I wonder if Vernon Ruttan’s scholarship would have followed the same path if he had grown up on a farm on the fertile black soils of central Illinois or Iowa instead of the thin sands of northern Michigan.
Ruttan, one of the University of Minnesota’s most productive economists over the past 45 years, died Monday. But his contributions to agricultural development in poor countries and to our knowledge about technological change will benefit the world for years to come.
Alden, Mich., an unincorporated village 20 miles northeast of Traverse City, was not an easy place to earn a living by farming when Ruttan was born there in 1924.
Some wax romantic about rural life, but before practical tractors and rural electrification, farming required an enormous human toil. Much of small-farm production went for subsistence of the farm family itself.
Rural Michigan was not India, Kenya or Bolivia, especially in terms of education, health care or effective government, but farmers in the Midwest had more in common with peasants in such countries than many today realize.
But Ruttan, along with other recently departed Minnesota economists like Nobel Laureate Leo Hurwicz, Humphrey Institute Dean Ed Schuh and long-time econ department head Jim Simler, came of age at a pivotal time in U.S. history. The Depression had ended. World War II swept millions of young Americans into experiences they never would have had otherwise.
The U.S. Navy sent Ruttan to Yale University. After the war ended, he continued there, graduating in 1948 before going on to get master’s and doctorate degrees at the University of Chicago.
At the end of the war, our country was an unrivaled world power and faced unimagined challenges. Ruttan and other economists of that generation helped shape the world we now live in.
Like several other prominent international development economists, Ruttan cut his teeth on the problems of rural poverty in our country, working for the Tennessee Valley Authority. From there he went to Purdue University, then to President Kennedy’s Council of Economic Advisors and a stint at the International Rice Research Institute in the Philippines before coming to the University of Minnesota in 1965 to head the agricultural economics department.
IRRI and the International Center for the Improvement of Corn and Wheat, where Minnesota alum Norman Borlaug worked, were the primary springboards for what came to be known as the “Green Revolution.” The development and dissemination of high-yielding varieties of rice, wheat and corn saved hundreds of millions of people from starvation. Even more important, they created the necessary preconditions for successful economic development and industrialization in countries like Taiwan, Korea, Thailand and Brazil.
Ruttan was captivated by the economics of why, when and where technological innovation occurs, spending the rest of his life exploring the subject and publishing two important books on it after his 75th birthday.
With Yujiro Hayami, a colleague from IRRI, he developed the idea of “induced innovation” that argues “a change in the relative prices of the factors of production is itself a spur to invention, and to invention of a particular kind — directed to economizing the use of a factor which has become relatively expensive.” More simply, it is the squeaking economic wheel that should get the grease of scientific research and technological development.
The germ of the theory came from British economist John Hicks in 1932, who later won the Nobel Prize, largely for other work. But Ruttan and Hayami fleshed out the idea and applied it to concrete issues of agricultural development in the real world.
Their work matters because for living standards as a whole to improve, each worker has to produce more goods and services. That is what economists call productivity. Electrification, tractors, improved seeds and other technology vastly improved the productivity of U.S. farmers from the 1930s on. Those factors eliminated the physical drudgery Ruttan knew as a farm boy in the 1930s. They reduced food expenditures from one-third of the typical U.S. family’s budget to one-eighth.
This technological change reduced rural poverty in our country, in Europe and eventually in Asia and Latin America. But tragically, such change has lagged in much of Africa and especially in the Islamic arc from western China to northern Nigeria.
In the 1950s and ’60s, the United States put a lot of money into centers like IRRI and the research of scholars like Ruttan, Borlaug and Schuh. We did not do this out of altruism but out of the conviction that rising standards of living in poor countries were important to our own security and well-being. We are slowly relearning that lesson.
© 2008 Edward Lotterman
Chanarambie Consulting, Inc.