains. "The major ingredient is corn, and the secondary ingredient is soybean meal." Over the last several years, "the cost of corn has gone from a base of $2.40 a bushel to today at $7.40 a bushel, nearly triple what it was just a few years ago." Which means every product that uses corn has risen, too—including everything from "cereal to soft drinks" and more.

    What triggered the upswing? In part: ethanol. President George W. Bush "came forward with—what do you call?—the edict that we were going to mandate 36 billion gallons of alternative fuels" by 2022, of which corn-based ethanol is "a substantial part." Companies that blend ethanol into fuel get a $5 billion annual tax credit, and there's a tariff to keep foreign producers out of the U.S. market. Now 40% of the corn crop is "directed to ethanol, which equals the amount that's going into livestock food," Mr. Pope calculates.

    The rapidly depreciating dollar is also sparking inflation, although Mr. Pope says that's a "hard" topic for him to discuss, trying to be diplomatic. But he doesn't deny that money is cheap. Investment bankers are throwing cash at the firm—a turnaround from 2008, when money was scarce—even though Mr. Pope doesn't need it right now.

    Rising prices are already squeezing food producers' "two to three percent" earnings margins. "Many of us had our costs hedged in the commodity markets and we all took on strident measures to control our cost structures," Mr. Pope says. "In the case of Smithfield, we closed six processing plants and one slaughter plant. We also closed 15% of all our live production business." But "once those measures are done, we have no choice but to pass those prices down" to consumers.

    Now food price inflation is popping up across the country. A pound of sliced bacon costs $4.54 today versus $3.59 two years ago and $3.16 a decade ago, according to the Bureau of Labor Statistics. Ground beef is $2.72, up from $2.27 in 2009 and $1.74 in 2001. And it's not just Smithfield's products: "You eat eggs, you drink milk, you get a loaf of bread, and you get a pound of meat," he drawls. "Those are the four staples of what Americans eat in their diet. All of those are based on grains."

    "Maybe to someone in the upper incomes it doesn't matter what the price of a pound of bacon is, or what the price of a ham, or the price of a pound of pork chops is," he says. "But for many of the customers we sell to, it really does matter." Workers can share cars when the price of oil rises, he quips, but "you can't share your food."

    Mr. Pope also worries about the impact on farmers, who are leveraging up operations to afford the ever-rising price of land and fertilizer that has resulted from the increased corn demand. "There are record prices for livestock but farmers are exiting the business!" he exclaims. "Why? Farmers know they won't make money."

    Continued in article


    "The Slaughter That Muslims Could Not Ignore:  The killing of Shiites in Iraq was Bin Laden's undoing in the eyes of many Muslims," by Reuel Marc Gerecht, The Wall Street Journal, May 3, 2011 ---

    Like all fundamentalists, Osama bin Laden was attuned to the past. When his speeches weren't about the economic decline of America, they recalled Islam's classical age, especially the rise of the Prophet Muhammad through the Rashidun ("rightly-guided") period, which ended in 661.

    Bin Laden saw himself as an Islamic Martin Luther: a protestant who was willing to go to war with the Muslim world's Westernized, U.S.-aided kings and presidents-for-life. He hoped to arouse, by the strength of his example, a global movement that would drive the U.S., the cutting edge of the West, out of the Muslim world. Showing American feebleness would bring the inevitable collapse of the unrighteous and the restoration of a more virtuous age.

    He sustained himself for so long in the Middle East and Central Asia because lots of Muslims—especially in powerful places in Sudan, Saudi Arabia, Afghanistan and Pakistan—were sympathetic to his cause. For a time, he tapped into an angry, shameful intellectual current among Muslims, who after World War II were increasingly immiserated by their ever more lawless rulers.

    The Westernized police-states (Egypt, Syria, Algeria, Tunisia and Libya) and the corrupt "Playboy" monarchies (Saudi Arabia, the Gulf Emirates, Jordan and Morocco) all became breeding grounds for violent fundamentalism. And even among most Muslims, who did not drink deeply of this creed, the spiritual depression and conspiracy-mongering of these societies made bin Laden an admired celebrity, if not a hero, since he at least scared and hurt the all-powerful United States and openly belittled the detested autocrats.

    Historically, Islamic societies have had a fairly high tolerance for the use of violence for a just cause. Bin Laden knew well the line of thought that sees rebellion against unjust rulers as a moral obligation. This was a defining theme of early Islamic history, when Muslims as a community wrestled with what constituted legitimate authority after the death of the Prophet Muhammad.

    Among the Arabs, Princeton's Michael Cook has written, "political and military participation were very widely spread, far more so than in the mainstream of human societies—whether those of the steppe nomads, the later Islamic world, or the modern West. It was the fusion of this egalitarian and activist tribal ethos with the monotheist tradition that gave Islam its distinctive political character. In no other civilization was rebellion for conscience sake so widespread as it was in the early centuries of Islamic history; no other major religious tradition has lent itself to revival as a political ideology—and not just a political identity—in the modern world."

    Continued in article


    "Atlas Shrunk," by Scott McLemee, Inside Higher Ed, May 4, 2011 ---

    Adolescent exposure to Ayn Rand’s work tends either to convert you to her philosophy of Objectivism or to inoculate you against it. The intensity and depth of the conversion experience vary from person to person. Not everyone can handle the rigors of a totalist system requiring adherents to accept not just laissez faire economics (that’s the easy part) but the full Randian synthesis of ethics, aesthetics, epistemology, and history. There is also a kind of Objectivist psychotherapy, serving to cure altruism and related failings of character.

