How the Price of Eggs Explains How to Weaken the Bulwark of Democracy

Over the last couple of days, I have seen a number of news segments and articles on the “price of eggs” getting high. Some of these had been spurred on by the fact that costs were high and occurred just before Thanksgiving. But the egg price news has continued beyond Thanksgiving and is just as relevant to the upcoming Christmas holidays. I am sure that the demand for eggs continuing to be higher than usual isn’t related. But what do egg prices have to do with weakening our democracy?

Ah! And this is where the real point begins.

To begin, I am going to paraphrase a popular conundrum: What came first egg prices or inflation? You’ve almost assuredly taken a position on the original question, are you prepared to take a position on this one?

As Jefferson noted; “An informed citizenry is the bulwark of a democracy.” This aphorism about our society can be used to assess aspects, conditions, and elements of America, its citizens, and our institutions on whether we are doing our patriotic duty as Americans. So, if you agree that Jefferson’s observation is insightfully true and instructively wise then let’s use it as a tool to assess whether we are fulfilling or are failing our ‘informed’ responsibilities to be that patriotic force required to defend our democracy by looking at how we respond to the price of eggs.

Now how can the price of eggs be used in this context? The price of eggs seems such a mundane matter, and it is for that reason that it may reveal more about what we are not “informed” about than you’d think. After all, the price of eggs isn’t just about their cost. Eggs are one of many items that were and are central characters in our political turmoil, else why would their price be blamed upon the government, politicians, and public policies. Eggs are just one of the many food items in the basket of goods where “Inflation” has been a political and economic issue; and have been used to “inform” public opinion.

Americans are concerned, upset, even angry about the price of eggs (and other items). Isn’t it thus important to know why egg’s costs have risen? I mean, if we are going to let the price of eggs matter in our politics. If the price of eggs is going to play a role in your political decisions, then clearly being “informed” about egg prices is important to that decision. Which raises the question: Are you “informed” about the price of eggs?

So, how about a little “informed” test.Note: It would be instructive for you to answer these questions before you continue beyond the questions. No but you will now how you do. The purpose is for you to have a basis for assessing how well you think you were “informed” by those you listened to and believed.

1.        Is the current high price of eggs due to government policy?

a.        If yes, what is the policy,

b.       If yes, when did it become the policy?

2.        Do the flock sizes / number of egg layers in poultry farms vary with the price of eggs?

a.        If yes, what does that mean?

3.        Does the demand for eggs change with what the season is?

4.        Does the supply of eggs change with what the season is?

5.        Does the bird flu affect the demand, the supply, or the price of eggs?

a.        If yes, which and how?

6.        Does the government have a responsibility to ensure that the supply of eggs will meet demand?

7.        Does the fluctuating price of eggs provide an opportunity for egg producers to improve their profitability in the marketplace?

a.        If yes, is this consistent with a free market economy?

8.        What would basic Economics theory tell us about the price of eggs?

9.        Would you rate yourself as an “informed” citizen with regard to the price of eggs?

a.        Were you “informed” prior to reading this?

b.       Are previous decisions you’ve made based upon the degree of “informed” you were in the past, representative of an “informed” citizen?

10.   How would you rate the level of “informed” citizenry across the US population on the price of eggs?

a.        Is that rating as good, better, or worse for many other food items?

b.       What about non-food items?

Here’s the last question. It’s really the most important question which is why it is last and given its own paragraph.

Do you feel that you have been adequately “informed” by all the sources that you rely/relyied upon to be “informed” about this issue that has been in the news, in our politics, on social-media, in the public’s response and concern about “prices” and “Inflation”?

Proceed with Caution: Beware All Who Enter Here!

As Jefferson stated, being “informed” is an essential way to defend our democracy; and no one said it would be easy, just necessary.

Now for some things to consider about the price of eggs (or other things).

People’s concerns that ‘food’ prices were/are getting high because of “Inflation” over the last few years is heard constantly; and eggs are one of those items of frequent focus. Just like eggs, the cost of beef, pork, potatoes, chicken (not surprisingly), milk, and other food items have also increased/inflated. Obviously, people are justified in being upset about “Inflation” causing these increases. Aren’t you also upset that egg prices have increased because of inflation?

But inflation is the “effect” and not the “cause” of these price increases. We use the term “inflation” to describe what has happened to prices and as a ‘stand-in’ for there being a cause or causes but “Inflation” is a measure of what has happened and tells us nothing about why or how it happened. If you feel this is just a semantic trick, do you know what the “cause(s)” are?

