TOTAL DEPRAVITY, OR ALWAYS LOOK ON THE BRIGHT SIDE OF LIFE

My pastor, Bill Bess, always says that every Presbyterian elder ought to have at least one good sermon in his/her head. He followed up on that by asking me to preach on Biblical models of economics today. For better or worse, here is my potentially one (good or bad) sermon.

A Sermon Prepared for the First Presbyterian Church, Havana, Florida, June 4, 2011, by Mark Isaac, Ruling Elder, substituting for Bill Bess, Teaching Elder.

I was born in a home for unwed mothers. Before you crank-up your sympathy, my parents were married. Like many of the GI Bill generation, they bought a house in the suburbs of Oklahoma City, and my Mom’s doctor believed that the best obstetrics facilities in the area were at the Home of Redeeming Love, a home for unwed mothers run by the women of the Free Methodist Church. The facility was already in transition (my birth certificate reads Deaconess Hospital) but the history of the Home of Redeeming Love, stretching back decades, is fascinating. The women of the Free Methodist Church founded and ran the facility for young women who had no access to good natal care because the shotgun didn’t fire and they were abandoned by their families. Initially out in the country, the women of the Church plowed the fields to raise crops both for the Home and for sale for cash.

The story of the Home of Redeeming Love is illustrative of part of the so-called Social Gospel movement in American Protestantism. Although we toss around terms such as “old time religion” we often forget that by 1900 the mainline Protestant churches, including the Presbyterian Church, were heavily influenced by a century of German theological rationalism and materialism. Biblical concepts such as the bodily resurrection of Jesus Christ were viewed as campfire fables invented by church leaders who were decades removed from Jesus of Nazareth. Now if your theology strips out all of the supernatural components of the New Testament, what is left of Christianity? Well one thing that is left is the body of teachings of Jesus as a guide as to how we ought to conduct our daily life both personally and in our communities. The latter focus became a dominant theme of the American and British Social Gospel throughout the late 19^th and early 20^th century. Among the good results of the Social Gospel were institutions such as the Home of Redeeming Love, the Salvation Army, the YMCA and YWCA, and countless hospitals. (By the way, the American Economics Association was founded as part of the social gospel movement).

But the Social Gospel broke into two strands. One stressed what Christians could do directly to lift the burden of off those who were suffering (the Home of Redeeming Love) and the other stressed what Christians could do to get the federal government to accomplish similar ends. The best example is the famous Methodist Board of Temperance and Prohibition. Temperance was a program of the community helping individuals make good choices; Prohibition was the drive to use the federal government to make those choices by force. In many American Protestant churches, the Prohibition branch eventually won out. (Our own Presbyterian denomination purged our seminaries of traditionalists. Interestingly, these traditionalists, branded with the nickname “Fundamentalists” not only disagreed with the modernists with regards to the bodily resurrection of Jesus, they also believed that it was none of the church’s business to enlist the government to tell a man or woman that they could not settle down with a pleasant single-malt Scotch before bedtime.)

By the 20^th century, although alcohol Prohibition was eventually deemed a failure, many of the major Protestant denominations bought into the idea that the government is the primary agency for caring for the poor. This has been codified by our own General Assembly, and no year goes by without some agency of the PCUSA weighing in on minimum wages, health care, smoking, and so on and so forth. Our stated clerk even recently took sides in the partisan fight over collective bargaining in the State of Wisconsin.

If we are going to talk about what economics means in terms of Heaven on Earth, we need to go back and find out more about what the Old and New Covenants were teaching before, during, and after Jesus’ ministry.

First, there is no question that in the Old Testament there is a dual recognition of the right to private property and the responsibility of the owners of that property to act justly and to care for the poor. In the former category are the prohibitions against stealing, against moving boundary markers, and the parts of the law code dealing with damages done to the property of others. In the latter category are the tithing requirements, the various debt forgiveness passages, the commands for honest weights and measures ,and numerous restrictions against unjust lending practices, especially to the poor.

Leviticus 23:22: And when you reap the harvest of your land, you shall not reap your field right up to its edge, nor shall you gather the gleanings of your harvest. You shall leave them for the poor and the sojourner. I am the Lord Your God.

