More chop logic from our leaders, this time coming from the World Economic Forum. As the BBC reports,
“World leaders have warned that rising food prices could lead to social unrest and even “economic war”…But business leaders at the World Economic Forum rejected calls for curbs on commodity speculation.”
To summarise: Things are getting bad, but we ought not to do anything about it.
Those business leaders, and the governments that listen to them, may well have taken heart from an entire report written with much the same philosophy. The UK government’s Department of Business Innovation and Skills launched its report on the future of food and farming in which it presented its diagnosis of the current malaise in the food system, and its cure.
First, the diagnosis:
The most likely contributing factors were a steady increase in global demand, in particular due to
economic growth in middle-income countries; an increase in energy prices and regulatory changes
encouraging the conversion of agricultural land to the production of biofuels; a series of poor wheat
harvests in 2006 and 2007 in agriculturally important regions such as Australia; and a general rundown
in commodity stocks. The height of the spike was undoubtedly exacerbated by the introduction or
tightening of export restrictions by governments in some important producer countries. It has also
been argued that commodity speculation was an important causal factor, but the empirical evidence
for this is contested and does not allow the relative importance of the various factors in causing or
exacerbating the price spikes to be distinguished.
The Department for Business finds that if the banking business had something to do with the food crisis, speculators can always plausibly deny their involvement because it’s just too complicated to figure out. Instead, the British government thinks that people in India and China in 2008 suddenly started wanting more food, at just the same time as there was bad weather in a few key parts of the world. Luckily, via the excellent GroundReality, comes this helpful list of resources and analysis by Tim Wise on why speculation matters, and how it works.
Sadly, the British government seems altogether too daunted by the economics of all this, and propose instead to let business solve the problem that a pro-business economic environment has spawned. How, exactly? By letting genetically modified crops and nanotechnology produce more food than ever before. Not, of course, that this has worked terribly well so far.
Trouble is that while there are great ways to grow more, and to make sure it gets into the hands of the hungry, they’re not nearly as profitable as the current food system. They’ll require innovation and skills, of course. But they won’t be great business.