So, if you are blaming “inflation” for the price of eggs (or other items) increasing are you still feeling “informed”?

But hang-on before you make your assessment, there might be more.

Clearly to be truly “informed” about egg prices there is more to consider. Can you explain how or why their price increased? There must be some reason(s) which changed something and that ‘causes’ eggs to become more costly. If you haven’t thought much about this or fail to put your finger on the triggering item(s) or event(s) making eggs more expensive, then it may not be because you yourself are who is really failing here. I would say there are other parties who are more responsible than you for this failure. [Though your own culpability is not zero.]

Don’t feel you have failed here. Well, not on your own. You actually had plenty of help and guidance. This was and is a systemic failure, in that the source of the failure did not occur in one place but way part of different processes. There was/is a failure of our educational system, a failure of our news & social media, a failure of our business/corporate entities, a failure of our governmental, a failure of our political parties and politicians, and a failure fomenting within your respective community (friends and family). All these sources of failure are not all the same, didn’t fail for the same reasons, and they didn’t fail to the same degree. But they did fail you. But perhaps if any one of them had done a better job of being a source to “inform”, you may not have failed. It is even possible and probable that inflation would not have been/be as bad. And we might have done or still do better in defending our democracy as Jefferson advised we must do as our patriotic duty.

You may doubt any or all of the entities failed you/us or that you yourself failed in this regard. Let’s see if the following removes some of that doubt. Perhaps you will remain unconvinced and that itself is just another way in which failure can persist. Should that be the case, you will need to seek some other explanation(s) for what caused the price of eggs to soar. And your explanation should also be able to explain its role in previous instances where the price of eggs increased, else you would need to explain why it doesn’t.

The following chart shows the Cost for Eggs (per dozen) over the last decade. It is not hard to see that occasionally there is a quick spike in egg prices. The biggest occurred roughly two years ago and the recent increase has just occurred or may be in the process of occurring. It all depends upon what happens going forward. So, is there something that is connected to these spikes?

Well, the Supply & Demand principle of economics would imply that either supply decreased or demand increased. Is there anything of that sort we can identify?

Yes, there is. There are at least two things. The chart above is helpful here.

First, look at that other line on the chart, the “Layers/Person”. This is the number of egg producing hens per person in the US population. It shows that there is a connection between the number of layers/person and egg prices. The highest price for eggs coincides with the lowest layers/person and the lowest price for eggs with the highest layers/person ration. Just as Supply & Demand would predict this, the data shows this.

There is no reason that Demand should increase so dramatically. Consumption of eggs really should not change much for people on average. While the US population increases and that would drive up demand, the Layers/Person data accounts for that and normalizes that Demand to the same measurement basis. There may be some external Demand for eggs that does have some impact, but it isn’t that big a factor in the US egg production market.

So, if there is no reason for Demand to have changed on a general basis, the ‘causal’ factor ought to be Supply related, according to the Supply & Demand principle. What would make Supply change so much? Well, whatever made the number of Layers/Person increase or decrease, of course. And we have some exact evidence about one thing that directly changes Supply. The Bird-flu does that. The Bird-flu kills birds directly and indirectly. When a flock is infected, the entire flock is destroyed. And if you had to guess, would you bet that the number of layers that are culled due to bird-flu affects the number of Layers/Person? Because the bird-flu has been and is responsible for part of the Supply decline. In fact the correlation between bird-flu outbreaks coincides with the highest prices of eggs. Likewise, the lowest egg prices are when the Layers/Person are the highest.

Inflation, particularly the highest levels, for egg prices has been “caused” by the bird-flu outbreaks. This doesn’t mean that there are no other sources of inflation; but those other sources don’t all come at the same time, for the same reasons, or are “caused” by the same person, group, or event.

If energy costs increase for farmers, distributors, grocery stores, and businesses that use eggs in their products; those costs are also going to add to your egg prices. Wages associated with providing eggs to you stores, eateries, and products add costs. Once prices (and even profits) rise, there is going to be resistance to reducing the prices quickly (and particularly totally) back to their prior price.

Yes, it is more difficult than just blaming “Inflation”, but then defending our democracy was never going to be easy. Easy answers may be the product of other factors and objectives which are intended to actually ‘inform’ you so much as ‘misinform’ you.

Do your patriotic duty, and stive to be actually “informed”.

At this point, you may feel that you are slightly better ‘informed’ or not. But, if you are interested in additional insight into how our societal system has failed us, the following presents some thoughts on all those others who failed you. Reading further is just as voluntary as having reached this sentence.

