Tuesday, July 8, 2008

Food Policy

Perhaps one of the better economic issues for classroom discussions about markets, price and price distortion is the current food crisis. To that end, I want to point you to a couple of interesting articles, the first three with an admittedly market-oriented view. The first is an article by Adam Lerrick of the American Enterprise Institute from today's Opinion Page of The Wall Street Journal. In it, Lerrick notes that the current crisis is less a result of speculation than bad agricultural policies. These policies are hurting the countries that can least afford rising commodity prices, and were often put in place by countries that needed protection the least. And while Lerrick offers little in the way of data and policy recommendations in this article, it is easy to read.

The second article, also by Lerrick, is published by the American Enterprise Institute (AEI) and is similar to the first. But it offers a bit more in the way of policy recommendations, and data in the form of some graphs on various foodstuffs.

The third resource is the summary of a recent (July 2) AEI conference titled "Was Malthus Right?" Malthus has long been in disrepute, but in my opinion it is largely a result of his bad timing. Specifically, he failed to foresee the full impact of the Industrial Revolution. But, so did his other contemporaries. The value of his teaching is that it shows how, without changes in our productive resources (specifically capital - human or physical), we can run into the occasional productive wall.

The final piece comes in the form of an article that appeared in the British newspaper, The Guardian. Unlike the first three sources, The Guardian is a self-styled liberal news source. The article claims to reference an internal World Bank study which seems to place the blame for the current crisis at the feet of biofuels. It is a different perspective but it ties in with these other articles nicely. Now, I admit I'm always a bit skeptical about "secret reports" as sources regardless of the politics of the writer. But the four articles together provide some nice ideas to kick around the classroom.

I look forward to your comments.

3 comments:

Mike Fladlien said...

The Muscatine Journal reports that supply of corn will be greater this year than last...this, despite the fact that 15% less will be harvested because of flood damage...

Tim Schilling said...

The $64,000.00 question is "how much of this bumper crop will be going for food and how much will go down the bio-fuel path?"

Mike Fladlien said...

I blame biofuel for world-wide hunger...Ethanol is heavily subsidized and there are mandates in Iowa that some 90 million gallons are produced annually...In answer to your question--probably all...