When we get to the Acts passages, there are some interpreters I have heard, and you probably have too, that suggest that the early church moved in a different direction, abolishing private property. This is clearly not the case. In the the Ananias and Sapphira story, Peter makes clear that the land was theirs to sell or not. This story is about the sin of lying to the community. What is suggested is that the Jerusalem church was a diverse collection of both wealthy individuals and people whom we might consider refugees, living in a world of violent oppression, in which the order of day to day life was clearly in peril. In this world, the wealthy people sold their property to provide funds to care for the poor. “They gave to anyone as he had need.” However, note that, as we will see in a minute that this does not mean some kind of Stalinist/Maoist collectivization of all among all: it becomes clear that “the poor” refers to groups such as widows, and, I suspect, orphans.

I wonder where they got this idea of caring for the poor?

Mark 10: 17-22. And as he was setting out on his journey, a man ran up and knelt before him. “Good teacher, what must I do to inherit eternal life?” And Jesus said to him, “Why do you call me good? No one is good-except God alone. You know the commandments: Do not murder, do not commit adultery, do not steal, do not bear false testimony, do not defraud, honor your father and mother.” “Teacher, all these I have kept from my youth.” Jesus, looking at him, loved him, and said to him, “You lack one thing. Go, sell all that you have and give to the poor, and you will have treasure in Heaven; and come, follow me.” Disheartened by the saying, he went away sorrowful, for he had great possessions.

It is at this point that I wish to turn to a Presbyterian Pastor who gets remarkably little attention in these days: John Calvin. We Presbyterians don’t like to talk much about Calvin. Look around any large city and you’ll see Presbyterian Churches happy to advertise their aerobics classes and high school pancake breakfasts. Putting a lot of John Calvin on the church marquee probably wouldn’t be good for attendance. But we must, at this point, confront a key part of our Reformed Faith: which has been tagged with the horrible phrase “The Total Depravity of Mankind.” The doctrine of the Total Depravity of Mankind most certainly does not mean that we are all sociopaths, incapable of doing good, even sacrificial things. It means something completely different. What it means is that there is no part of our lives that we can put in an imaginary box and say “I do not sin in this part of my life.” It means that even when we are doing what we think of as “good” we remain subject to sin.

I John 1: 8-10 : “If we say we have no sin, we deceive ourselves and the truth is not in us. If we confess ours sins, he is faithful and just to forgive us our sins and to cleanse us from all unrighteousness. If we claim we have not sinned, we make him a liar, and his word is not in us.”

So let us see the operation of sin in the economics of the early church:

Acts 6: 1 – 7: “Now in these days when disciples were increasing in number, a complaint by the Hellenists arose against the Hebrews because their widows were being neglected in the daily distribution. And the Twelve summoned the full number of the disciples and said: “it is not right that we should give up preaching the word to serve tables. Therefore Brothers, pick out from among you seven men of good repute, full of the Spirit and of Wisdom, whom we will appoint to this duty. But we will devote ourselves to prayer and the ministry of the word.” And what they said pleased the whole gathering, and they chose Stephen, a man full of faith and the Holy Spirit; and Philip, and Procurus, and Nicanor, and Timon, and Parmenas, and Nicolaus a proselyte from Antioch. These they set before the Apostles, who prayed and laid their hands upon them.”

As Calvinists, we can see the operation of sin even in this most noble of institutions: the distribution to the poor. Either the Hebraic Jews really are discriminating against the Greek-speaking Jews, or the Greek-speaking Jews are bearing false witness against the Hebraic Jews. It doesn’t matter, because in midst of this sin God works His will and the church office of Deacon is born, ordained with specific responsibility to care for the poor.

Now it would be nice to continue on with the evolution of economic institutions in the early church in Jerusalem. But we simply don’t know more, because the Christian Church in Jerusalem was decimated with Jerusalem’s destruction by Rome.

Instead, we turn to a different early Christian tradition: the churches begun by Paul and the other church-planting apostles around the Mediterranean. And we see here something new:

Acts 16: 13- 15 And on the Sabbath day we went outside the gate to the riverside, where we supposed there was a place of prayer, and spoke to the women who had come together. One who heard us was a woman named Lydia, from the city of Thyatria, a seller of purple goods, who was a worshipper of God.

