"Starve your neighbor" (16 April 2008)

When people are driven to protest because they can't afford to buy food, it's pretty unsettling.

Rioting in response to soaring food prices recently has broken out in Egypt, Cameroon, Ivory Coast, Senegal and Ethiopia. In Pakistan and Thailand, army troops have been deployed to deter food theft from fields and warehouses. World Bank President Robert Zoellick warned in a recent speech that 33 countries are at risk of social upheaval because of rising food prices. Those could include Indonesia, Yemen, Ghana, Uzbekistan and the Philippines. In countries where buying food requires half to three-quarters of a poor person's income, "there is no margin for survival," he said.

The NYT quotes IMF honcho Dominique Strauss-Kahn as commenting that "the food crisis posed questions about the survivability of democracy and political regimes." According to Strauss-Kahn "sometimes those questions lead to war." Great. The possibility of a soylent green future is being casually bandied about in the newspaper by some of the world's most powerful bankers.

“As we know in the past, sometimes those questions lead to war,” he said. “We now need to devote 100 percent of our time to these questions.”
This chart from yesterday's FT shows all the locations of the recent rioting.

In the article, the authors explain how globalization has made food-importing countries extremely vulnerable to the whims of producing nations, who ultimately have a lot less invested in making sure foreigners don't starve.

today’s high and volatile prices make it increasingly costly to cushion the blow for consumers and many of the poorest countries’ governments cannot afford indefinitely to hold food costs down. Instead, they have started to remove import tariffs and impose export bans in an attempt to transfer income directly from farmers to consumers – in effect preventing farmers from selling their produce at the highest price they can find on international markets.
Such measures may alleviate domestic supply problems in the short term. But they also create shortages in global markets, accentuating the problems of those who have to depend on imports – particularly when highly efficient net exporters of grain such as Argentina and Ukraine restrict exports. Joachim von Braun, director-general of Ifpri, calls them “starve your neighbour” policies.

Famine no longer depends entirely on natural causes -- weather, depleted soil, no arable land, etc. -- now economic interdependence itself can create shortages and politicize food supplies on an international scale. Hence, as quoted in the WSJ article, the Indian and Turkish finance ministers direct barbs at U.S. energy "policy":

"When millions of people are going hungry, it's a crime against humanity that food should be diverted to biofuels," said India's finance minister, Palaniappan Chidambaram, in an interview. Turkey's finance minister, Mehmet Simsek, said the use of food for biofuels is "appalling."

The intent of the juxtaposition is clear; people in India or Turkey or anywhere else shouldn't be starving so Americans can salve their conscience when driving and/or wasting electricity. And it's not just energy policy that is problematic. Economist Martin Feldstein took to the WSJ editorial page to argue that Fed rate cuts are pumping up commodity prices and fueling global inflation, exacerbating the food problems.

Yves Smith points to this Telegraph editorial by Ambrose Evans-Pritchard for some forceful rhetoric on the subject. "Hedge funds played their part in the violent rise in spot prices early this year. To that extent they can be held responsible for the death of African and Asian children. Tougher margin rules on the commodity exchanges might have stopped the racket. Capitalism must police itself, or be policed.... A new Cold War is taking shape, around energy and food. The world intelligentsia has been asleep at the wheel. While we rage over global warming, global hunger has swept in under the radar screen."

Though Evans-Pritchard seems to want to discredit worry over global warming as much as raise the alarm about food shortages, the specter of global unrest motivated by famine is pretty scary. It's one thing to try to convince people to give up an anti-modern and anti-democratic ideology (the alleged purpose of the "Global War on Terror"), but quite another to try to convince them to go hungry.