Once upon a time there was no Accounting System except Nature itself.
We do not know exactly when in history humans began counting in earnest. We know that some animals have some ability to count, for instance to notice when a child has gone missing. We also know that most animals can see the difference between "more" and "less."
By the time of the early urban civilizations we know about (Egypt, Palestine and Mesopotamia, and China for example) counting and keeping records of counts was a well-established set of skills. Rulers wanted to know how many cows were in their herds, how many soldiers were available for battle, and whether subordinates had contributed their fair share of grain to the royal stores. Merchants needed to track their inventories, as did anyone who farmed on a large scale. This keeping of records of counts of things is the earliest manifestation of The Accounting System.
The ledger, or written record of counts, thus preceded what we now call cash and coin. Coin is generally treated as having inherent value, and for that reason tended over the millennia to standardize on three metals: gold, silver, and copper. Coin stands as a way station between bartering (directly trading one kind of good or service for another) and systemic accounting through modern record keeping.
People counted coins, and thus accounting and bookkeeping seemed to be the art of coin counting. This was the case with the improved accounting systems of early Renaissance Italy. This led to misconceptions, both popular and among the professional accountants, which persist to this day.
Counting things other than coin did not go away, but accountants and ordinary people came to start measuring all things by their value in coin. To keep his books straight, a farmer might count his cows, multiply by a set value per cow, and account for the total as an asset in units of currency.
During the Coin Age (roughly 1400 to 1900) other aspects of the accounting system evolved and expanded. People, from peasants to kings, still needed to count their things. The most important thing to count was land, but that was somewhat more complicated than counting cows or shillings. It required a title system (note the term likely evolved from titles such as duke, lord, sir, and mister) and surveys, and a legal system as well. People who lived on land but had no legal title to it lost it over the centuries. This was particularly obvious in the Americas, where the natives were dispossessed of almost all of their tribal land. Today the land title system extends to every part of the world except the Antarctic.
The human identity system also expanded during the Coin Age. We know that ancient kings took censuses of their subjects. Various forms of identity papers evolved, particularly in Europe. Passports and visas were required for travel. Birth certificates evolved from baptismal records into a pervasive system that came to account for most births. Place of birth was attached to nationality, and the various national identity systems, including Social Security numbers, drivers licenses, and death certificates in the United States, evolved into a system that accounts for each individual human living and dead.
The rapid rise of industrialism, including the rise of industrial methods of agriculture, and parallel expansion of the global human population, put strains on the economic systems of the Coin Age.
In a throwback to the Platonic (or medieval Scholastic) system of intellectual architectures that don't reflect reality, Gold was declared by many people to be the only "real" money. This proved to be impractical to the point of economic disaster. At times the supply of gold did not grow as fast as the economy, leading to recessions and depressions. At other times the supply of gold from new discoveries grew rapidly, leading to inflation (it took increasing amounts of gold to buy other goods like cows, houses, and services).
Next: Bank Cycles, Credit and Gold
[The Accounting System, Your Fate is in the Cloud, is a work in progress by William P. Meyers, ©2013]
Showing posts with label inventory. Show all posts
Showing posts with label inventory. Show all posts
Thursday, April 18, 2013
Sunday, August 12, 2012
When Drought Becomes Famine
As far as I know, the only famines among white settlers in the United States occurred back in the 1600's. The availability of land (just steal it from natives, or buy a parcel from someone who did) and the agricultural techniques available even in the 18th century meant that food was usually abundant and limited only by one's wallet. There were crop failures on a local scale, and lean times, and disruptions from the Revolutionary War and the Civil War, and even the Dust Bowl, but they did not amount to national famines.
That could change, and sooner than you think, if you crunch the numbers. The current drought, spreading over much of the nation, makes it worth thinking about.
The United States is no longer an agricultural nation. The human population is currently around 315 million. Over the last decade the dollar value of U.S. food imports and exports, while fluctuating year to year, has drifted from a surplus of exports to a surplus of imports. While our nation ships a lot of grain to China and other countries, we import a lot of food too, mainly from Mexico and Canada.
This year's drought has hit the corn crop particularly hard. Still, the current estimate is that corn production will be around 10.8 billion bushels. That sounds like a lot, but it is less than 4 bushels per person (a bushel is 8 gallons, or 56 pounds of shelled corn). Usually 40% goes to producing ethanol. Much of the rest goes to feed for meat animals, including exports to China. But a lot goes straight to feed humans in the United States everything from corn chips to corn syrup.
The key figure to watch is ending inventories. According to the U.S. Department of Agriculture's report on August 10, the ending inventory this year will be about 650 million bushels. That is down over 500 million bushels in a single year.
Now suppose the same thing happens to corn next year. Subtract another 500 million bushels from this years' inventory of 650 million bushels. That would leave an inventory of 150 million bushels. A third year straight of crop failure would mean famine.