When we read the popular history of the Roman Empire, we see very little of merchants, traders, and manufacturers, what we would call the “Middle Class.” Rome was ruled by landed oligarchs and a major source of its “wealth” was plunder from military campaigns. In the midst of this were people who did the ordinary: making goods, trading, etc.. It is important to note that these people were not the respected merchants of Geneva or Amsterdam. Even though trade and manufacturing could provide what was probably a good standard of living, only a few of these folks would be candidates for the Roman Senate: they were equally likely to be slaves, freed slaves, women, illegitimate children of the agricultural or military class, or people living in or emigrating the flyover provinces: The Oklahomas and Nebraskas of the empire. Recent scholarship, which might embarrass some Christians inclined towards liberation theology, suggests that outside of Jerusalem, Christianity became a religion that spread primarily through this proto-middle class of merchants, traders, and artisans. What we continue to see are short but repeated references in Pauls’s letters to his congregations raising money for the poor ---perhaps the poor in the local community but also perhaps the relatively more oppressed Christians in Jerusalem. This suggests that the economic system in Jerusalem, described in the earlier Acts passages, was probably some kind of survival system that was sustainable only with subsidies from the Mediterranean churches, and thus not exported elsewhere in the early church. There’s little reference to this kind of survival communalism in the churches of the epistles.

I hate to say it, but in terms of the Bible, that’s pretty much where we stop. The problem for us is that there’s simply no transition theology to a capitalist world in which the church has ceded to the government the office of primary care for the poor. I suspect that most of you in the congregation today are like most of my students: you cannot conceive of a world in which the Presbyterian Church renounces the government as the primary office of care for the poor. You can’t imagine lines forming to plow fields for unwed mothers. We are like the Jews after the time of the Judges, who, against God’s warning, have merged the identity of God’s people with the coercive power of a centralized government. I suspect that the Home of Redeeming Love, now Deaconess Hospital, is well entwined with Medicare, Medicaid, and so forth. In this, I believe we have before us a very good model for the decline of the Presbyterian Church , the UCC, the Episcopal Church and so forth. If your theology has rejected the supernatural and simply focused on the government as the agent of the material, once that social agenda has been accomplished in the New Deal and the Great Society, what need is there to be a Presbyterian on Sunday morning? The answer from the collapse in our membership from 4.25 million to 2 million in my adult lifetime says that the answer is “not much.”

At the risk of being repetitive, our scripture from Acts demonstrates a fundamental paradox of our Reformed faith: we are called to do good, to bring the Kingdom “on Earth as it is in Heaven.” But we must bathe ourselves in the humility that, acting with the best of intentions, we might “miss the mark,” what the Bible calls sin. Therefore, in a world in which our government educational system does a good job for the well-off but a horrible job for the poor, in which the government has been completely ineffective in preventing a dramatic rise in children born out of wedlock (what the Bible would certainly consider fatherless children or “orphans”) I cannot imagine that the Old Testament prophets wouldn’t be screaming that we are differentially hurting the poor and most vulnerable of our society, that we as a society will suffer the consequences of this sin, and that we ought to be thinking about doing something different. I personally believe that the model for this “something different” can be found in the earliest Calvinist communities in Switzerland, but that is a story for another sermon.

More Unintended Consequences

Mayor Bloomberg of New York, hardly known as a conservative or libertarian firebrand, has ignited a controversy by claiming that some people voluntarily enter homeless shelters simply to receive rent subsidy vouchers that are only available to shelter residents. The New York Times takes a look, and finds some evidence that this is true. This is an important unintended consequence not simply because people may be gaming the system, but also because, assuming that shelter resources are scarce, like anything else in our economic world, then these resources are being diverted away from people who may much more in need.

Those Inconvenient Tradeoffs

I have to start by admitting my personal bias. When wind turbines were first proposed as an alternative energy source in the 1970s, I thought that they destroyed some of the most beautiful scenery in California. The small picture at the center right is of the San Gorgonio Pass between the Mojave desert and the Los Angeles basin. Apparently, the same debate is occurring elsewhere. The John Muir Trust is one of the leading environmental organizations in the U.K., and apparently they are concerned about the effect of wind farms on scenic vistas, especially in Scotland, as can be seen in a picture from the Daily Mail just above. The Muir Trust has recently released a statistical study arguing that wind farms are much less efficient than their supporters in the wind turbine industry and certain governments claim. The Muir Trust report claims that, at least in Scotland, they operate at lower overall levels of output, and with longer periods of "low wind events" than supporters of wind energy admit. The full report from the Muir Trust, together with complete links to their data, can be found here. A BBC report on the political debate on the report between the Muir Trust and advocates of wind farms in the U.K. can be found here. (Thanks to NCPA for the tip about the controversy).

The Seen and Unseen

Our training in economics sensitizes us to unseen effects.  For example, Thomas Sowell, the Sage of Palo Alto, writes in his Basic Economics textbook that the question for any policy is, "What happens next?" In other words, we raise the minimum wage and workers will be compensated more money. Ok, but, what happens next? Mark touched on this in his previous post "Truth or Consequences". And, this was the topic of my last review for the Economics of Compassion class.


