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June 28, 2016


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Oh man, rural telephony was a hoot. Party lines and switchboard operators, and before that, I think the post office would put a notice in your mail. A nasty "last mile" problem.

Why the weird decline between 1920 and 1940, though?

The FCC was authorized by the Communications Act of 1934. Prior to that you had a hodgepodge of rural systems with notoriously bad service (poor maintenance and few economic rationales for rural capital investment during the Depression).

In the 1940's Congress additionally moved to provide low interest loans for upgrades to rural telephone infrastructure.

What the hell happened to rice in 1994?

I would assume the slowdown in agricultural productivity is a complex story (rising agricultural labor wages, rising land values, increasing capital costs, slowdown in appropriately-scaled technologies and other factors).

My relatives all left farming in the 1990s so my view is probably dated.

"One interpretation emphasizes the transformation of agriculture to shed much of its labor, and replace horses, mules, and people with machines and other inputs bought off-farm."

Yeah, this is pretty much my family's experience. My mom milked cows by hand. So did the first girl I dated. Hell, so did the second girl I dated. Imagine the labor productivity there. My uncles pitched bales of hay into trucks. It was motorized agriculture -- my great-grandfather could fix damn near anything with an engine -- but not really mechanized agriculture.

(As the authors note, this doesn't contradict the other hypothesis. Break down an agricultural task into parts. One large one is harvest. Once you have a machine that *can* harvest a crop, you've enormously extended the labor productivity frontier. But it's limited by the crop. What's the next step: harvesting a crop in cyberspace?)

Probably shouldn't forget Field's hypothesis about transportation. The road to my grandparents' farm was still gravel, not "black top", until the 1980s. Same county as an NFL team. The majority of road mileage in Kansas is *still* gravel, and there's a substantial amount that's worse.

I would guess that in the US, land values and the expenses that go along with holding land is a major factor in suppressing what should be productivity gains. It's certainly was one for fruit orchards in the Sun Belt. So something like every piece of agriculture has some sort of choke point expense (like labor with tree fruit) that gets amplified by rising land prices. Falling urban land prices do seem to promote utilization for gardening, and a bit of actual agriculture...

A follow up question that could lead to a hypothesis: when did farming subsidies start and how did they evolve along this period? Subsidies in general could make farmers less inclined to incur greater risk for potential rewards. If subsidies guarantee decent returns, then why risk?

About productivity in developed Nations I read in some articles about guaranteed income that with all the productivity increases coming from automation we are headed towards a point in time in which nations are collectively rich and productive without actually being able to generate enough employment for its population. Can a similar effect be at work here, but with the caveat than rather make people idle we find new ways to generate unproductive jobs to keep unemployment low? How we do so collectively is through a combination of regulation, lack of focus on productivity, empire building by the middle managers class, etc. It is a hard hypothesis to test and only based on anecdotal evidence. I have observed empirically many organizations that have been able to reduce direct labor jobs through automation only to increase overheads and indirect labor through a host of unrelated decisions that result in unproductive work. For example, compare the % of people employed in occupations that are not involved in producing the goods and services the economy produces despite being necessary in the current business and legal climate, such as: Safety officer, Community relations Director, Social responsibility Manager, PR Manager, extra accountants and controllers to comply with regulations, Corporate counsel and their teams and law firms, non Technical researchers, etc. Today with those in the 1930s. Those non productive positions have mushroomed and along with Goverment size increases could have offset some of the pure productivity gains.

I am not arguing that these positions are unnecessary, I am simply pointing that they did not exist in earlier times.

I wonder whether consolidation in the Agribusiness has a role in this. Vertical integration could stifle productivity by reducing the number of open market transactions that occur during agricultural/food production. Oligopsony also exists for enough commodities that it may stifle innovation (Why invest capital that the processor/marketer will eventually capture?)

Farmer's falling share of the retail food dollar suggests market power may have a role in this productivity slowdown. Why invest as much capital when someone else will gain an increasing share of your productivity gains.

I worked on a turkey (egg) farm a few summers and it was surprising how productivity was driven more by human labor than the expensive automated machines (that interacted poorly with turkey behavior).

I'd guess the Great Depression was at least part of the story with the telephones. The apparent decline before 1930 could just be a sampling issue.

A couple of summers ago I visited my dad's hometown in western Nebraska (currently being kept alive by an ethanol plant). There's a little town museum there that has, among other things, the town's old telephone switchboard, which was used until the early 1970s. (There was a phone book sitting on it; I looked up my grandfather, and his number had three digits, if I recall correctly.)

Dad said that they'd actually bought direct-dialing equipment sometime in the mid-Sixties but waited to install it until the town operator was ready to retire. So for several years, calling home was a matter of arguing with AT&T's long-distance operators and insisting that, no, direct dialing to his town really was not possible. And then they'd get irritated that the town operator, who knew all, was hanging on the line chatting with him and telling him whether his parents were in.

Very, very interesting Noel.

I think that both hypotheses may have something to them. They aren't mutual exclusive after all and are in fact somewhat related. It's interesting that the adoption paths during the acceleration phase from 1930-1980 seemed to involve a mix of crop innovations, mechanical innovations/equipment, farm practices and chemicals: hybrid corn, electrification, tractors, telephones, fertilizer and irrigation.

On the other hand from 1980 onwards most of the innovations adopted are crop related (semi-dwarf rice, GE soybeans and GE corn) with the non-crop innovations being a stagnating adoption path for tractors plus the fertilizers and irrigation continuing from before.

I wonder how much this might be related to a stagnation in research and development for agriculture in general which in turn might force research to focus on certain areas (such as GM crops) to the detriment of other areas that might make more of an impact (either singly or in conjunction with GM crops).

This page says some things about the history of rural telephony that might be relevant:


In short: there was a boom beginning in the 1890s that was driven by farmer-run independent mutual telephone systems, but by the 1920s these systems were falling apart from internal organizational problems and got a bad reputation. Eventually a new government-driven expansion happened modeled on the REA (notice that the early rural telephone boom was before these farms even had electricity, apart from phones).

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