Bill Bonner

Well-traveled asparagus…and the US in recession…

Markets were closed in the US yesterday. We didn’t bother to look at what happened outside the US.

We were tired. After traveling to China, Switzerland, England and France…we had run out of gas.

But yesterday, Memorial Day in the USA, gave us a time to fill up the tank.

First, we fired up the lawnmower. Then, we got the weed whacker working. Next, it was time to start the tractor, attach the bush-hog, and begin cutting the fields.

Each of these devices requires oil and gasoline. So, we thought again about how our standard of living depends on the black goo… And we began to think of what would happen if the average suburbanite in Shanghai or Beijing also began to mow his lawn on weekends.

This is hardly a novel thought. Economists have been writing about it for many years. The emerging markets are bound to use more energy. And the price of energy is more than likely to go up.

Standards of living in the emerging world are bound to go up too as people put a little more energy into their lives. They will inevitably benefit from more locomotion and refrigeration. Maybe they will soon be using leaf blowers too.

But what will happen to standards of living in developed countries?

Of course, a lawnmower doesn’t take a lot of gas. Even if the price of oil doubled our lives wouldn’t change much.

But all of modern civilization depends on oil. And everything that we take for granted – asparagus trucked from California, leaf-blowers, and air conditioning – is set up not only to work on oil, directly or indirectly, but to work at today’s price. Double the price of oil and a lot of what we see today becomes uneconomical.

Fortunately for the United States of America and Canada, we have a lot of energy…and we use it freely, easily, and lavishly. If the price of oil were to double, we could cut back…and still live well. We might even live better. Because not everything that contributes to our standard of living contributes to our quality of living.

Take asparagus, for example. If oil is cheap enough, you can afford to ship asparagus from California to Maryland and sell it at a reasonable price. Standards of living go up – at least as measured by GDP. The grower in California earns money…his illegal immigrant workers earn money…the trucker earns money…the grocery store in Maryland earns money – voila, the GDP goes up.

But raise the price of oil and transcontinental asparagus may not make any sense.

We ate the most delicious asparagus in Zurich! Big, white, tender…juicy. “Where did it come from?” we asked our host.

“Why… It’s from Zurich, of course.”

He must have meant the canton. We saw no asparagus grown in downtown Zurich.

It was surely not cheap – nothing in Zurich is cheap. But it was good. Much better than the asparagus you find in the US.

We’re just guessing, but we suppose it was good because it was grown for a local market and did not have to be a variety that travels well. A trip from Sacramento to Philadelphia is tiring for anyone; if your asparagus is going to hold up…it has to be tough.

Perhaps, when prices of energy are higher, our asparagus will not be so well-traveled. Maybe, as our standards of living stagnate, our asparagus will taste better.

Regards,

Bill Bonner,
for The Daily Reckoning

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Bill Bonner

Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America's most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind The Daily ReckoningDice Have No Memory: Big Bets & Bad Economics from Paris to the Pampas, the newest book from Bill Bonner, is the definitive compendium of Bill's daily reckonings from more than a decade: 1999-2010. 

  • Bob

    Great Points!

  • Dave

    I’m here in rural northern CA and our asparagus is usually not all that good, more often than not it’s from Mexico or Peru. On the other hand we have 17 cannabis collectives serving 40k patients in an area of 90k total population. Figure what that means.

  • http://www.eatlocal365.com Erik

    It’s not just taste, it’s health as well.

    We spent the weekend a few weeks ago at a pig farm in upstate NY. (It was far more pleasant than it sounds, particularly because it was not an overcrowded CAFO. Our apartment was only a few hundred yards from the pigs, the windows were wide open, and not a whiff!)

    We eat only local meat (to NYC) because we can get truly grass-fed, 100% pastured beef and all-natural pork, chicken, and eggs.

    I’m not talking about just antibiotic free meat or a diet of organic feed, but meat with a diet and lifestyle that is natural to the animal, including grazing, exercise, and nurturing of the young, etc. It’s not as marbled, but it’s tastier, and the health profile of it is vastly different (improved).

    But the farmer was telling us how all of the processing facilities are gone from the area. As all meat started to be shipped in from thousands of miles away, the local facilities evaporated.

    Now there are one or two, but the scale is small and the price is huge. They spend $3/lb on processing, compared with pennies for the industrial processors. A lot of that cost differential is because the process is slower and more careful at the new local location, but part of it is simply because they are rebuilding from scratch.

    So rising transportation costs would help to level the playing field there as well.

  • CommonCents

    My Upstate NY asparagus is great this year. But, it took 5 years of cultivating to get to the picking part for this crop.

  • Bloomer

    I like asparagus but doing without wouldn’t be such a hardship. I could always grow my own if transcontinental shipped asparagus becomes too expensive due to soaring fuel costs.

  • kenn

    How much has fuel went up if inflation is considered…

    Pretty cool,,, Inflate the heck out of the economy upping the cost of living while shipping all the jobs out!

    And we still vote em back in

  • vinnster

    Good way of expanding things…

    As for asparagus, if you like it, grow your own. Back when I lived in homes that offered small garden areas a neighbor offered some advice. Grow the things you like that costs the most.

    I now have a large garden area, but Still follow that advise. Only after I have planted all the expensive stuff do I plant cheap stuff I like.

    Asparagus is the plant that keeps on giving year after year and it surprisingly easy to grow and low maintenance. It just takes a few years to get established…but it is worth the wait. Asparagus right from the garden is nothing like anything I have ever eaten in a restaurant or bought in a store.

  • Silver Bull

    Michigan had a good crop of asparagus this year.

  • http://neighboroil.com Paul Harkins

    Bill,

    Almost all of our activities are tied up in a commodity that is rising in price while our wages are falling. Unless you can find a new way to pay for oil, something has to give. We see this everyday at http://www.neighboroil.com. So may people are asking for help because they just cannot afford the oil they were struggling to buy at $2.25 a gallon.

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