Wednesday, April 15, 2009

Japanese Agriculture: A Rich Source of Economic Lessons

Below the fold on the front page of today's issue of The Wall Street Journal was this interesting story. With the current state of the economy, the Japanese government has earmarked funds to retrain unemployed urban workers to become farmers. (There's a parallel story in today's issue of The New York Times.)

It appears that, despite significant subsidies to support and tariffs to protect agriculture, farming is in a bad way in Japan. This report from The Tokyo Foundation indicates that even though the lifestyle is respected and the beneficiary of some economic protection, people don't choose to make it a career. One might guess why after reading descriptions in the WSJ and NYT articles. The current agricultural workforce is aging, and significant portions of Japan's scarce arable land are unused. Japan has long held to the "strategic industry" argument to justify protection, but it appears that, without a shift in labor resources, the idea of food independence, at least in certain categories, may be at risk.

Questions for your students might include the following:
1) Could a reintroduction of "markets" provide different incentives to enter farming as a career?
2) How does the monetary value of Japanese protection compare to the value of Japanese agricultural output? What might this suggest about the efficiency of the current system?
3) How could you make this career and industry more attractive for younger workers? To what extent might access to other resources increase interest?

I would welcome other suggestions for use with students.

This post relates to the following Keystone Economic Principles:
1. We all make choices.
2. There ain’t no such thing as a free lunch.
3. All choices have consequences.
4. Economic systems influence choices.
5. Incentives produce “predictable” responses.

6. Do what you do best; trade for the rest.
7. Economic thinking is marginal thinking.
8. Quantity and quality of available resources impact living standards.
9. Prices are determined by the market forces of supply and demand…and are constantly changing.

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