Economics fundamentally comes down to the seen and unseen:

1. What is seen in rent-controlled apartments? Lower prices. What is unseen? The underground market created for sub-leasing. The deterioration of property because landlords have no profit motive to improve the property. 
2. What is seen with welfare payments? More resources for the poor. What is unseen? The high implicit marginal tax rates that reduces the incentive to work (sometimes for each additional dollar earned the poor lose more than one dollar in welfare receipts). 
3. What is seen with subsidies to farmers? Farmers benefit from the receipt of money. What is unseen? This artificially lowers the price of the crop which makes it more difficult for developing nations to compete in agriculture.  

***Contribute your favorite seen versus unseen distinction to our comments section***

This is well put by French political economist Frederic Bastiat in his book "That Which is Seen, and That Which is not Seen": 

[The inability to think through beyond immediate effects] explains the fatally grievous condition of mankind. Ignorance surrounds its cradle: then its actions are determined by their first consequences, the only ones which, in its first stage, it can see. It is only in the long run that it learns to take account of the others. It has to learn this lesson from two very different masters - experience and foresight. Experience teaches effectually, but brutally. It makes us acquainted with all the effects of an action, by causing us to feel them; and we cannot fail to finish by knowing that fire burns, if we have burned ourselves. For this rough teacher, I should like, if possible, to substitute a more gentle one. I mean Foresight. For this purpose I shall examine the consequences of certain economical phenomena, by placing in opposition to each other those which are seen, and those which are not seen.

  Moreover, I recently learned of 20th century American journalist Henry Hazlitt (influenced by Bastiat) from the APEE meeting. In the book Economics in One Lesson he writes,

The reason is that the demogogues and bad economists are presenting half-truths. They are speaking only of the immediate effect of a proposed policy or its effect upon a single group. As far as they go they may often be right. In these cases the answer consists in showing that the proposed policy would also have longer and less desriable effects, or it could benefit one group only at the expense of all other groups.

To consider all the ramifications of any policy is wisdom ---at least from my "consequentalist" economic perspective. There is a Jewish aphorism that says (paraphrasing): A clever man can extricate himself from a difficult situation, but, a wise man never gets into such a situation in the first place. There will always be the messy business of trade-offs; however, a little foresight can go a long way to making trade-offs less painful.

TOMS Shoes

 Monday morning one of my students walked in, sat down, and confessed that the Economics of Compassion course is challenging her thoughts about charity. Then, she asked about my personal opinion of TOMS shoes. This is a brief description of the conversation. But, first let me explain what TOMS is. From their website under "Our Movement",

In 2006, American traveler Blake Mycoskie befriended children in Argentina and found they had no shoes to protect their feet. Wanting to help, he created TOMS Shoes, a company that would match every pair of shoes purchased with a pair of new shoes given to a child in need. One for One. Blake returned to Argentina with a group of family, friends and staff later that year with 10,000 pairs of shoes made possible by TOMS customers.

Why Shoes?

Many children in developing countries grow up barefoot. Whether at play, doing chores or going to school, these children are at risk:

•A leading cause of disease in developing countries is soil-transmitted diseases, which can penetrate the skin through bare feet. Wearing shoes can help prevent these diseases, and the long-term physical and cognitive harm they cause.

•Wearing shoes also prevents feet from getting cuts and sores. Not only are these injuries painful, they also are dangerous when wounds become infected.

•Many times children can't attend school barefoot because shoes are a required part of their uniform. If they don't have shoes, they don't go to school. If they don't receive an education, they don't have the opportunity to realize their potential.

Their goal is what is commonly called a "double bottom line": profit and charity.  And, they are doing quite well at both. Last year TOMS reached the 1 million pair sold plateau (which means they also gave away 1 million pairs of shoes). But, economics fundamentally boils down to what Bastiat called, "That which is seen and that which is not seen". What do people see with TOMS? First, they are fashionable and cool looking kicks but they also see photographs like the one pictured below. Is this a good thing? Maybe.

If that is what is seen then what is not seen? I'll argue that there are three things that may go unnoticed by most people: Opportunity Cost, Paternalism, and Unintended Consequences.

