Bread and Rosy Scenarios
Briefing | By Brooke Rieder | July 10, 2008
The
current food shortage has no lack of scapegoats, ranging from the
newfound carnivorous habits of the Chinese, to global warming.
But Finance Consultant Kel Kelly sets out to debunk these and similar theories about the food crisis in the Free Market newsletter put out by the Ludwig von Mises Institute. He takes on New York Times columnist Paul Krugman,
setting out to discredit Krugman’s four main causal arguments for the
current food shortage, which include increased demand from China, high
oil prices, bad weather, and reduced available farmland.
Kelly dismisses Krugman’s analysis as “illogical,” insisting that the
primary reason for the food shortage today, and any shortage for that
matter, is the lack of a free market.
He argues that if food were freely exported from regions where it was
plentiful to more needy regions, like Africa, it would be profitable to
do so because shortages would have caused food prices to rise.
“The fact that this is not currently happening can be a result only of
government price controls, trade restrictions, or some other government
barrier that prevents people from getting what they need,” Kelly wrote.
Using a statistic from the World Bank to emphasize market barriers,
Kelly cites a list of 21 countries with price controls on basic
staples. He also faults government intrusion for major crises such as
the 3 million starving Ethiopians in the 1980’s, stating that the food
was available, but its movement to the drought-stricken region was
obstructed by fighting between rebel groups and the government.
Kelly claims that the second main cause of the food shortage is yet
another sin of government intervention—the overprinting of money.
“While the United States has been expanding the money supply by ‘only’
10-15 percent per year, many countries have printed money at rates
exceeding 50 percent per year,” Kelly wrote.
He explains that this practice causes prices to rise, because money is
being created faster than goods. While Kelly concedes there is a true
decrease in the production of wheat, other commodities such as cereals,
livestock, fish, and seafood have, in turn, seen increases.
Kelly next turns his attention to Krugman’s arguments, systematically
rejecting each causal theory’s plausibility in a free market system.
He explains that bad weather could never have an effect more dramatic
than temporary price increase, because in a shortage other countries
would step up their production to compensate. Increased food demands
from China are not to be feared because increased demand results in a
reduction in demand and prices for other goods. The push for biofuel is
dismissed as a cause because signals of shortage would instigate action
to convert all less important uses of land—“biofuel feedstock, car
lots, movie theaters, houses, or whatever”—into farming land in order
to meet demands.
There is no doubt that Kelly makes some important points about the
virtues of the free market system. However, it is less than helpful to
reject Krugman’s hypotheses of surface-level causes in favor of
theoretical philosophies about the underlying roots of shortages and
their solutions under a pure market system such as the
historically-capitalist U.S. has never even known.
Brooke Rieder is an intern at the American Journalism Center, a training program run by Accuracy in Media and Accuracy in Academia.
4 Comments | Post a Comment
Yes, even i am aware of it that Africa is struggling for the food even free foods! since many decades. People are so active on changing the farm lands into cinema theaters, super markets, and lots of other money making buildings.
I do agree on the obscene amount of land that is being covered with concrete every minute in this country.
While in AZ, the citrus orchards were being drug down to make way for yet another apartment building or luxury office building.
That is insanity.
My thoughts and my fear, however, is not that concrete will stop flowing to build yet another strip mall, that’s not going to happen until there is no more money to loan, and no more taxpayers to bail out those bad loans. That won’t be the target of the government. My fear is that the government will decide farm producing land, in use already to produce food would be better suited ‘for the national good’ if it is used for growing corn for ethanol.
From all I have read ethanol from corn is not a good idea. WE have already seen that it has driven up the price of food, the price of animal food, etc, and for a very limited or no benefit.
Another horror that is being done in this country is strip mining for coal. That is the most heartbreaking thing to see. For those who didn’t know the land before or don’t really know, they might think that gently rolling, grass covered land with a little pond is just idyllic and the coal company has ‘reclaimed’ it. They probably don’t wonder why there are no cattle on it, not even deer, or why it isn’t being used to grow food.
Also, coal mining destroys the shallow water table, draining people’s wells, and spring fed creeks, ponds, etc., for miles and miles around.
They are planting pine tree farms on some of it and that is an improvement - but we are a very populous nation and getting more so. The world is growing and demanding more food. We cannot, simply cannot be dependent on foreign countries for our very food.
There are many things we need to do in this country, but covering every inch with corn, is not it.
Neither is destroying the land for generations, maybe forever, for food production while digging for coal.
We need people to begin getting educated, to listen to other people about what is happening in their area. Stop perpetrating partisan spin and start talking common sense.
We also need for everyone to do whatever they can - no matter how small - to cut our consumption - of everything.
July 11 at 12:30 pm | #1 | Link
Hasn’t it always been a problem to get food to the African nations? Even free food? For many, many years - not just lately.
There is one statement that is the most problematic concerning biofuel—
<<<<would instigate action to convert all less important uses of land—“biofuel feedstock, car lots, movie theaters, houses, or whatever”—into farming land in order to meet demands. >>>
While the author is trying to pretend that these lands are not important - they are private property. Also, there is the assumption that the owners would be so willing to convert their property to that use.
How long before the government gets to decide what is best use for YOUR land??
How long before the decide they need that housing development in the country to grow corn and relocate people into the city?
How long before the small family farms are deemed ‘less important’ and the government forces them to allow big agribusiness to take the land for corn growing?
Ethanol is suicidal - it needs to be scrapped now - drill for oil, develop alternative energies and cut back on consumption.
Please leave our food growing land for growing food - and do not create a situation the government can take it from the owners.