Phipps: Why Dark Matter Really Matters

November 10, 2017 09:49 AM
Phipps: Why Dark Matter Really Matters

When physicists tried to make the equations for gravity, matter and energy in the universe match up with their measurements, the numbers just didn’t work out. So they invented dark matter—matter that can’t be sensed but simply has to be there.

“Hold my beer,” economists replied. In 1970, they began detecting an analogous problem. When they calculated the total value of companies by their stock price and number of shares, the sum was larger than the value of all the physical stuff—real estate, buildings, equipment, etc.—and the total wage bill. In fact, about 20% of the value had to be attributed to economic dark matter.

This ratio has now reversed, economist Ryan Avent points out. About 80% of business firms’ value is dark matter. He attributes it to the monetary value of all the internal wisdom of the firm: how to do stuff, how to work together, connections to other business entities, influence and myriad other abilities. Dark matter is the value of the group culture.

This would be just an intellectual curiosity except for the startling trend. Much more of the wealth of the world is now literally embodied in people, not tangible goods.

Ag Is Different. Does agriculture generate this same surplus of non-tangible value? Because farm businesses are rarely bought out in their entirety, and almost never publicly, we have no way of even estimating the value of our dark matter.

The answer might be that we have little dark matter or company culture because we have yet to coalesce into larger multi-person entities. The vast majority of acres are farmed by two to three people units who are usually related. Given the land-ownership restraints on farm size I outlined in my September column (Why Didn’t We Get Bigger Faster?), a group culture is not a critical need. This is no big impediment to most farm careers, but it suggests we would have a hard time transitioning to other employment, where group skills are assumed and crucial to success.

Exhibit A. For farmers who think this whole idea of dark matter is managerial mumbo-jumbo, consider Washington. The enormous loss of dark matter or productive culture in Congress is clearly evident as they struggle to complete even routine responsibilities.

With the retirement and defeat of those few who do understand how to make the government work, our political dark matter dwindles. Meanwhile, administration efforts are jettisoning any culture of accomplishment by failing to fill key positions and delegitimizing institutions such as the Congressional Budget Office, NASA and National Oceanic and Atmospheric Administration. The people and buildings are there, but the group skills are disappearing. 

As more wealth goes dark, we have less in common with our fellow citizens. While we cherish our self-sufficiency, the vast majority are moving toward a more interconnected culture. If we think non-farmers don’t understand us now, just wait a few years.

Our values could be increasingly perceived as isolationist and self-centered. Against that prejudice, our attempts to persuade on issues such as GMOs will face even stronger skepticism. Meanwhile, doing business with companies built overwhelmingly on dark matter will become more frustrating. We will simply lack the cultural tools to fit in.

Our Role. It is imperative we seek to match their cooperative growth by making the considerable effort to be part of groups and contribute to building our own slice of dark matter somewhere. Being part of a group outside of ag, like a service club (Rotary, etc.) or advocacy group (Pheasants Forever, etc.) will at least expose us to how non-farmers function as a group and how that is changing.

As we endure a wealth-eroding era in agriculture, knowing what wealth now looks like elsewhere might supply tools we can use to improve our future prospects. If nothing else, respecting the growing power of dark matter wealth will help us explain and predict those forces that will shape that future.

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