How to attack the food crisis? Rat-a-tat-tat

Its hard to know where to begin when trying to tackle an issue as big and complex as the rise in global food prices. So instead of delving into the causes of higher global food costs (rising fuel costs, biofuels, lower supply, speculation, market consolidation, a richer Asia increasing demand, World Bank structural adjustment) your reporter decided to start with some articles published yesterday, to illustrate some effects.

According to the Reuters, the price of rat meat has increased nearly fivefold in Cambodia. Last year a kilo went for 1,200 riel, this year it is 5,000 riel (1 USD = 4,120 KHR approx) out pacing the official central bank's rate of inflation, which stands at 37%.

With a kilo of beef costing 20,000 riel, it is no surprise that Cambodia's poor have flocked to a cheaper substitute. Though poor people in parts of the world have been eating rat for years. This seems to suggest that rising food prices are forcing middle class Cambodians into the lower class.

Then again maybe it doesn't. Maybe rodent-eating is all the rave. According to the Guardian, grey squirrels are flying off of the shelves in butcher shops all across Britain. They are numerous and local, which gives them green credentials, and they are also, apparently, quite tasty. One butcher, David Ridley, from Northumberland, described the bushy tailed animals as tasting somewhere between lamb and duck: “'It's moist and sweet because, basically, its diet has been berries and nuts.”

But this is Britain we're talking about, not Cambodia. Britain has not been ravaged by civil war in over 350 years. Its hardly been three decades since Pol Pot and his Khmer Rouge thugs decided that about a quarter of the population was surplus to requirements. Given that the price of rice has risen by about 50 percent over the past six months, it would be very unconvincing to argue that Cambodians are eating rats for the same reason that Britons are eating squirrels, especially considering that 60% of Cambodians' nutrition comes from rice.

Therefore one can only conclude that rising food costs are forcing more and more into poverty, and as disposable income declines, demand for inferior goods such as rats will increase. Yesterday the World Bank released data which showed that more of the world's inhabitants are in dire poverty than previously thought. That number, which was calculated using more recent data (from 2005) has been revised up to 1.4 billion from 1 billion. The good news is that there has still been significant poverty reduction since the 1980s. The bad news is that the data does not account for recent rising food and fuel costs. Wheres the pied piper when you need him?

(Sources: http://www.washingtonpost.com/wp-dyn/content/article/2008/08/26/AR2008082602786.html?sub=AR

http://www.guardian.co.uk/environment/2008/jul/20/food.cambodia

http://news.yahoo.com/s/nm/20080827/od_uk_nm/oukoe_uk_cambodia_rats )

Glenn Beck - Thick as S***

Glenn Beck's latest column on CNN defies logic. The conservative pundit rails against cities like Detroit, Buffalo, Newark and other poverty stricken cities for electing Democrats for mayors, implying that had they elected Republicans occasionally (many cities have elected Dem. mayors for half a century) they would not be so poverty stricken.

Cue the head shaking.

Had he bothered to give any meaningful insight, he would have mentioned found that cities really only have control over property tax revenue. So what would his solution be? To cut those taxes? Housing demand is relatively price inelastic (sure it varies from city to city) but a tax cut given inelastic demand would equate to lower tax revenue. This would mean less cash to spend on education and public transport, which can help alleviate poverty.

Beck neglects to mention that since 1968, America has elected a Republican president for all but 12 years (Carter, Clinton) and that Clinton himself was fairly right wing. But surely those who actually control important macroeconomic policy (fed. income tax, minimum wage & labor laws and trade issues) should not be held responsible for the poverty that has stricken once productive industrial cities. Instead Beck blames the victims - that somehow these cities are more poverty stricken than others because the inhabitants of these cities dont take personal responsibility (just like all those CEOs who receive massive bonuses after leaving companies they've run into the ground)

Furthermore, Beck suggests that Ben Franklin was opposed to minimum wage laws and a welfare state (those ideas barely existed in a pre-industrial society, though they did to be fair, i.e. Elizabethan Poor Laws) without actually citing Franklin on the subject.

