A blog for the Public Finance course members at Kalamazoo College in Winter 2011
Thursday, January 13, 2011
Food as a basic commodity
Food prices are rising, and if shortages occur, people in many countries will be hurt. See here. Is this a "public sector" issue that government must intervene in or is this a fundamental outcome of scarcity in our world economic system?
I don't know if scarcity is an issue here, I have read other articles claiming that the world does have enough food to feed everyone, it is just a matter of distribution (but as we learned in class, that can be another issue entirely). When traders of food commodities can endure triple profits and developing countries riot for food, there is definitely something amiss. Food is a basic human need and lack thereof can cause political instability and violence. To some extent, this is a public sector problem. Right now, the Algerian government has intervened to attempt to keep their food prices low.
I feel like the government really cannot control the food industry because both supply and demand are too big to control. But the government could have some over-arching guidelines that could help sway one way or the other in order to help this type of industry. It is something that everyone needs, but our government is not really setup to handle that kind of product management. It would seem that a government could regulate these commodities and the way we are consuming globally any type of resource, it may well be in the future blueprint of a society.
I think if our government did have control over the entire U.S. food industry then our country would basically be run under a dictatorship. As Ashley and Brooks have mentioned, food is a necessity and thus an extremely large industry. Government here in the U.S. would have to be extremely large to handle this task and I therefore don't even think it would be feasible. Aside from whether or not this is even realistic, I believe government control over the food industry is an extremely bad idea. Look at Zimbabwe for example. They once were known as Africa's bread basket, feeding their entire country and most of Southern Africa. At the time white farmers (making up only 2% of the population) owned majority of all the farm land in Zimbabwe. However after Robert Mugabe's land reform bill went into action all that land was dispersed amongst the rest of the population and eventually destroyed. Clearly this is an example from a third world country, however it shows too much government control can ruin an entire food industry.
I agree with Ashley's point that quantity isn't the issue as much as distribution. In many countries dictatorial oppression and greed inhibits this basic necessity. Cultural and political differences also get in the way of morality. Countries in this position will push back against outside pressure in the name of sovreignty. There is probably enough food produced in this country to put a serious dent in the number of the world's hungry, but we are likely to intervene only when the end run result is a net gain to this country. in other words we will only help if we think it will benefit us in the end. The government could implicate some distribution policies where food is concerned similar to a welfare system to ensure that everyone is fed, but that costs money, so the dilemma becomes equity or efficiency?
that is a good end point posted by richard... we've already gone over the fact that efficiencey may have to be sacraficed to increase equity, but how much room do governments around the world have to sacrefice? It's already comical how deep in debt our country is already, so how can we place another burden, especially of this magnitude, on our government? Our current welfare program (SNAP aka EBT or Food Stamps) is already under heavy scrutiny due to loose regulations and misuse.
there is also a high proportion of countries dependent on other's currently undergoing droubt. countries such as Russia and Egypt for example, where Egypt has 60% of the wheat and other agricultural needs dependent on Russias production, but due to current harvest deficits, supply has been cut deeply and prices are expected to tripple..
It will be interesting to see how all of this plays out...
I don't know if scarcity is an issue here, I have read other articles claiming that the world does have enough food to feed everyone, it is just a matter of distribution (but as we learned in class, that can be another issue entirely). When traders of food commodities can endure triple profits and developing countries riot for food, there is definitely something amiss. Food is a basic human need and lack thereof can cause political instability and violence. To some extent, this is a public sector problem. Right now, the Algerian government has intervened to attempt to keep their food prices low.
ReplyDeleteI feel like the government really cannot control the food industry because both supply and demand are too big to control. But the government could have some over-arching guidelines that could help sway one way or the other in order to help this type of industry. It is something that everyone needs, but our government is not really setup to handle that kind of product management. It would seem that a government could regulate these commodities and the way we are consuming globally any type of resource, it may well be in the future blueprint of a society.
ReplyDeleteI think if our government did have control over the entire U.S. food industry then our country would basically be run under a dictatorship. As Ashley and Brooks have mentioned, food is a necessity and thus an extremely large industry. Government here in the U.S. would have to be extremely large to handle this task and I therefore don't even think it would be feasible. Aside from whether or not this is even realistic, I believe government control over the food industry is an extremely bad idea. Look at Zimbabwe for example. They once were known as Africa's bread basket, feeding their entire country and most of Southern Africa. At the time white farmers (making up only 2% of the population) owned majority of all the farm land in Zimbabwe. However after Robert Mugabe's land reform bill went into action all that land was dispersed amongst the rest of the population and eventually destroyed. Clearly this is an example from a third world country, however it shows too much government control can ruin an entire food industry.
ReplyDeleteI agree with Ashley's point that quantity isn't the issue as much as distribution. In many countries dictatorial oppression and greed inhibits this basic necessity. Cultural and political differences also get in the way of morality. Countries in this position will push back against outside pressure in the name of sovreignty. There is probably enough food produced in this country to put a serious dent in the number of the world's hungry, but we are likely to intervene only when the end run result is a net gain to this country. in other words we will only help if we think it will benefit us in the end. The government could implicate some distribution policies where food is concerned similar to a welfare system to ensure that everyone is fed, but that costs money, so the dilemma becomes equity or efficiency?
ReplyDeletethat is a good end point posted by richard... we've already gone over the fact that efficiencey may have to be sacraficed to increase equity, but how much room do governments around the world have to sacrefice? It's already comical how deep in debt our country is already, so how can we place another burden, especially of this magnitude, on our government? Our current welfare program (SNAP aka EBT or Food Stamps) is already under heavy scrutiny due to loose regulations and misuse.
ReplyDeletethere is also a high proportion of countries dependent on other's currently undergoing droubt. countries such as Russia and Egypt for example, where Egypt has 60% of the wheat and other agricultural needs dependent on Russias production, but due to current harvest deficits, supply has been cut deeply and prices are expected to tripple..
It will be interesting to see how all of this plays out...