Opportunity cost is what we give up to get something else. The least expensive pair of TOMS shoes are $44 on their website. What else could $44 buy? My pair of sweet Nike's cost $30 on sale. If I wanted to give away $14 that could buy medicines, malaria nets, food, etc. through a variety of NGOs. Additionally, there are really inexpensive pairs of shoes that you could buy at Wal Mart for $14 but are more durable than TOMS. I wore the soles of my TOMS out in short order and my primary mode of transportation isn't my feet!

Paternalism is important because when buying TOMS we're determining what to supply rather than asking what is in demand. Perhaps giving the money to the people directly through a sponsorship program and allowing them to allocate their own resources is better. Do we really know their needs better than themselves? (Obviously Principal-Agent problems factor in when you just give people money, nevertheless, I think this is an important point)

Unintended Consequences are those positive or negative outcomes people did not anticipate. Vivek Nemana made two guest posts (here and here)on the Aid Watch Blog and notes that TOMS shoes actually can be harmful to local shoe markets. If TOMS targets people who would never have bought shoes this is a moot point; however, if TOMS is giving away free shoes to those people who would otherwise be customers in the local shoe market they are destroying demand. At this point you might be asking, "Why is this a bad thing? Now that person has extra money they can spend in alternative ways." That is true; however, what happens when TOMS become less fashionable and less shoes are being given away?

Certainly the work TOMS does in these developing countries has positive benefit. No doubt. Also, in our own country it has brought about awareness with campaigns such as the one on FSU campus a couple weeks ago called, "One Day Without Shoes". In the end my critique of TOMS comes down to the seen versus the unseen.

Unintended Consequences #5

I've followed the following story in several places, but I'm writing with the Wall Street Journal editorial "The Madness of Cotton" in front of me.

Students in both the Compassion and Sustainability classes have heard an earful from us about U.S. agricultural subsidies. They depress prices for farmers in developing countries, are transfers largely to wealthy Americans, and have a variety of unintended, bad environmental consequences from overproduction. Did you know that so much cotton has been grown in the Arizona desert that we used to say that Arizona's economy was dependent on the 5 C's: Copper, Citrus, Climate, Cattle, and ....Cotton? [WSJ figures regarding the total U.S. subsidy amount: $2.3 billion in 2009, with the top 10% receiving 70% of the benefits]. Of course, Congress repeatedly re-authorizes the program.

Recently, Brazil successfully protested to the WTO about our cotton subsidies, and the WTO found in favor of Brazil. The allowed Brazil to propose a list of retaliatory tariffs against the U.S.. According to the WSJ, the hits to American manufacturing would have included cars, medical equipment (way to go Brazil---make health care more expensive for your own people), pharmaceuticals, electronics, textiles, wheat, software, and intellectual property. It seems as thought the sensible thing to do would be for Congress to say, "That's a shame, I guess we'll just have to lower those cotton subsidies." Instead, the Obama administration has proposed that the United States government pay $147.3 million dollars to Brazilian cotton farmers in return for the Brazilians waiving their right to retaliate against American manufacturers.

$147.3 million paid by our government to Brazilian farmers to divert the damage done by our own cotton subsidies to our medical device and software industries....just another day in the life of Unitended Consequences.

Unintended Consequences #4

In a previous post, I wrote about the tradeoffs facing the efforts of the Gates Foundation to eliminate polio. One of the surprising conjectures was that poor water quality might actually promote community resistance to polio.

That same "unexpected consequence" on a broader scale has been addressed today in the Wall Street Journal in an article entitled "Can a Dirt Do a Little Good?" . It points out that a child growing up in a health-conscious American city like San Francisco has a much better life expectancy than one growing up in a developing country such as Namibia or Mongolia, but that San Francisco child has a higher expectancy of diseases such as asthma, Type I diabetes, MS and other auto-immune diseases. The article profiles the possibility that our cleanliness may be a contributing factor to these diseases. The combined effect is reflected in overall survival rates: sanitation produces better childhood survival, but, as the article says, there's nothing inherently wrong with having your kids play in the dirt once in a while....it may actually be good for them.

Unintended Consequences #3

I can't keep track of what parts of the Wall Street Journal are behind subscription firewalls, so I'll just directly reference a fascinating front-page article from Friday, April 23, 2010: "Gates Rethinks His War on Polio" by Robert A. Guth.

Mr. Guth traveled extensively with Bill Gates in preparing the article, including many stops in Africa, where the Gates Foundation is one of the major players attempting to eradicate polio.