Basically my point is Beck's stupidity is absolutely astonishing. He can blame the Democratic mayors all he wants, but at the end of the day the major economic policy makers are either in Washington or state governments.

Then again maybe he's right about the Democrats. Maybe those cities should've elected socialist mayors.

You can read the article for yourself here, but I highly recommend that you don't.
http://www.cnn.com/2008/POLITICS/08/20/beck.cities/index.html


Stay tuned for some comprehensive posts on the global food economy.

How Dumb Do They Think We Are?

Dont answer that.

I know I was planning on to keep this blog focused on specific issues, but I just can't help myself.

John McCain has just released another negative ad. Surprise, surprise. Though it is already known that economics is not his strong point, the stupidity of the latest ad (which I had hoped to post or put a link to but could not find) is nothing short of astonishing.

The woman narrator (courting Hillary's votes, are we?) states: "The real Obama promises higher taxes, more government spending -- so, fewer jobs." Can anyone who has studied macroeconomics for a week point out whats wrong with this statement? No, well consider the following:

GDP = Consumer Spending + Investment + Government Spending + Net Exports - (Savings + Taxes)

McCain might be right about the taxation meaning fewer jobs, though if this tax revenue is spent in an effective manner it will *shock* create jobs. So why did his campaign state that government spending has a negative effect on employment? Is he really that foolish or does he think we are?

He must be a fool and take us for one if he thinks he can make Obama's popularity seem like a negative thing. God those ads are annoying. And I'm not even an Obamamaniac.

The End of the American Dream?

Recessions have occurred in the past with little batting of eyelashes by those who study the economy. But especially with the housing market in tatters, this time there are reasons to believe that the recession of 2008 could signal the end of the American Dream.

What makes this recession different, I'm sure you've heard all before. High oil prices are crippling American drivers and homeowners. Should these trends continue, the American suburban way of life based on long daily commutes could, thankfully, be under threat. Record trade deficits have thrown into question the sustainability of a service economy given rising costs of imports, which implies structural changes in America's pipeline. This is particularly funny considering it wasn't all that long ago that we had to make the transition to a service economy from a manufacturing one.

The trade deficits and, to a lesser extent, high oil prices can be blamed on capital-seeking corporations and the all-powerful profit maximizing financial institutions, the latter being the means of many people to home ownership. But the financial sector is buckling under the burden of irresponsible lending and borrowing, thus raising questions about the ability to continue . By some measures, household debt has doubled over the past seven years. This debt combined with government debt is greater than 100 percent of US GDP. Oh dear. ('The Economic State of the Union' – Manufacturing & Technology News 2008) I'm not sure if this even accounts for inflation and the burgeoning foreign debts.

Had a massive recession occurred without prior significant strain on creditors and debtors, recovery would be made easier by expanding credit. But with credit already overstretched, one has to wonder who would be dumb enough to lend money to Americans at a time like this (it will come from overseas, if anywhere – China and the Middle East). The last time America suffered economic hardships on a large scale, it took a massive war to end it (and by some accounts, America's war machine have kept the economy afloat ever since...will be covered in a future post).

But I digress...

The point is this: with the economy overstretched as it is, particularly the housing market, the American Dream (big suburban house complete with garage two lawns and 2.5 kids) will be scrutinized. What does this mean? Well, its not the end of America, thats for sure. But politicians fawning over the benefits of home ownership and financial analysts who claim that real estate always bounces back might be endangered species. But people's reactions to the recession depends on how severe it actually will be.

Perhaps the most positive aspect of the changing economy are the end of Disneyland suburbs complete with McMansions and strip mall after strip mall. After years of excess and demanding perfection and massive spectacles, Americans may finally grow up. But then again, maybe another massive economy-fixing war is being planned by the deviants who lurk the halls of the Pentagon. It would give America a fresh start, boost the economy and Disney could make a movie about it in twenty years time.

all power to the blogosoviets

This being my first post, I'm not sure entirely what to say, only that this 'blog' (I really hate that word) will hopefully focus on armed conflicts, housing and land and food issues.

Hopefully it will be updated a few days a week, but we'll see.