Phony Demand and Underpopulation: Problems Plaguing American Farmers
Phony Demand and Underpopulation: Problems Plaguing American Farmers
By Matthew Yglesias
Status quo bias weighs heavily on our policy debates. The United States of America is a major global power, and Canada is not. The most talented and ambitious people from around the world — including from Canada itself — are more likely to make their way to New York, Los Angeles, or Silicon Valley to seek their fortunes than they are to go to Toronto or Vancouver.
This in part reflects the fact that the United States is among the richest countries in the world. But Norway and Switzerland have us beat in GDP per capita and still remain fairly minor players in world affairs. The difference is that America is larger and scale does matter in the modern world. It matters geopolitically but it matters economically as well — our continent-scale home market is a good place to be a star performer or to build a major company. But that size is not just a question of geography. The United States is larger, but it’s not as large as Canada. We simply have ten times their population, a situation that has held true for so long that it’s easy to treat it as a fact of nature rather than a contingent consequence of different policy choices made in the distant past.
This is a country with plenty of land, plenty of water, so much food that Congress busies itself thinking of ways to waste it, and with a farm sector whose output is more limited by labor than by land.
But despite the role of deliberate population growth in America’s developmental history, today further growth is broadly seen as off the table.
“The country’s full” was former president Donald Trump’s characteristically blunt rejoinder to Central Americans seeking asylum at our border, sending a message that beyond questions about the specifics of who should immigrate and on which terms it’s simply impossible to imagine a larger number of people living here. On the left the discourse is more polite, but likewise heavily tilted toward a politics of limits and constraints full of dire warnings of an allegedly looming climate apocalypse.
But both the MAGA nostalgics and the pastoralist climate doomers miss the basic realities of the situation. Even nearly 250 years after the Declaration of Independence, the United States remains a sparsely populated country.
Not counting Alaska, there are about 111 people per square mile in America. That’s less than Ireland. Less than half the density of Spain, about a third the density of France, one sixth the density of Germany or the United Kingdom, and a tenth the density of the Netherlands. These are not dystopian, ultra-crowded slums out of Blade Runner, they are nice developed countries with plenty of attractive countryside. Taiwan has fifteen times as many people as the Lower 48 states. And Alaska itself, vast and empty, does after all exist.
If more people were here, where would they go? First and foremost, I think, within the existing envelop of urban and suburban development. A huge share of America’s cities are now operating well below their historic peak population. St Louis has lost over 60 percent of its population since 1950. That’s an extreme level of population decline, but the trend is far from unique. Cleveland has lost nearly six out of ten residents, Detroit is down by over a million people. Half the population is gone from Buffalo and Pittsburgh and nearly half from Baltimore. Smaller cities in similar situations are found throughout the Midwest and Northeast. They are all places that are struggling in part due to genuine problems and in part simply because air conditioning has made it more pleasant to move to places without cold winters than was the case in the past. But in global terms, the standard of living offered in Syracuse, NY or Reading, PA is still dramatically higher than what’s offered to a majority of the world’s people. And for communities in decline, the decline itself has become a problem. Shrinking populations mean a shrinking tax base is saddled with the pension obligations and fixed infrastructure costs of the past. Shrinking populations mean fewer opportunities for entrepreneurs to launch businesses while staying close to home. The shrinking tendency is itself spreading, with 47 percent of American counties experiencing population loss in the latest census data.
Contrary to the fears of climate alarmists, much of this population loss is taking place in areas that are currently cold — places where climate change will be either beneficial or at least less-harmful than in the global average. Allowing more freedom of movement is one of the most-effective mitigation strategies available. Conservatives blessed with greater appreciation for the power of market-based adaptations to a changing world should consider that the flexibility of the labor market counts here.
Beyond the cases of decline, there is ample evidence from prices that lots more people would like to live in the existing suburbs and urban cores of America’s coastal metropolitan areas. From Santa Monica, CA to Bethesda, MD and from the Upper West Side to the Upper Haight, the country is chock full of neighborhoods where the market price of a home far exceeds the hard construction costs of building a new one. The wedge is explained in part by the underlying price of the land, but in large part by regulatory constraints — minimum lot size rules, setback rules, minimum parking rules, maximum height rules, maximum FAR rules — that prevent supply from growing to match demand. In community meetings and zoning board hearings across the land, this is often conceptualized as primarily a distributional issue pitting the interests of incumbent homeowners against those of renters. But as is often the case, the distributional issue here is dwarfed by the scale of the economic losses involved in overregulation.
Momentum has grown in states ranging from California to Montana to revise these policies, but elsewhere a mix of anti-market sentiment on the left and suburban identity politics on the right continues to block reform.
It is of course true that a much larger population would entail some burdens on America’s existing stock of natural resources. But alongside our vast stock land comes other resources. We have about four times the UK’s supply of cubic meters of fresh water per person, seven times Germany’s, and over thirteen times the fresh water volume of the Netherlands. The Dutch example is particularly instructive in terms of agriculture because the Netherlands is the world’s number two exporter of agricultural commodities after the United States itself. The size of America’s farmland, meanwhile, has been steadily shrinking for decades. This is often portrayed by alarmists as some kind of crisis, but the reality is that American agricultural output has been rising this whole time. What’s more, the United States has plenty of opportunity to continue scaling-up food production even with further shrinkage of agricultural land. The American breadbasket, though incredibly productive in aggregate terms, is actually pretty unimpressive in terms of output per hectare with our wheat yields, for example, lagging well behind other rich countries.
