Monday, September 6, 2010

World Hunger, Starvation, and Riots

≈World hunger seems like a good topic to begin this blog. Let me explain. Back in early 2008 the press began to report a sudden jump in the numbers of food riots in many parts of the world. Suddenly more people were starving than might be expected simply from population growth and poverty alone!

This jump in numbers seemed like an interesting incident in the history of global human ecology and so I began to try to learn why it was happening. I began to bounce my findings and ideas off of colleagues and soon people were suggesting that I start a blog. But I did not start one until now, after more urging regarding this and other topics. So here we are, you see entry #1! Now back to early 2008, many months before the world economic crash. What I was finding out one could say predicted the crash, for my looking into the food crisis began to reveal to me that the world economy was a house of cards. Maybe I should have known earlier, but apparently most educated people and even economists did not then understand this. Apparently most of them still do not, or don't want to discuss it. Everybody is focused on the immediate problems.

Okay, in 2008, and before and after, the obvious contributions to world hunger were and are climate fluctuations and population growth. But these will only explain part of world hunger, and of the 2008 spike. Another factor is ecological degradation of farm land and again that will only explain part of world hunger and of the spike. So we keep looking -- right?

To make a long story short there were two other big possibilities; I will deal with them briefly for now. The first was that biofuels made from food crops were being promoted by governments and by the "life science" biotech and seed companies and the scientific community that is involved in this sort of thing, and of course by stockholders and the banks that are betting on these sorts of companies. There was a lot of awesomely powerful lobbying behind this! Legislation to mix ethanol into fuel and subsidies of course stimulated farmers to grow more corn for biofuel and less for human and animal consumption. They put less land into alternative food crops too. So, less food was on the market because it was more profitable to grow for biofuels. Farm land prices were shooting up too because of the market that was being stimulated by legislation and subsidies for biofuels. So this further drove up the prices of grains and other foods for both domestic consumption and the export markets, A lot of big farmers and investors were very happy about this. But there were complications, to say the least, for certain types of farmers and for world trade in food and for poor people. Perhaps more about this later.

Right now I want to get back to my "house of cards" claim. Where was all this money to invest in land, farm equipment, processing plants, etc. coming from? Moreover, as food prices were going up speculators were jumping like mad into the commodities markets and buying up grain futures for example. Huge amounts of money were being spent to bet that biofuel grain and food prices would go up. Think of a sort of bidding auction, where rich people are willing to pay more and more trying to own the rights to some grain and this competition drives up the price of the grain, much as competition can drive up the price of a Picasso to crazy heights. This sort of effect means that most of us cannot afford an original Picasso, and likewise many people at the economic margins could rather suddenly no longer afford to buy even as much food as they had. Thus, panic. All this is simple enough to understand, right? How much of the problem was caused by this? We still cannot put a precise figure on it for various reasons, but it is generally agreed by all but the special interests that biofuels and speculation were significant factors. And keep in mind that despite the world recession/depression and tightening of money the structural issues here have not really gone away!

I am still not quite to my "house of cards" claim, but almost. Sooooooo. The next question is where did all the money for investing in commodity futures come from? There seemed to be no shortage! Most was coming from big hedge funds. And where did they get the money? NOW to the house of cards: What I began to learn is that if you are one of the big boys you can borrow a tremendous amount of money without much real value collateral and THIS SUPER-LEVERAGE WAS GOING ON ALL OVER THE PLACE!! What that meant was that there was a tremendous amount of money in circulation without anything solid behind it. If simple loose credit was not bad enough I learned that if you are one of the big boys you can take the money that you have borrowed that has very little real value collateral and use THAT leveraged borrowed money as collateral for yet another round of loans. Regulations had become so loose that this could go on and on, and has done so! And moreover this sort of thing had become such common practice that many other countries were allowing this as well so that their wealthy folks could stay in the global competition.

Basically the world of high finance, that for some decades since the Reagan Revolution policies of deregulation had been developing, had been allowed to print their own money -- maybe call it "e-currency."  This all seemed impossibly reckless to me, not to mention unfair to little people who are not allowed to "e-print" money. My younger friends in business said "You are only concerned because your thinking is old fashioned. The world is prospering with these new creative types of financing." That was before the crash began a few months later and the big institutions began to freeze up because not even they were sure of the true value of anything.

My knowledge of history told me that economies went into great troubles when for example, kings diluted the precious metals in coins so that they could have more of them to spend on their wars and castles. Think about it this way -- why not just allow you and me to print our own money? Why not make counterfeiting legal? In a sense the US governments since the Reagan Revolution have allowed businesses evermore to print money. So let's say for the sake of discussion that there had been a good amount of economic growth around the world -- but how much new capital had been bought by "counterfeit" (in this sense) money? Apparently no one is sure. And apparently no one is sure what to do about it even today. But lets save these sorts of questions for later.

One point I want to make just now is that human ecology cannot be simply about how much biomass an acre of land can produce and how many calories X numbers of people need to survive. It must take into consideration laws, politics, the real world ins and outs of moving money around, and indeed the public ignorance of the world that helps to keep voters from making informed decisions.

And why is there public ignorance? -- Let's save that for future posts.

1 comment:

  1. Can't tell you how glad I am to see you here in the blogosphere. :-)

    One thing it's good at is making it possible for like minds to find each other, and develop some synergy. Which is why I thought of this post, when I read this one:

    (Incidentally; if you comment on someone else's post, it's a really good way to get them to take a look at your blog... develop a little useful positive feedback...