J. B. Penn

Modeling and Simulation of the U.S. Economy with Alternative Energy Availabilities

The acute energy shortages of 1973–74 accentuated the pervasiveness of energy utilization in the U.S. economy and underscored the complexity of the system interrelationships. It was also revealed that little is known about these interrelationships. This article reports on a systems analysis of the short-run economic effects of alternative situations involving reduced energy availability. The impacts of several different energy availabilities are analyzed. Specifically, the situations considered are a 2% quantity reduction in domestic coal supply, a 1.0 and a 1.5 million barrel per day reduction in crude petroleum imports, and a 10% quantity reduction in natural gas supply.

Commodity Programs and Inflation

Inflation has been identified by many as the nations number one economic problem. And that makes the theme of this plenary session-inflation and its pervasiveness in agriculture and the food system-especially timely. Unfortunately (and perhaps inexcusably), we have woefully little rigorous analysis of the subject to allow comprehensive assessment of impacts. We can, then, hardly be prescriptive. The role of the agricultural commodity programs in the performance of the national economy and their contribution to the persistent inflation is complex. The complexity has grown in this decade with the increased interdependence of the agricultural sector and the national economy. This paper identifies and explores the major considerations necessary for full and complete analysis of the costs and benefits of these programs to society, especially the inflationary impacts. I will discuss the impacts of inflation on the agricultural sector and the commodity programs, the role of commodity programs in affecting the national price level, the mechanism by which agricultural prices are transmitted through the economic system, and some issues and research areas important to future public policy decisions.

Energy, Government Policies, and the Structure of the Food and Fiber System

It has become almost trite to suggest that the United States and the world are presently in a fundamentally changed economic situation requiring new diagnoses, prescriptions, and treatments. However, many have reached that conclusion after an assessment of recent economic events, including two devaluations of the U.S. dollar, formation of price-raising raw material-producing country cartels and threats of others, wage and price controls, and their lingering distortions, stagflation, U.S. balance of payments-inflow of petrodollars, expanded U.S. trade in agricultural commodities-detente with new trading partners, growing obsolescence of U.S. manufacturing plant and equipment relative to major trading nations of Europe and Japan, decline in the rate of U.S. technological innovation relative to the rest of the world, slowed growth rate of the U.S. labor force, environmental impact regulations, and more energy conscious consumers and producers. Taken individually, the economic system would likely respond to these shocks in traditional ways. Interacting together, however, they strain our ability to sort out past impacts and to predict future changes. Many of these events are new and hence, data are not organized for analyzing them, which contributes to greater uncertainty. The economic units of the system are having difficulty in formulating expectations upon which to base decisions. Our purposes in this paper are to evaluate the energy-environment component of this confluence of forces, giving special attention to government policies as both a source of and solution to problems of uncertainty and to discuss important potential impacts of uncertainty forces in general on the organizational structure of the food and fiber system. The initial focus is on economic units directly affected by recent economic events, but the ultimate concern is with the likely effects on the growth rate of our domestic economy, on the economic organization of production, on our ability to compete in world trade, and on our role in reducing world hunger. Economic growth in excess of the rate of population growth has been the formula by which the United States has developed the highest standard of living in the world. Labor-saving technology has permitted the economic pie to yield an ever larger slice to each person. Growth has been viewed as subject only to the constraints of the rate of technological advance, the rate of saving and capital formation available to finance new technology, and the rate of growth of the labor force. Two new kinds of apparent constraints have now entered the growth equation: environmental and natural resource considera-

The Substitution of Analytic for Simulation Algorithms: A Comment

An example problem that was initially analyzed by simulation and subsequently solved analytically is presented. It is argued that simulation algorithms are not necessarily preferable to analytic procedures even when problems contain apparently intractable features. Analytic solutions to simplified problems might prove useful even when a simulation algorithm is employed.

Agricultural Policy under a Democratic Administration

The key characteristics of policy have become rather well-defined over time, and some are pertinent to our discussion today: (a) The Congress typically has the paramount role in agriculture policy making, as embodied in the periodic farm bills. Generally, an administration is able only to tilt the direction a bit one way or another or to prevail only on a few very specific issues. An administration almost never dominates the policy debate. Comprehensive farm bill proposals submitted by administrations in 1977, 1981, and 1985 attracted very little serious attention and scarcely resembled the legislation that finally became law.

Agricultural Structural Issues and Policy Alternatives for the Late 1980s

convening of the 99th Congress and any serious consideration of new legislation to replace the expiring Agriculture and Food Act of 1981, but we have already seen more interest and activity in that legislation than has attended any farm bill of recent memory. This widespread activity includes numerous conferences, special studies, and public engagement by foundations, think tanks, and academics, and intense preparation by the agricultural industry interest groups. It also extends to the Congress with committee hearings and publications, and the administration with listening sessions, special studies, and appointment of a cabinet council to develop proposals. These activities can be expected to increase and intensify in the months ahead. This unusual interest so early largely derives from events and conditions that have