This is not per se a failure of the American agricultural sector. We have much more land per person than our neighbors across the Atlantic so it makes sense to be more profligate in its use.
But it does illustrate the concerns about the capacity of America’s farmers to feed a larger population — worries I heard while promoting One Billion Americans from everyone from conservative talk radio hosts to granola NPR call-in show listeners to podcasting superstar Joe Rogan — are fundamentally misplaced. American agriculture isn’t operating anywhere close to its maximum ability to turn land into food, it’s behaving in an economically rational way under conditions of underpopulation.
It's also worth remembering in this regard that the American government currently maintains a wasteful and expensive array of farm subsidies that command bipartisan despite dubious policy merits. The political economy of this is easy enough to see. Farm country is overrepresented in the United States Senate, and because rural America aligns with the Republican party’s leadership on social and cultural issues they repay rural voters’ loyalty with support for their economic interests even when doing so violates their supposed ideological principles. Democrats are less invested in the particulars of this, but also less invested in the idea that cutting spending is bad or markets are good and are happy to wrap farm subsidies into a bargain that includes generous SNAP payments to the poor.
Regardless of the questionable merits of this, the point is that the federal government’s current stance is that American farmers need extra financial support above and beyond what the market is providing not that American eaters are suffering from food scarcity.
Enlarging the population to grow the customer base would be a considerably more win-win to ensuring demand for farm output. By the same token, the country currently has an array of rules in place designed to encourage (and at times force) Americans to use corn ethanol to power their cars. The environmental benefits of this are extremely dubious, and everyone knows that corn state politics more than the science of air pollution drives biofuels mandates. The politics of unwinding this are brutal, but realistically the use of ethanol as a prop for the corn industry is rapidly becoming obsolete anyway as electric vehicle sales continue to grow faster than the market and internal combustion engine efficiency continues its steady upward march alongside it. This is bad news, narrowly, for American farmers but again emphasizes that there would be no trouble feeding a larger population — policymakers are currently dealing with a country that’s essentially awash in excess agricultural products. Along with the effort to force consumers to power their cars with corn, a major policy objective of the Trump administration was to try to force the People’s Republic of China to buy more American soybeans. This ultimately failed, but also represents a rare area where the Biden administration has proudly continued with Trump policies.
None of this is to say that the sweaty desperation to find American farmers new outlets for their production is particularly warranted, it’s simply to observe that we’re not on the brink of any kind of objective food scarcity.
Figure source: 2021 U.S. EPA Report
On the flipside, stakeholders in the American agricultural sector continually point to labor scarcity as a problem for farm production. In an era of growing populist sentiment on both the left and the right it’s difficult to have a mature conversation about this. But the fact is that relatively few residents of one of the richest countries on earth aspire for their children to have a career doing manual farm labor. There is obviously some wage rate at which that calculus changes, but labor scarcity also shifts the utilization of other factors of production. Marginal land simply ceased to be used for agricultural purposes if it’s not profitable to hire someone to work it. And the land that is cultivated ends up cultivated in low-intensity, labor-saving ways that contribute to America’s relatively low crop yields.
The US Department of Agriculture in its survey of the farm workforce observes that while “wages and salaries plus contract labor costs represented just 12 percent of production expenses for all farms” the numbers are much higher in certain sub-fields rising to 43 percent for greenhouse and nursery operations and 39 percent for fruit and tree nut farms.
In other words, the most intense and resource-efficient forms of farming obtain their efficiency by utilizing a larger labor base. And every one of these workers feeds many, many, many people leading to the conclusion that a larger American population would do more to facilitate than to inhibit a great increase in American agricultural output even before one considers technological advances.
It's worth returning to the fundamental sweep of American history. This country is, in a profound level, what it is today because earlier generations of political leadership opted to aim for a more populated continent. This involved, as progressives are now prone to reminding us, some incredibly acts of cruelty and violence. But it also created, as conservatives are now more likely to insist, a powerful and successful nation that Joe Biden calls “the beacon to the world” and Donald Trump calls “the greatest place on earth.” But this would not have happened if earlier leaders were entranced by the strains of xenophobia and ecopessmism that are so dominant in contemporary American politics. Maximizing the quantity of open space per person is not what made American great.
And under today’s conditions there is absolutely no need for any kind of cruelty or violence to allow the population to grow. People from around the world are, on the contrary, clamoring to get in while our politicians debate how to keep them out.
Reasonable people can and will continue to disagree about exactly how the immigration system ought to function. But the underlying presumption of today’s debates that more people are per se undesirable or that America’s current population is groaning against objective resource constraints is simply mistaken. This is a country with plenty of land, plenty of water, so much food that congress busies itself thinking of ways to waste it, and with a farm sector whose output is more limited by labor than by land. We deserve a more ambitious, more growth-oriented future that acknowledges how much more we could be achieving with the resources at our disposal.
Matthew Yglesias is a columnist for Bloomberg, co-founder and former columnist for Vox, and produces the Slow Boring Substack and newsletter. He is the author of One Billion Americans. He can be found on twitter @mattyglesias
Further Reading:
One Billion Americans: The Case for Thinking Bigger, by Matthew Yglesias
Slow Boring on Substack, by Matthew Yglesias
Innovation and Stagnation: Ethanol and the Renewable Fuel Standard, By Arthur R. Wardle
Achieve Agricultural Abundance by Challenging the Status Quo, By Agnes Gambill West
Urban Farming in Dubuque, Iowa: An interview with Lesli Shalabi, co-founder of Convivium Urban Farmstead