To Children Ardent for Some Desperate Glory

Today the Guardian reported that in May, former Israeli Prime Minister, Ehud Olmert, asked George W. Bush if the United States would support Israel's plan to attack Iranian nuclear facilities. This revelation was made by an unnamed senior European diplomat, the paper claimed. Bush, himself not immune to causing immense violent conflicts, thankfully declined to offer his backing, considering the US is already mired in two wars that are far from over.

One can't help but wonder that we might find ourselves immersed in World War III right now, but for Bush's dismal approval rating. This is something to consider come election day. John McCain has let the whole world know how he feels on the subject, when on stage during an early 2008 presidential campaign event, he broke out into an impromptu version of a popular Beach Boys song, replacing the lyrics “Barbara Ann” with “Bomb Iran.” Charming.

McCain went on to say that “Iran is dedicated to the destruction of Israel.” Firstly, Iran does not have nuclear weapons, and has refuted claims that their nuclear facilities are going to be used to build them (this itself could be the subject of another article). Secondly, and more importantly, the infamous “wipe Israel off the map” quote from Iranian President Mahmoud Ahmadinejad may have in fact been mistranslated by Iran's official propaganda arm itself. Ahmadinejad alleges that he was referring to the Israeli regime, at the time headed by alleged war criminal, Ariel Sharon, and not the people of Israel or Jews as a whole.

Don't get me wrong, Ahmadinejad is certainly a despicable figure. He isn't exactly the biggest fan of women's and minorities' rights, nor is he a staunch believer in democracy or free speech. But Jews haven't exactly been pouring out of Iran as a direct result of his presidency either. Perhaps right wing Americans and Israelis are too busy rattling their sabres and licking their lips at the prospect of yet another war. They should take notice that discrimination is not genocide, and, though deplorable, the case for war should be diminished.

So it is not surprising that no one in the US took notice of the Guardian's report. Even if this senior European diplomat turns out to be discredited, the rumors are still quite chilling. But it was ignored entirely by the New York Times, the Washington Post and CNN.

Its a shame that these media outlets did not pick up on this story too, especially on a day when Sarah Palin's interview with Katie Couric made news worldwide. “We shouldn't second guessed [sic] Israel's security efforts,” said the VP candidate, “because we cannot ever afford to send a message that we would allow a second Holocaust, for one. Israel has got to have the opportunity and the ability to protect itself. They are our closest ally in the Mid East [sic]. We need them, they need us and we shouldn't second guess their effort.” Unfortunately Katie Couric gave Mrs. Palin the opportunity to cover her tracks, when she asked her immediately after if the US should still support Israel, even if it is not in America's (or Israel's) best interests (e.g. Iranian forces would do more than just harass American forces in Iraq and Afghanistan, Israel itself would be under more of a threat).

We simply cannot allow this self-proclaimed pitbull to be an illness or accident away from the missile launch codes. Though she wont be the one dying, she is dying for more war, it would seem. Any excuse will do, and Israel will do just fine, thank you very much. Is this the type of person Americans really want to represent them on a global stage?

It is very frustrating that the media in the United States have not thus far made this connection; that certain factions within Israel have allegedly asked the United States for its' support for a war with Iran, and a certain presidential candidate in the United States is looking for what George W. Bush called a 'mandate' for his agenda, which could very well involve "preemptive" military action against Iran.

And on top of this, the only Middle Eastern regime with nuclear weapons is Israel. And its currently wiping Palestine clean off the map.

A Speculative Effort, A Deadly Game (out in 2008 in farms and supermarkets near you)

Speculation, the practice of purchasing something with a view to sell for a profit, has always been viewed askance. Speculation in foreign exchange markets can distort exchange rates, which could lead to short term instability. Property speculation can lead to gentrification, which can force people out of their homes through no fault of their own. In recent years, a very dangerous type of speculation has garnered some very appropriate negative attention in the media: speculation in food commodities.

Think of it as going to a school fair, buying up all the hot dogs, soda and cotton candy then setting up your own stand and charging more than what you paid for it. Except replace 'school fair' with 'the world' and 'hot dogs, soda and cotton candy' with basic foods such as wheat and corn and you have a problem of epic proportions.

Now that we've established food speculation as immoral (the equivalent of taking candy from a baby or many babies), just how much of it is a contributing factor is it to rising food prices? If you believe the academics, journalists and economists who bleat the same old nonsense about the virtues of unfettered trade and the End of History, then speculation on food futures is not only not raising food prices, but its lowering them, curing AIDS and spreading democracy around the world simultaneously. Of course they aren't saying the last three things, but their denial of speculation playing any role in rising food costs is baffling (did I say 'baffling'? Because I meant 'predictable').

Conservative economists, politicians and businessmen are more likely to attribute rising food costs to subsidies. Agricultural subsidies are by no means perfect, especially export subsidies on products to poorer countries, which should be scrapped immediately. Though if done right they can increase supply and decrease price. But I digress.

Nicholas Brookes of ETF Securities in London said the following on speculation: “There is no question that we have seen a sharp increase in this kind of futures trading. But the flows that are going into these products are minuscule compared to the underlying production of such agricultural goods globally.” His firm secured $1 billion in food futures in the last year alone.

By some accounts, speculating on food has increased to $47 billion in the past year alone. Though this certainly isn't a staggering sum in the context of the global economy, the fact that it has increased by a factor of five in one year makes Mr. Brookes' above statement seem, well, speculative at best. A coalition of Belgian political parties and NGOs estimate that about 20% of recent rises in food cost stem from speculation.