The article highlights two sources of unintended consequences in compassion policies: a) the behavior and choices or individuals, and b) complicated medical, engineering, or environmental relationships. We've blogged extensively about the first category. The second category addresses questions such as if you see two cars parked next to each other, how do you know which one has a lower "carbon footprint," much less which one would be create fewer overall environmental externalities. The term "dust to dust" analysis has come to be associated with attempts to answer the second question, because it's not just the driving of the car that matters, it's also the production and disposal.

The article in the Journal shows Mr. Gates confronting both of these sources of unintended consequences. For example, one argument being debated is whether money should be diverted from polio vaccination narrowly defined to a broader effort to make people healthier and thus better able to resist infections. But, there's also the possibility that cleaning up the water supply can paradoxically cut down on processes of passive or community immunization from the mild childhood "stomach flu" manifestations of the virus. This potential unintended consequence is discussed in greater detail in the Wikipedia article on polio.

Likewise, Mr. Gates confronts behavioral issues, such as unfounded rumors of personal costs of immunization (rumors of sterilization of children who received the vaccine). So, Gates schedules a visit with the religious leader of Muslims in Nigeria for help in setting the record straight.

The closing words of the article are the following:

"As polio shows, technology can be hampered by political, religious and societal obstacles in countries where he's spending his money.

"In Nigeria last year, Mr. Gates sat on the lawn behind his hotel reflecting on that. Science can simplify the job, he said, but 'the human piece is the ultimate test'."

Unintended Consequences #2

This is from the Wall Street Journal, March 11, 2010, page D1. There have been a lot of reports of really awful situations in which airlines, facing weather or other delays, keep flyers on the tarmac rather than returning them to the gate where they could a) eat and relax, but also b) cancel or reschedule flights, and so forth. So the U.S. Department of Transportation has issued rules than say that airlines can be fined $27,500 per passenger when such confinement lasts more than three hours. That sounds good; with my love/hate relationship with flying, I would be climbing the walls (?) if I were trapped on a runway for four hours. But, there is a cost. Airlines, following the announcement of the new penalties, have been much more aggressive in canceling flights. This was in evidence during this winter's bad weather. I think that this could actually be a good thing. I would rather know in advance that I need to delay travel than wait for hours on a runway and then have to return to the gate. But apparently many travelers have a different opinion. In any even, this is the "unintended consequence" of the week.

Unexpected Consequences # 1

One thing that Doug and I stress in the course "The Economics of Compassion" is that intentions can be different than results, particularly if the person attempting to "do good" doesn't take account of things such as a ) complicated general equilibrium effects in the underlying science, medicine, engineering, etc. or b) the fact that human beings change their behavior in response to incentives. I thought it might be fun to begin a series of short posts at more frequent intervals that illustrate this point. Today, thanks to Instapundit, I've linked to an article from the St. Petersburg Times that investigates the question as to whether "red light cameras" cause more accidents than they prevent. If so, the reason is almost certainly that driver behavior changes in response to the incentives posed by the cameras.

Subsidies without Education = Disaster in India

Here is an article from the Wall Street Journal that documents the sad circumstance Indian farmers find themselves in after massive use of the fertilizer urea has killed the soil and reduced crop yields. Why the overuse of this fertilizer? Subsidies that made costs much lower for urea compared to other alternatives (which were also previously subsidized before urea received preferential treatment under a legislative compromise). In addition to the subsidies, lack of knowledge by farmers led to a bad interpretation about how to fix lower crop yields.

The Farmers Fertilizer Cooperative Ltd. produces the fertilizer urea and because the cooperative represents 50 million farmers in India they are also a powerful special interest lobby. But, unlike other fertilizers which did not have subsidies, urea is not just inexpensive (thanks to the subsidies) but because it is nitrogen based without phosphorus, potassium or other important nutrients it does not do the complete job.

The second part of the disaster came from two sub-parts. First, farmers observed lower crop yields (due in part to the lacking necessary nutrients in the soil). Second, the farmers desperate to increase crop yields believed that it must be a quantity issue, not a quality issue with the fertilizer. So, they dumped more and more urea on the soil.

The result? The WSJ article discusses briefly the fact that the damage to the soil will be difficult to overcome in a short time horizon. And, there are other articles prior to the WSJ that discussed soil damage stemming from urea. Now, the Indian government is discussing the removal of subsidies from urea and potentially adopting a nutrient based subsidy program. Hopefully, this is sorted out soon because the crop yield matters tremendously in a country with so many mouths to feed.

Unfortunately, this is one more tragic case of unintended consequences.