The sustainability of meat

There is an excellent post over at Offsetting Behaviour discussing the reasons why people go vegetarian, and discussing the separation of moral and allocative issues that lead to this choice.  The way I see it, there are three main reasons why a person may go vegetarian – these can be mixed and matched of course, they aren’t mutually independent.

  1. The person has an eating disorder
  2. The person gains disutility from eating a dead animal/causing the death of an animal
  3. The person gains disutility from the view that, given current institutions, the consumption of meat is unsustainable/damaging – specifically that the choice to eat meat lowers the lifetime welfare of future generations.
  4. Update:  Health, I forgot health – some people do it for health reasons.

Now I have recently gone vegetarian myself.  My reasoning was the second one.  This is strange given things I have previously said, I know –  implicitly I do believe that if the animal only lives because it is going to be consumed, and that the life it lives is a good one, then it is morally right to eat the animal.

However, I am viciously time inconsistent.  When it comes to the final stage of the animals life where it must die, I can’t handle the personal disutility I gain from the idea that the animal died to feed me.  As a result of my selfish choice not to eat meat, the animals I would have consumed never get to live those beautiful free-range lives that they deserved.  Not to worry though. See it here first.

Anyway, I haven’t come here to discuss myself, I’ve come here to discuss the sustainability issue.

Is meat consumption sustainable in our finite world?

Lets note something down here.  Prices represent scarcity, as long as the “price is right” the consumption of meat is perfectly sustainable.  As Eric says:

There’s no need for a moral imperative to reduce meat-eating. Get rid of subsidies in the agricultural sector, make sure effluent externalities are properly priced or regulated, then let relative price adjustments take care of the rest. The optimal amount of meat will be eaten, so long as we keep waving our hands about the moral questions.

However, people who do not eat meat on these grounds have exactly the same argument.  They would say:

  • Meat is subsidised.
  • Externalities are not priced, regulation is not appropriate.
  • We discount the future too strongly, relative to what we believe is morally right.

Given these sets of factors people turn around and say “what can I do”.  With the price too low, there is a relative overconsumption of meat, an overutilization of land into the production of meat, an excessive degradation of the environment.  In this context, it is completely consistent of people to say they will go vegetarian to deal with it – however, instead of complaining about the unsustainability of meat in of itself, it might be better that they say that the “price is wrong”. If you want to learn about how meat is stored for being sold and to be transported, get more information from this new blog post.

I would argue that governments should come together and ensure that the worst of these issues are fixed, namely that subsidises on agricultural production are removed.  Then these people can get back to enjoying the consumption of meat, knowing that the higher price they are paying represents truly sustainable practices.

Economists: Born or trained

Although that is an interesting title, I’m not actually going to talk about anything interesting.  Instead, Merry Christmas everyone – and here is a cartoon from Saturday Morning Breakfast Cereal (again):

(ht SMBC)

Crisis over before Christmas?

With bond yields collapsing in Europe the implied “bank run” on the periphery appears to be over.  This is due to the ECB backstopping European banks for the next three years – in some sense they have taken on the lender of last resort role, just in a confusing, seemingly temporary, and poorly communicated way. Note:  Whether this is really “happening” is still an open question – we won’t have confirmation of this, or its impact on CDS’s, until tomorrow at the earliest.

This in no way means that the fundamental issues in Europe are over – in fact, it makes focus on the structural problems in Europe an essential part of what people should now be doing.

However, if the bank run really is over, and credit markets really are unfreezing (something we will know in the next couple of days), it is a positive for the short-term for a little country like NZ.  But lets not forget a few things:

  1. Japan, and now Europe, have shown us the vulnerability of public and private finances to changes in demographic structure – we ignore these issues at our peril, and with plenty of warning.
  2. Europe still has massive structural issues.  These still need to be solved, or we will merely have another crisis down the line.
  3. If Europe isn’t going to sort itself out, hopefully the rest of the world will see the risk and reduce their implied exposure to Europe.

RBNZ December 2011 Bulletin

It’s good – and its pretty easy reading.  You guys should give it a go.

My main focus was on the starting paper on consumption, which just gives a basic overview of how to view total consumption in New Zealand, and then uses this framework to understand some stylized facts regarding NZ in the past decade.  I also agree heartily with the conclusion:

However as consumption as a share of income did nothing very unusual during an unprecedented housing boom, it is not obvious that there is a large role for house prices to play in explaining consumption behaviour during the period.

I like it because it supports my priors of course 😉 .  Fundamentally, we can’t rely on some “wealth effect” that has driven us to buy “flat screen tv’s” to explain what has happened in NZ over the last decade – a point that was, at one point, being pushed too hard IMO.  Debt has been built up, house sizes have increased, building costs/land prices have risen, non-house consumption goods have been cheap, financial markets have changed – there are a range of factors here that we need to tie together to make a convincing, and sensible, story of what has happened.  And once we have a clear and consistent answer, only then can we try to understand whether it is/was “good” or “bad” and whether there is anything that should be done to improve outcomes.

Conditional policy

Today’s Fed statement about monetary policy followed the same pattern that we have seen from other central banks, such as the RBA and RBNZ.

Essentially, fundamental conditions remain a bit weak, and so there is a reason to keep policy stimulatory – however, this view is strongly conditional on the ECB/Europe not being bat sh*t crazy.

Should the ECB/Europe be bat sh*t crazy, these central banks will be ready to support their respective domestic economies.

It makes sense – you can’t have an organisation  being BSC as a central forecast.  However, the risk has to be taken into account – which is why so many other organisations are releasing “downside scenarios” alongside their primary forecasts (the RBNZ and Treasury have both done this in NZ).

Again, I stick to the following line.  The current banking crisis needs to be sorted by the ECB – fiscal authorities need more discipline, and that is a structural issue, but that isn’t the marginal factor pushing things into trouble now.

The ECB is doing things – but they need to communicate them better.  Improve that communication and markets can have more faith in the policies the ECB is already frikken implementing, increasing their effectiveness.  By communicating so poorly they are taking on all the costs of their policies, and not receiving a large portion of the benefit.  It is on the verge of nonsensical …

Wellington presentation on Saturday

I will be doing a presentation for the blogging community this Saturday in Wellington. We will meet out the front of 109 Featherston St (diagonally from Pita Pit) at 12pm.

During the presentation I’ll cover the follow:

  • An overview of what’s going on in Europe, what we need to keep an eye out for, and how it will impact on New Zealand generally,
  • A discussion of “rebalancing” in New Zealand,
  • What’s going on with food prices and what it means for us,
  • The growing problems in the labour market,
  • A social “minimum income”.

During question time I will also be available to talk about anything … as long as its economics related.

I’d love to see you guys there to discuss these issues with me.