Grains, Prices, Riots

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Here’s what Paul Krugman wrote yesterday:

These days you hear a lot about the world financial crisis. But there’s another world crisis under way — and it’s hurting a lot more people.

I’m talking about the food crisis. Over the past few years the prices of wheat, corn, rice and other basic foodstuffs have doubled or tripled, with much of the increase taking place just in the last few months. High food prices dismay even relatively well-off Americans — but they’re truly devastating in poor countries, where food often accounts for more than half a family’s spending.

It’s about grain shortages. Factors behind this are more Chinese eating more meat, which diverts a lot of grain and drives up prices, oil prices, which drive up prices of grain as they do everything else, and bad weather.

All these, but also —

Where the effects of bad policy are clearest, however, is in the rise of demon ethanol and other biofuels.

… even on optimistic estimates, producing a gallon of ethanol from corn uses most of the energy the gallon contains.

… And meanwhile, land used to grow biofuel feedstock is land not available to grow food, so subsidies to biofuels are a major factor in the food crisis. You might put it this way: people are starving in Africa so that American politicians can court votes in farm states.

It gets worse:

One more thing: one reason the food crisis has gotten so severe, so fast, is that major players in the grain market grew complacent.

Governments and private grain dealers used to hold large inventories in normal times, just in case a bad harvest created a sudden shortage. Over the years, however, these precautionary inventories were allowed to shrink, mainly because everyone came to believe that countries suffering crop failures could always import the food they needed.

This left the world food balance highly vulnerable to a crisis affecting many countries at once — in much the same way that the marketing of complex financial securities, which was supposed to diversify away risk, left world financial markets highly vulnerable to a systemwide shock.

Not only in Africa are people starving! Right on cue, the BBC updates one of the most under-reported stories of the past week:

Crowds of demonstrators in Haiti have tried to storm the presidential palace in the capital Port-au-Prince as protests continue over food prices.

Witnesses say the protesters used metal bins to try to smash down the palace gates before UN troops fired rubber bullets and tear gas to disperse them.

Several people are reported to have been injured in the clashes.

At least five people have been killed in Haiti since the unrest began last week in the southern city of Les Cayes.

The demonstrators outside the presidential palace said the rising cost of living in Haiti meant they were struggling to feed themselves.

“We are hungry,” they shouted before attempting to smash open the palace gates.

In recent months, it has become common among Haiti’s poor to use the expression grangou klowox , or “eating bleach”, to describe the daily hunger pains people face, because of the burning feeling in their stomachs.

You know, poverty was once “John Edwards’ issue.” No one else seemed to think it was an issue. Paradoxically, the demise of his candidacy put the concept into the remaining Democratic candidates’ mouths. To be sure, this happened because the prospect of an Edwards endorsement dangled tantalizingly close, as it dangles still. However, as to global hunger, says Krugman:

Oh, and in case you’re wondering: all the remaining presidential contenders are terrible on this issue.

Not that we should be surprised. True, some of the candidates have more range than Dorothy Parker’s review of the emotional range of a particular Katherine Hepburn performance had it — running the gamut from A to B. But in the worldcentric visionary alphabet, the best of them might — just might — get up to the letter G. You don’t get farmers mad at ya. Period.

These rioters in Haiti, and those rioters of the near future in other parts of the world, are human beings. You can meet them, for example, in Amy Chua’s brilliant World on Fire: How Exporting Free Market Democracy Breeds Ethnic Hatred and Global Instability. The title of the book gives you the idea.

Remember blowback? I know we don’t want to. Pastor Jeremiah Wright got a mess of bad press for mentioning it. But remember the concept. It may help dispel confusion someday.

B.l.o.w.b.a.c.k. It happens.


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