Starvation, Hunger, And The Downside of a Globalized World

Finally waking up to the global challenge we face with rising food and fuel prices and the imminent starvation of millions, the Washington Post is committing some responsible journalism, maybe a tad late, by running a series dedicated to the global food crisis. It's a complex issue with a variety of factors and countervailing forces, without an easy cause-effect scenario. So it's beneficial to stretch it out over several days and examine what we can do and how we can prevent future crises.

The first article looks at the statistical reality of food prices, which soared due to increased demand and hoarding, and aren't likely to fall back to 2006-era prices anytime soon. For a billion people living on next to nothing, the article says, "it is a matter of survival."

Interestingly for a consensus media establishment paper like the Post, they actually attribute the problem to market forces.

The root cause of price surges varies from crop to crop. But the crisis is being driven in part by an unprecedented linkage of the food chain.

A big reason for higher wheat prices, for instance, is the multiyear drought in Australia, something that scientists say may become persistent because of global warming. But wheat prices are also rising because U.S. farmers have been planting less of it, or moving wheat to less fertile ground. That is partly because they are planting more corn to capitalize on the biofuel frenzy.

This year, at least a fifth and perhaps a quarter of the U.S. corn crop will be fed to ethanol plants. As food and fuel fuse, it has presented a boon to American farmers after years of stable prices. But it has also helped spark the broader food-price shock.

"If you didn't have ethanol, you would not have the prices we have today," said Bruce Babcock, a professor of economics and the director of the Center for Agricultural and Rural Development at Iowa State University. "It doesn't mean it's the sole driver. Prices would be higher than we saw earlier in this decade because world grain supplies are tighter now than earlier in the decade. But we've introduced a new demand into the market."

They shrink back into blaming protectionist markets for the problem, but I think the paper stepped over a kernel of truth. It's not just about biofuels - it's been known for a while that they could contribute to starving the poor - it's about market forces driving types of farm production, subsidies making it more profitable, not to mention political forces (Iowa being the first primary state certainly drives the corn ethanol boom domestically). And this is a symbol for how markets work with respect to producing and distributing resources around the planet. Devilstower at Kos wrote the finest post on this topic I've ever seen, and I wish I could excerpt it all but I'll just give you a piece and urge you to follow the link and read it yourself:

Whether it's a bridge in Minnesota or body armor in Iraq, we live in a world constructed by low bid. That's not just true for items built by government contract. For decades, business has focused on efficiency, on the elimination of all redundancy, on "right sizing," on "just in time" on "zero inventory." One of the economic indicators we've been trained to look for each month is the measure of labor productivity, the amount of output achieved for each man-hour of input. In the United States, productivity has soared over the last decade, as automation, outsourcing, and just-in-time have worked together to make US workers much much more productive.

Want to know why corporations are able to sit on huge sums of money, but the average worker's pay hasn't increased? It's because they can get by with fewer of us and still get what they need. Not more than they need, of course. Just enough. Corporations have been proudly "cutting the fat." Flexibility and robustness are not the goals for a corporate society that rarely glances beyond the end of the current quarter.

The trouble is, fat does something other than cause unsightly bulges in your favorite outfit. Fat is storage. If bears were to "cut the fat" before heading into hibernation, they'd be really thin -- as in skeletons -- come spring.

We've promoted this vision of business that's right on the edge, pushing supply out right to the margin, getting everything done expending the precise resources needed, and with respect to this food crisis, a market that works that way is left unprepared. We've globalized and interlocked and paralleled these production and distribution systems so earnestly, that when some farmers decide to switch to growing biofuels instead of food, or when some Chinese and Indian people decide to eat a bit more meat than grain in their diet, or when a few monsoons and hurricanes wipe out some crops, there's no excess supply to which to revert.

The crisis is not necessarily borne out of production, but economics, and in particular the current form of capitalism. The second part of the Washington Post series focuses on the real-world cost of this perversion of production and distribution as it relates to the poor in Mauritania. The problem is this easy reliance on a globalized market that will unquestionably produce whatever bounty is needed. That dismisses human greed. And it has led us down this path.