Educational System:

How did your/our educational system fail us? Well, we don’t teach economics as a mandatory subject in all states, only about half. Understanding “Inflation” and other economic concepts doesn’t improve with non-exposure. Also, having been taught economics doesn’t mean you learned or understand economics, and there is a natural knowledge attrition rate which may increase over time. Then there is the question of do or can you apply those concepts just because you were taught them? There is no requirement that anyone must remember, recall, or apply things you were taught. Then there is the issue that you need access to relevant information and knowledge which would make your knowledge of economics useful regarding the price of eggs or any other thing. If you know the economic principle of “Price and Demand” does that enable you to understand why the price of eggs increased? It’s on this basis that I contend that our educational system has a contributory role in our failure to be adequately “informed” citizens. These are some ways in which it can have failed us.

News Media:

The media (news and social) has presented ‘stories’ about the “price of eggs” (and other things) and Inflation has caused their prices to rise dramatically. However, they often cited “Inflation” s the reason and in some cases assigned blame to some government policy or action. Though I can’t recall them specifying the policy or action which was to blame. Cautionary Note: Don’t be too quick to cite a particular policy or action as it may be easy to call into question, especially in the current period.

In reporting, the media hasn’t and doesn’t often mention what contributing factors to the increases are. Telling people that the price of eggs has increased is actually not fulfilling their duty to “inform”, you’ll know the price is higher when you go to buy them. Often the media will make the same “Inflation” has caused the price of eggs to increase, which we know is backwards.This doesn’t mean that the media hasn’t reported on other factors that cause increases in egg prices, because sometime some of the media do. But the media entities that are “informing” better are not necessarily the major entities, nor is their better information being noticed or disseminated. And then there is the problem of just because a news entity is reporting on informative details does not mean that the public/you are noticing. You still play a role remember.

 Business/Corporate Entities:

Businesses don’t have as major a role in “informing” the public on things that cause the price of eggs (or other foods or anything else) to increase. However there are instances where it does serve their own interests and it is also the case that businesses often have the most valuable information that would be needed/useful in “informing” the public. In the case of eggs the poultry farming business must, in order to succeed, know what causes their costs to change and their prices to change. Those businesses whose commerce involves eggs also have information that can “inform” us. For example, eggs are exported which makes the ‘demand’ side of price vary accordingly; and about a quarter of egg production is used by companies in their own products which also affects the ‘demand’ side of the equation. The price of eggs is not so simple as you may presume.

Government:

I am sure that many people blame the government for the increased price of eggs, and no doubt there is some truth to it. However, that truth doesn’t mean that the full responsibility for or cause of that cost was entirely that of the government. Nor does it mean that the government’s role was wrongly done. It only means that there are or were policies, decisions, and events that had their effect upon egg prices. So where is the government’s failure to “inform” then?

When policies and decisions were made the government failed to effectively “inform” the public about the connection between those actions and their impact upon egg prices (or other items’ prices). This included failing to provide guidance or advice on how to respond to the cost increases, which may have helped both the consumer and the situation that prompted the increase. This “informative” function may not be considered a governmental responsibility but that shouldn’t prevent it from doing so. Whether those in government know how to do this is a different question all together. The government does provide a tremendous amount of information about the price of eggs (or other items) which is often the source of information that news entities use in their reporting. However, neither the government nor the media necessarily interpret it for the public to feel “informed”, even if those in the public are aware of the information’s existence.

Political Parties and Politicians:

As the representatives of the people, one might think that these groups would surely not just “inform” their constituents but work to help them deal with the problems that they face. I know this is what we are taught about politicians, but I would question whether experience demonstrates it to be accurate. First, there is sufficient evidence that politicians and political parties do not understand “Inflation” any more or even as well as the public. This lack of apparent knowledge can be seen in their lack of actions or worse the actions that they do take to ‘help’ the public. After all, who doesn’t know the typical results that you get from someone who acts without an adequate or any understanding of the situation that they are acting upon.

Community (Friends and Family) and the General Public:

Your communities do share in the responsibility for Inflation just because they along with the rest of the general public are consumers. In the case of eggs, they are the primary consumers. As consumers, they are the major “demand” side of the equation that plays into the price of eggs. Now, remember they are not the only factor that influences the price, but they do play their role.

However, you, your family and friends, and the general public is not adequately “informed” if they don’t know why the price of eggs is increasing.  Nor can they act as an “informed” citizen if you don’t know what the ‘cause and effect’ factors are producing the prices that you are concerned, upset, or angry about.