Corn is not the only major crop, but drought is not the only problem. Higher temperatures can also lead to higher losses from superweeds (the ones that Monsanto helped create be killing their weaker ancestors), insects, and an assortment of plant diseases.
2012 will, hopefully, go down in history as a particularly bad year, not to be repeated anytime soon. We can't count on that.
Given how fat many Americans are, and that our diet is quite varied, you might still want to discount the risk of famine. After all, under the scenario above, even during the third year of disaster we could get 10 to 11 billion bushels of corn. We might produce less ethanol, and feed corn directly to hungry people, instead of to pigs, chickens, and cows. Maybe Canada, Russia, or Brazil will have a bumper year, and we'll just import corn for our tortillas. Maybe the President will proclaim that gluten-free diets are nonsense and people should eat more wheat products again.
Maybe the relatively affluent, the top 30% or 20% or so, will keep eating meat. Maybe the ethanol producers will put their profit first and not give up their share of corn.
Maybe production of corn will be even lower next year, and wheat will decline too. Why? Because the soil will be dry going into the new year, and irrigation sources will be depleted. And maybe the fat people will take no pity on those who are already lean: maybe they will be strong enough to shove the starving aside when the delivery trucks pull up to the supermarkets.
As the population of the U.S.and the globe increases, and as weather gets more erratic and generally warmer, it might seem like a good idea to have a plan to cope with ugly scenarios. The Free Market won't magically make food appear out of parched fields.
Barack Obama, as usual, is sucking his thumb, moistening it in case he needs to measure the political wind. Instead of turning off the ethanol machine and creating a rational plan to prevent famine in the long run (like: more birth control), he is worrying about getting re-elected. Ditto for Congress. If I had not studied American history I would say this lot is the worst bunch of idiots ever. In fact they are typical mediocrities.
Our only hope is that rains will return, and it will keep on raining until at least 2016, when we might get some better nominees for Congress and the Presidency.
That could change, and sooner than you think, if you crunch the numbers. The current drought, spreading over much of the nation, makes it worth thinking about.
The United States is no longer an agricultural nation. The human population is currently around 315 million. Over the last decade the dollar value of U.S. food imports and exports, while fluctuating year to year, has drifted from a surplus of exports to a surplus of imports. While our nation ships a lot of grain to China and other countries, we import a lot of food too, mainly from Mexico and Canada.
This year's drought has hit the corn crop particularly hard. Still, the current estimate is that corn production will be around 10.8 billion bushels. That sounds like a lot, but it is less than 4 bushels per person (a bushel is 8 gallons, or 56 pounds of shelled corn). Usually 40% goes to producing ethanol. Much of the rest goes to feed for meat animals, including exports to China. But a lot goes straight to feed humans in the United States everything from corn chips to corn syrup.
The key figure to watch is ending inventories. According to the U.S. Department of Agriculture's report on August 10, the ending inventory this year will be about 650 million bushels. That is down over 500 million bushels in a single year.
Now suppose the same thing happens to corn next year. Subtract another 500 million bushels from this years' inventory of 650 million bushels. That would leave an inventory of 150 million bushels. A third year straight of crop failure would mean famine.
Corn is not the only major crop, but drought is not the only problem. Higher temperatures can also lead to higher losses from superweeds (the ones that Monsanto helped create be killing their weaker ancestors), insects, and an assortment of plant diseases.
2012 will, hopefully, go down in history as a particularly bad year, not to be repeated anytime soon. We can't count on that.
Given how fat many Americans are, and that our diet is quite varied, you might still want to discount the risk of famine. After all, under the scenario above, even during the third year of disaster we could get 10 to 11 billion bushels of corn. We might produce less ethanol, and feed corn directly to hungry people, instead of to pigs, chickens, and cows. Maybe Canada, Russia, or Brazil will have a bumper year, and we'll just import corn for our tortillas. Maybe the President will proclaim that gluten-free diets are nonsense and people should eat more wheat products again.
Maybe the relatively affluent, the top 30% or 20% or so, will keep eating meat. Maybe the ethanol producers will put their profit first and not give up their share of corn.
Maybe production of corn will be even lower next year, and wheat will decline too. Why? Because the soil will be dry going into the new year, and irrigation sources will be depleted. And maybe the fat people will take no pity on those who are already lean: maybe they will be strong enough to shove the starving aside when the delivery trucks pull up to the supermarkets.
As the population of the U.S.and the globe increases, and as weather gets more erratic and generally warmer, it might seem like a good idea to have a plan to cope with ugly scenarios. The Free Market won't magically make food appear out of parched fields.
Barack Obama, as usual, is sucking his thumb, moistening it in case he needs to measure the political wind. Instead of turning off the ethanol machine and creating a rational plan to prevent famine in the long run (like: more birth control), he is worrying about getting re-elected. Ditto for Congress. If I had not studied American history I would say this lot is the worst bunch of idiots ever. In fact they are typical mediocrities.
Our only hope is that rains will return, and it will keep on raining until at least 2016, when we might get some better nominees for Congress and the Presidency.
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