Economy

Looking at the gloom and doom predictions in the financial pages generally gives me a headache from trying to understand all the acronyms and arcane theories so easily tossed about by economists. Of course my never having studied the world of high finance, and having just about zero interest in it, probably explains part of the problem. However, if I just pick out one sentence at a time and worry it to death I can usually come up with some vague idea of what they’re babbling about. From that, it appears that at present the faltering global economy is the major concern, closely followed by the worldwide cost and the (apparently artificial) shortage of oil. Here in the US, the Federal Reserve is constantly trying to “adjust” the supply of money, which only serves to further confuse the issue at home, and helps to preserve the rather jittery financial situation in the rest of the world. Congress on the other hand appears to be greatly concerned with keeping the mortgage market intact with federal bailouts, and of course increasing the taxes on oil yet again, neither of which are helping the average citizen any at all. Then of course we have other economic worries as well.

From a recent story on the MSN financial pages it would appear that the UN financial gurus are predicting that a global famine will strike within the next few years. Historically, famine was a regional problem brought about by crop failures, drought, war, or pests of one sort or another (usually either locusts or the tax collector I believe). In this case there are several causes for the threat. The first is the perennial bug-a-boo of over-population, and I can hardly find fault with the logic used. Consider that in the 63 years since the end of WW II, the United States population has doubled, and it’s predicted to double again by the year 2040, and the world population increase is not far behind. The second cause relates to the world population and the subsequent increased demand for improved nutrition world wide, combined with government subsidized demand for “green” biofuels that are produced from our limited supply of food crops. The fixed amount of arable land available worldwide not only has to provide our food but it also has to provide living space for the population. Then to, our unsettled climate isn’t helping the situation any at all. “Experts” state that the world’s arable land “could” feed a population of ten billion people, with some claims as high as thirty billion. (Ten maybe. But thirty!?)

Many parts of the third world are already experiencing food shortages and escalating prices, in some cases to the point of starvation for the “poorer classes”. That food crisis is not only promoting civil unrest hither and yon, but is being used as a weapon in “ethnic cleansing” campaigns. It’s also bringing on the very serious threat of previously stable governments failing, and also of war between the “have” and “have not” nations. That threat is serious enough that much of the UN is becoming quite concerned. The food crisis is not only being felt among the worlds poor, but is also cutting into the gains of the working and middle classes in the more affluent nations, sowing discontent and putting new pressures on various governments. In Cairo, the military is being put to work baking bread. In parts of sub-Saharan Africa, food riots are breaking out as never before. In Malaysia, the government was nearly ousted by voters who cite food and fuel price increases as their main concerns. The sudden rise of commodity prices pits the world’s poorer nations against the relatively wealthy, adding to demands for reform of rich nations' farm policies. But experts say there are few quick fixes to a crisis brought on by so many factors, from the strong demand for food in emerging economies like China and India, to rising oil prices that cause the diversion of food resources to make biofuels. There are no quick answers to handling the crisis either. Asian governments are organizing measures to limit hoarding of rice after shoppers panicked at price increases and bought up everything they could. In Thailand, which produces more rice than it consumes, supermarkets have limited the amount of rice shoppers are allowed to purchase. The Indonesian government recently revised its budget, increasing the amount it will spend on food subsidies by about $280 million. In Senegal, one of Africa's oldest and most stable democracies, police in riot gear used tear gas against people protesting high food prices.

In an MSNBS news report, Arif Husain, senior food security analyst at the World Food Program asked "Why are these riots happening? The human instinct is to survive, and people are going to do no matter what to survive. And if you're hungry you get angry quicker." The report further stated; “Food riots caused by rising food prices have erupted around the world. Five people died in uprisings in Haiti, perhaps the first of many casualties to come from the fad of being “green”. Food riots also broke out in Egypt, Cameroon, Ivory Coast, Senegal and Ethiopia. The military is being deployed in Pakistan and Thailand to protect fields and warehouses. Higher energy costs and policies promoting the use of biofuels such as ethanol are being blamed.” "When millions of people are going hungry, it’s a crime against humanity that food should be diverted to biofuels," an Indian government official told the Wall Street Journal.

Biofuels have generally turned out to be a losing proposition. Claims by environmentalists and the industry as to reducing the demand for oil, and to lowering greenhouse gas emissions have proven false. Research shows that biofuels increase greenhouse gas emissions over the total production/usage cycle (raising the crops, harvesting, conversion, transportation, usage). Adding to the problem is the diversion of food crops and food crop acreage to producing fuels. That diversion has contributed to higher food prices and a reduced food supply. Nor is the situation going to improve in the near future, as cutting farm subsidies and tariffs on sugarcane based fuel imports is another political hot potato that congress can’t seem to get a grip on. Biofuel advocates tell us the reliance on food crops to produce biodiesel and ethanol is only temporary, as they plan a future where biomass (such as wood chips, corn stalks and straw) are the feedstock for cellulose ethanol. But the technology for producing that ethanol is nowhere near mature, and the greenhouse gasses produced over the entire lifecycle will probably be worse than what we’re already seeing. Nor will the cost per gallon of liquid fuels necessarily decrease either. Food riots are only the beginning, now we can expect to see energy riots as well. The world’s population is always growing remember, and those additional people will need food and energy. Yet the Sierra Club fights to shut down coal-fired power plants, the Natural Resources Defense Council fights to keep nuclear power from replacing coal, and Earth First is campaigning against power plants that use natural gas.

Just what the world needs today, overpopulation, a faltering economy, an energy crunch, approaching famine, and rabid environmentalism calling the shots on domestic oil production. I think the Cold War was probably easier to handle!