This figure is especially significant when you consider that from March 2007-March 2008, the prices of wheat, soy products and rice have risen by 130%, 87% and 74% respectively. If we are to accept what our Belgian friends have told us and make some simple assumptions, that means speculators have inflated the prices of wheat, soy and rice by 26%, 17.4% and 14.8%. These are not paltry sums when you realize that aristocrats are essentially using profit motives to eat into people's disposable incomes. People who make less in their lifetime than these investors do before lunchtime.

Thus it does not come as a surprise to hear this Belgian coalition call for the banning of speculation on raw food products (I don't think anyone is out to get wine speculators). It might not solve the problem as a whole, but its a step in the right direction. Why not use the freed up capital to invest in better farming technology around the world?

Not Quite Out of the Bretton Woods...

The masses being subjugated by the classes is, appropriately enough, as old as agriculture itself (the elites needed someone to feed them). In recent years though, The World Bank and IMF have played a role in causing food prices to rise through economic bullying: prying open closed markets through Structural Adjustment Policies. Though other there are other causes to the current crisis, there is reason to believe that these institutions are partly responsible for world grain supplies being as low now as they were in 1973, when there were approximately 2.6 billion fewer people in the world.

For those that do not know what a Structural Adjustment Policy (SAP) is, it is the conditions by which a country must abide when it obtains credit from the World Bank. SAPs are nearly as old as the Breton Woods institutions themselves, but gained prominence as a policy tool as many countries experienced economic crises in the late seventies. Though this seems reasonable (a creditor would want to make sure that his borrower doesn't spend care-free), in reality some of these demands are quite unreasonable for an institution that claims to be fighting poverty, in the World Bank's case.

In addition to accepting fiscal austerity, which itself can be harsh especially considering most Western governments run on deficits, many countries are also forced to privatize state-owned firms. But more integral to the food crisis, they are also made to open up their markets to richer countries, and encouraged (read: coerced) to discard traditional agriculture in favor of cash crops for export to the west.

Strucutral Adjustment is especially harsh when you consider that many poor countries only have asked the World Bank and IMF for loans after previous corrupt dictatorships bankrupted their countries. As a means of recouping losses incurred through irresponsible lending to these dictators (especially in the crisis of the late 70s early 80s), banks turned to the IMF, who then loaned these countries money so they could repay their creditors (such as Scotia Bank, Citibank) and thus global finance was given a get-out-of-jail-free card.

So how have these policies directly contributed to people going hungry today? The fallacy of economic orthodoxy with regards to free trade. It states that when tariffs are removed, countries that sacrifice the least production of one good to produce more of another (comparative advantage) will do so, and prices will consequently drop. This assumption, based on supply increasing more than demand due to competitive markets, is sheer fantasy, even in agricultural markets (see Cargill, Tyson, ADM). If markets are uncompetitive, taxes can fall with no negative effect on price whatsoever. Who will force firms to lower their prices (and their profits) if there are no competitors?

To illustrate this point consider the following. Country A and Country B sign a free-trade agreement, but B is significantly smaller and poorer than A. Consumers in both countries eat corn, but B produces much more. Previously there were tariffs on corn. If B's corn markets are open to A's richer consumers, the effect on price will be positive, thus diminishing real incomes in B. The beneficiaries will be corn farmers in B, whose land will invariably be bought by corporate interests, thus negating any real long term progress to those who yearn for it most.

This would appear to be the case in Central America, where corn and rice, key components in the diet of many, have increased in price due to richer consumers around the world pushing up the price (biofuels also dont help the cause of the campesino). Some even argue that Cargill is using its market power to rise the price of corn even higher than it should be if it were determined by market forces alone.

Another illustration of free trade's failure is the case of oil. Has religious pursuit of free trade made oil cheaper? Not by a country mile. Though unique in its naturally limited supply, it is comparable to grain markets. Only so much land is arable, and small landholders, though by some accounts more productively efficient, are easily bought out by corporate farmers. As stated before, farming is actually not as competitive as high school economics text book writers would have you believe. Free trade agreements might lead to lower prices in the short run, but as smaller farmers struggle to cope with lower revenue and are run out of business, prices will increase. And why would a profit maximizing agricultural firm choose to lower its price in the absence of additional competition, particularly when consumers are typically unresponsive to price changes in basic food commodities?

Furthermore, Western countries make a mockery of free trade when you account for the export subsidies that agribusinesses receive. We make trade liberalization a necessary condition for normalized relations with poorer countries, yet we dump our agricultural surplus on their markets, only to the benefit of overproducing Western corporate farms.

As if the encouragement of unfair trade wasn't enough, the World Bank and IMF also encourage the growth of cash crops for export through market-distorting incentives. Not only do these mainly benefit elite and corporate farmers, who have the capital handy in order to make the switch and learn how to grow the cash crops, but they also succeed in reducing the supply of crops grown for domestic consumption and staples that may be exported.

By 1999, 50% of World Bank loans were tied to structural adjustment. There is reason to believe that because the World Bank/IMF placed more emphasis on SAPs (and they were accepted by debtor governments), food supply in poorer countries has decreased as a result, thus contributing to the rise in price. Tanzania, for example, saw land designated for cash crops increase by 17% after accepting the terms of Structural Adjustment in the late 80's. Most of these crops had a detrimental impact on the soil, as they were highly erosive. Thus structural adjustment directly led to unfavorable conditions for Tanzania's farmers and consumers.

Structural Adjustment Programs come under criticism for many reasons. They mainly come under criticism for their violation of national sovereignty and unjust provisions. The World Bank and IMF should admit their mistakes and work to neutralize some negative effects of SAPs on the global masses, though SAPs are not the sole cause for the food crisis. Previously, economists must've felt that the price of wheat, corn and rice could do with an increase, but a rapidly changing world is voting with its stomach and its appetite for a solution is growing.