I enjoy reading about a wide variety of topics and take particular pleasure when reading on one subject provides insight into another, seemingly unrelated, subject. I experienced this recently when an academic paper regarding statistics caused me to look at an article about food systems from a completely different perspective.

Tom Philpott's article Toward a Less Efficient and More Robust Food System appeared in Grist. My initial take was very negative and I still think that the article is flawed. For example, I continue to disagree with the point regarding the "valuable inefficiencies...of cities" because, in fact, cities are more efficient than suburban and rural areas, as evidenced by recent studies regarding the carbon footprint of city-dwellers compared to others.

I also continue to believe that the cited comparison between “Efficient Manchester” and “Inefficient Birmingham" is faulty. The comparison equates diversification with inefficiency when, in fact, diversification can be highly efficient (think of stock market index mutual funds that are highly diversified but very efficient because they do not bear the costs of active trading). Contrary to being "mired in the past," Birmingham was known as "the workshop of the world" during the Industrial Revolution and was the founding city of two of Britain's "big four" banks. Further, in different industries, efficiency is maximized at different sizes of companies. That firms were smaller in Birmingham than Manchester may simply have reflected that scale economies ran out and diminishing returns set in faster for Birmingham's industries than for Manchester's. Finally, the author's assertion that "Birmingham...turn[ed] to outside trade only at the margins" is factually incorrect.

But what really irked my was the title and the idea behind the title. An engineer by training, I learned to love optimization and hate inefficiency. Why would anyone in their right mind advocate moving "toward a less efficient...food system?" I agreed with the eminent jurist Richard Posner when he said, "[The central] meaning of justice, perhaps the most common is – efficiency… [because] in a world of scarce resources waste should be regarded as immoral."

Then, I read the academic paper on statistics "Errors, Robustness, and the Fourth Quadrant" by Nassim Nicholas Taleb, author of The Black Swan. In it, Taleb notes, "Biological systems—those that survived millions of years—include a large share of redundancies" and says, "We cannot discuss 'flat earth' globalization without realizing that it is overoptimized to the point of maximal vulnerability." Taleb wrote the paper mainly to comment on economic and financial systems (whose vulnerability has been vividly demonstrated by current events) but clearly extended his thinking to other systems, explicitly citing electricity grids. Having recently read Philpott's Grist article, I related Taleb's comments to food systems.

There's no doubt that our food system is globalized and interconnected. Black Swan-style events, for example the Irish Potato Famine, have occurred in food systems. In the 1840s, our food system was far less connected and global than it is today, meaning that a million Irish could escape the famine by emigrating. Still, a million died of starvation. What would happen if a Black Swan struck our food system today? In a global system, there is nowhere to emigrate because the system encompasses the world.

Some potential Black Swans, although very painful for the employees, owners, suppliers and customer of the affected industry, would not present a widespread threat to people. For example, if a blight were to wipe out almond production in California's Central Valley, where 80% of the world's almonds are grown, it would not cause mass starvation. If McDonald's were to go bankrupt, lines would get longer at Burger King but everyone would still eat.

But what if Cargill, which, among other things provides 22% of the meat consumed in the United States, were to go under? Or the Chicago Mercantile Exchange, where many agricultural futures are traded, (and which, due to the recent acquisition of the Chicago Board of Trade, concentrated the market for futures trading) was to cease functioning due to cyber-terrorism? I don't know that either of these events would cause major hardship but would certainly feel more secure if I knew that some redundancy was built into the system.

In his paper, Philpott praises "the gradual, steady build out of alternative food networks" such as farmers' markets and small farmers' cooperatives and encourages their expansion through community investment in facilities such as local slaughterhouses and dairy processing plants. I don't agree with Philpott's "[keep] our food dollars...within the community" logic because comparative advantage teaches us that trade flows in both directions. However, Taleb made me see the value of building alternative food networks, networks which are not tightly integrated into the global food system, as a way to build redundancy and, therefore, robustness, and to mitigate the impact of potential food system Black Swans to communities that have such alternative food networks in place.

I remain skeptical about the environment benefits of localvorism. However, Taleb's paper has provided me a new lens through which to view it, with an eye toward the impact of local production on food system robustness. More importantly, the combination of Taleb's and Philpott's writings may well affect my food-buying habits.

NOTES:

1) I apologize to the unknown tweeter who brought the Philpott article to my attention. I wanted to acknowledge you in this post but I haven't been able to determine your identity by searching past tweets.

2) The Taleb paper is very technical and I understood little of the mathematics presented in it. However, the implications are clear even without understanding the math so don't let it intimidate you. Google for a definition of kurtosis if you must (I did). A literary version of the paper is available. However, I prefer the technical version because it makes the point about overoptimization and vulnerability much more forcefully than the literary version.

3) Taleb's description of the events of September 18, 2008, may make you want to jump out a window. Don't. Reuters and Seeking Alpha blogger Felix Salmon (whose Reuters blog, ironically, originally pointed me to the Taleb paper) claims that Taleb's source is wrong about the day's events.

4) I am indebted to BeerCurve whose comment on my Bauer Curve post introduced me to Taleb and The Black Swan. But, I still disagree with BeerCurve's criticism of that post.