    And so you may approach, without ever quite hoping to achieve, the state of perfect selfishness embodied in John Galt, the mysterious hero of Atlas Shrugged. Once upon this path, you will understand why the seemingly mild-mannered Immanuel Kant was, in fact, an incredibly sinister figure, which spares you the trouble (and it really is trouble) of reading him.

    The full course of Randian thought-reform is itself quite demanding, however. Most conversions to Rand’s worldview prove halfhearted. Many are called, but few are Galtian. The world, or at least the United States, is full of people who remember the novels fondly, and vote Republican, while otherwise falling short of the glory. Rand would have scorned them. She was good at scorn, and hardcore Objectivists get a lot of practice at it as well.

    But her fans -- as distinct from her followers, sometimes called Randroids, though by each other -- form the real constituency for the "Atlas Shrugged" movie now in theaters. It is only the first of two or three parts. Whether the project will be finished appears to be a matter of debate among the moviemakers themselves. Clearly, though, it's going over well with its intended market, to judge by the Twitterchat hailing it as one of the great films of all time. And when I saw it in New York this weekend, the audience clapped at the end, as the credits began to roll.

    By that point, my capacity for disbelief had been tested quite enough for one evening; the applause seemed one challenge to it too many. The problem with this incarnation of Atlas Shrugged is not ideology but competence. The film looks cheap. Its cinematography is at roughly the level of a TV show from the 1980s. Rand’s plot is almost operatic in its indifference to plausibility, but none of the cast is up to the challenge. (Even with the lead characters, Hank Rearden and Dagny Taggart, some part of the actors' brains seemed busy checking their iPhones, perhaps to see if that dinner-theater gig came through.)

    The film, or rather this installment of it, culminates in the triumphant run of the John Galt Railroad through Colorado, traveling at hundreds of miles per hour over rails fabricated from the surprisingly controversial Rearden Metal. The State Science Institute has issued dire warnings about Rearden Metal. The entire country stops whatever it is doing just to watch this event on television. Pundits on several continents write editorials denouncing the folly of such boldness. The stakes are enormous, for the mighty train is a symbol of the indomitable individual against collectivist tyranny. Either that or the tracks made of Rearden Metal are. Possibly it's both. Anyway, the climax, when it comes, possesses all the grandeur of an Amtrak commercial.

    Any audience willing to pay $13 to watch "Atlas Shrugged" at the late screening on a Saturday night will be self-selecting for Randian enthusiasm, of course. People weren’t clapping for the movie, as such. They were applauding Rand’s weltanschauung. She was a genius, which more than makes up for the talent deficit of everyone else involved in the film. My objections are just the gripes of a Marxist who wants his money back.

    But in truth, Rand and her work intrigue me. The initial exposure did not yield conversion, by any means, but the inoculation was imperfect. Something about her is fascinating. She is one of the great pulp writers, like Jim Thompson or Richard Shaver. At the same time, her fusion of melodrama and ideology is quite distinctive. I think of Rand (who was an anti-Communist émigré from Russia) as a profoundly Soviet author -- albeit one standing on her head.

    In Atlas Shrugged, the greedy proletariat ruthlessly exploits the capitalists. The oppressed capitalists go on strike, then create a utopia under the leadership of John Galt. (In a socialist-realist “production novel” of the 1930s, Galt's analog would be the “positive hero” who grasps the direction of history and provides wise leadership.) The existence of a body of Objectivist scholarship interested me enough to write a long article about Rand for Lingua Franca, some while ago; and I still take an occasional look at the secondary literature on Rand.

    Continued in article

    Bob Jensen's universal health care messaging --- http://www.trinity.edu/rjensen/Health.htm

    Return to the Tidbits Archives ---


    Shielding Against Validity Challenges in Plato's Cave ---

    ·     With a Rejoinder from the 2010 Senior Editor of The Accounting Review (TAR), Steven J. Kachelmeier

    ·     With Replies in Appendix 4 to Professor Kachemeier by Professors Jagdish Gangolly and Paul Williams

    ·     With Added Conjectures in Appendix 1 as to Why the Profession of Accountancy Ignores TAR

    ·     With Suggestions in Appendix 2 for Incorporating Accounting Research into Undergraduate Accounting Courses

    Shielding Against Validity Challenges in Plato's Cave  --- http://www.trinity.edu/rjensen/TheoryTAR.htm
    By Bob Jensen

    What went wrong in accounting/accountics research?  ---

    The Sad State of Accountancy Doctoral Programs That Do Not Appeal to Most Accountants ---


    Bob Jensen's threads on accounting theory ---

    Tom Lehrer on Mathematical Models and Statistics ---

    Systemic problems of accountancy (especially the vegetable nutrition paradox) that probably will never be solved ---

    Bob Jensen's economic crisis messaging http://www.trinity.edu/rjensen/2008Bailout.htm

    Bob Jensen's threads --- http://www.trinity.edu/rjensen/threads.htm

    Bob Jensen's Home Page --- http://www.trinity.edu/rjensen/