June 15, 2009
Milk in the Desert & Institutions in India

While taking some family members to the airport yesterday, I caught two interesting stories on NPR's "Weekend Edition."

Here's a snip from a story on the Saudis raising cattle in the desert:

One day, the son of a king came to America to learn how to make milk in the desert.

"He went to California. He saw some dairy farms there, and he said, 'OK, I want one, same as that. But I want two of them,' " says Russel Wards. Wards manages tens of thousands of cows at the Al-Safi dairy in Saudi Arabia, founded in the 1970s by Prince Abdullah bin Faisal.

Wards says the prince took the plans of a sizable dairy farm in California, brought them back to Saudi Arabia and built a dairy twice the size.

"While the rest of the world was dependent upon oil, Saudi Arabia was dependent upon food from the rest of the world," Wards says. "So they could actually be vulnerable to a food boycott."

As America looked for ways to become more fuel-independent, Saudis worked to become food-independent — building massive grain and dairy operations like this one.

Specialization and gains from trade--never mind. BTW, the story goes on to explain how the the wells used to sustain the cows are depleting an aquifer deep below the desert. So much for the "local food is better" bit.

The other story was a reporter's observations from India and had some nifty examples of institutions. A snip:

Singh grew up on a farm that has been in his family for generations. "I used to grow maize, barley, wheat," Singh says. "And it was real hard work."

The story of how he became a chapati man reflects the huge changes transforming India.

Every time a farm family in India has sons, the parents have to carve up their land, so every son gets his own piece. With every new generation, each son's share of the farm gets smaller and smaller. Singh's farm was tiny, and he struggled to support his family. So 20 years ago, he walked away from his farm and moved to the city — just as tens of millions of other rural Indians have done. Singh is luckier than many, because at least he found a job. He saw this patch of dirt and became a chapati man.

But Singh's son says they're not sure if their business can last. City officials "trouble us a lot," Parveen says. "We're not sure when they'll order us to leave." He's reluctant to give more details, but Nabdeep Arora, an acquaintance who sells milk and eggs at a nearby stall, says the dilemma is that Singh is doing business on somebody else's property.

In other words, Singh is a squatter. Both Arora and Parveen confirm that Singh has been doing business on this patch of dirt, under the spreading branches of the tree, without paying rent to anybody or getting any permits.

And as India's population keeps booming, corners like this are getting as valuable as gold. Developers are hungry for every square inch, to build housing developments or shopping malls.

Arora says Singh has been bribing city officials to turn the other way while he keeps churning out chapatis. "He's paying under the table — the health department and the environment people," Arora says. "Some policemen also come here to eat, but they don't pay for the food. Free service for the policemen."


Posted by E. Frank Stephenson at 02:53 PM in Economics

The statesman who should attempt to direct private people in what manner they ought to employ their capitals would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it. -Adam Smith

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