"There's a lot of ruin in a nation." - Part 3

Posted On: Thursday - November 16th 2017 10:38AM MST
In Topics: 
  History  Global Financial Stupidity  Cars  China  Economics

How much rich American farmland can 2 Trillion dollars buy?

As part of the Peak Stupidity on-going writing on the topic of "There's a lot of ruin in a nation", from here, and prior to that, here, I want to present one simple arithmetic calculation of some pretty large numbers. This has to do with how much money does it take, actually, to buy up a significant portion of our nation's wealth (the amount of "ruin" left, per Adam Smith's quote).

Many have commented over the last few years or decade that this situation with China's economic rising is just the same old same-old, as in "yeah, they said all that about Japan, back in the 1980's and it didn't amount to a hill of beans." Many times, yes, it's NOT different this time. However, this time, it IS different. In both magnitude of the money and population of China vs. Japan, and the magnitude of just how far in the hole (follow-up here) the United States is, it IS! DIFFERENT! THIS! TIME!

Let's go back, way on back, to the mid-1970's when Japanese manufacturing might suddenly became apparent to Americans over just a few years. They'd already been making the best, or at least best at reasonable cost, cameras for a while. Kodak and Polaroid had had and were still somewhat having their day, but the Minoltas, Pentax's, Canons, and Nikons (so popular a name, that is is memorialized in an EARLY-70's Paul Simon song) with the Single-Lens Reflex professional-style high-quality cameras. OK, photography was big, but still one market for products out of hundreds; however, automobiles were, and still are, a different story. The Japanese-made automobiles came next.

One can blame part of it on the sudden, not-quickly-fulfilled demand for fuel-efficient vehicles after the 1st "energy crisis" of 1973, the fat-and-lazy union. workers in Detroit, the poor quality of the US made vehicles that consumers were just used to (rolling over the 100,000 mile mark on the odometer back then was just a matter of luck, or the owner being a very competent car guy). Whatever the combination of factors was, the Japanese came into this market with a vengeance. The difference between 1973 and 1980 in terms of what one would see on the road was amazing. Even with the bad-mouthing of the Japanese, just based on American patriotism, people spent their money on quality and fuel-efficient cars, and the Japanese were kicking ass. However, even by the late 1980's near the end of the apparent Japanese economic might, the US big-3 auto manufacturers still had a big majority of the US market.

Hey, it WAS worrisome, and tensions were sometimes high (see the 1986 humorous feel-good movie Gung Ho - not even a Japanese expression, it's Chinese! -with a young Michael Keaton). I mean, they Japs bought Rockefella Center for cryin' out loud! OMG! Well, this all faded when the Japanese stock market collapsed like many paper/computer types of wealth do. Japan still has a large economy and we all know they have kept up the high-quality and heavy-duty manufacturing as opposed to Americans.

That's ancient recent history; let's discuss China here. The country's population is an order of magnitude larger than Japan's, and 1/2 order of magnitude larger than ours, so when they do get economically powerful, things are DIFFERENT, as I said. The 2nd factor of big numbers mentioned above it that, though the Japanese grew economically mighty by the late 1980's our economy was multiple times bigger AND we still manufactured a majority of American-bought consumer and industrial goods. The situation is completely different now, and we don't have our economic/manufacturing base of even 1995 left.

Wait, when Peak Stupidity started this blog almost a year ago, we writers were led to believe there would be no math. Apparently, this is not the case! [quit bitching... go talk to HR! - ed.] $2,000,000,000,000 is just a rough idea of how much money is owed to China. Back to the point of this series of posts, how much of our country could be sold out to pay this back? It's not just Rockafella Center, hell, they can take all of NY City, and that wouldn't bother me a bit. No, lets talk about farmland. I will make rough estimates, as that's all we need. We would like comments, but please let's not quibble over factors as large as 2 even, as I want to show an order-of-magnitude estimate.

The contiguous US has an area of ~ 3,000,000 mi2. Just the rich midwest farmland along, with 1-2 ft. thick topsoil created from thousands of years of tall-grass growing in this prairie, may be 10-15% of that, but let's start and end with round numbers to show the precision that we have and don't have. Call it 500,000 mi2, possibly including some other not-so-rich but decent farmland. There are 640 acres in a square mile. Round off and get 300,000,000 million acres. Hell, let's just bring it down to 200,000,000 acres, not for the hell of it, but to make the next calculation a snap.

What does good farmland cost? $5,000/acre? Again, it's just to get an idea here. That makes this farmland worth right at $1,000,000,000,000 ... that's ONE TRILLION BUCKS, and we owe what, TWO TRILLION for starters?. It is easy to see the magnitude of the problem we are in due to the financial hole we have dug due to trying to live as a well-off people when we aren't.

Let me just respond against a couple of general arguments. "Yeah, well, that's what they said about Japan." Besides the order-of-magnitude larger problem there is this time, as already explained, are there any signs that the Chinese economy will just fold, and that ours will get right back on it's feet? I don't see it. The next is simple patriotism, with "We need to just pass a law. We can't let them buy us out, and we just won't." Yeah? The money talks, laws notwithstanding. OK, foreign Chinese (or any, for that matter) buyers can't buy US property - not the case now, but it should be anyway. This doesn't matter as much as one might think. Who has the money to pay for the big companies that do the farming? Are you going to argue with the customer over what you will produce? Who may own all the distribution in the future? Who will pay to get the your "American-thinking" laws changed? (It didn't take a whole lot at all to bribe the US government's executive branch in the 1990's-2000's to open the markets one-sidedly.) It's all a matter of money, period, on who owns your labor.

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