Monday, April 7, 2008

Oh, great. Another crisis.

First it was global warming. Next came the Sovietization of Alabama. Then it was The Blog Crisis. Now, it's rice:
A global rice shortage that has seen prices of one of the world's most important staple foods increase by 50 per cent in the past two weeks alone is triggering an international crisis, with countries banning export and threatening serious punishment for hoarders.
Bans and punishment! Pretty soon, we'll see Coast Guard cutters chasing down rice smugglers and customs officials at foreign airports will be asking departing tourists, "Ma'am, do you have any rice in your luggage?"

An amusing naivete to this article:
The impact will be felt most keenly by the world's poorest populations, who have become increasingly dependent on the crop as the prices of other grains have become too costly.
Well, duh. Food is a commodity. It is sold for money. If prices go up, poor people are always hurt worse than rich people because -- big surprise -- rich people have lots of money.

Thurston Howell III may have to postpone the purchase of another yacht, but he ain't going to starve to death. On the other hand, the poor guy in the slums of Calcutta lives day-to-day with no money to spare, and an increase in prices means he might go hungry, or go even hungrier than he's already going.

Amazing thing about wealth and poverty: Whatever your problem, being rich makes it better, and being poor makes it worse. And that's true for nations as well as for individuals.

Rich countries have more resources to cope with their problems than do poor countries. A hurricane hits Florida, causes a few million dollars in damage, people evacuate and maybe one or two people die. But if the same hurricane hits Haiti, hundreds of people might be killed.

So whether you are a nation or an individual, it's better to be rich than to be poor, and most people understand this. That's why so many people watch those stupid TV informercials about "no-money-down" real estate deals -- they want to get rich. And it's why poor people in Mexico want to live in the United States: They'll still be poor, but it's better to be poor in a rich country than to be poor in a poor country.

All this is just common sense, but still the Guardian feels the need to state in the second paragraph that higher rice prices "will be felt most keenly by the world's poorest populations." This is an "international crisis," the reporter proclaims, as if Swedes will soon be starving in the streets and Canada is about to descend into anarchy.

In reality, the rice shortage is a crisis in the same poor Third World countries that are always in crisis, if by "crisis" you mean the persistent problems associated with widespread poverty. The higher price of rice will make things worse for a while, but apocalyptic famine is unlikely, except where governments try to "fix" the problem, for example:
Already China, India, Egypt, Vietnam and Cambodia have imposed tariffs or export bans, as it has become clear that world production of rice this year will decline in real terms by 3.5 per cent. . . .
In Bangladesh, government-run outlets that sell subsidised rice have been besieged by queues comprised largely of the country's middle classes, who will queue for hours to purchase five kilograms of rice sold at 30 per cent cheaper than on the open market.
In Thailand yesterday . . . Deputy Prime Minister Mingkwan Sangsuwan convened a meeting of key officials and traders yesterday to discuss imposing minimum export prices to control export volumes and measures to punish hoarders. The meeting follows moves by some larger supermarkets in Thailand to limit purchases of rice by customers.
In the Philippines, where the National Bureau of Investigation has been called in to
raid traders suspected of hoarding rice to push up the prices, activists have warned of the risk of food riots.
OK, so famine might strike the Philippines, Thailand, Bangladesh, etc., but not because of high rice prices. It's the governments' anti-market paranoia -- "Someone might be making a profit here!" -- that will lead to real shortages. Where trade is criminalized, prices go up and shortages become routine, as you may have discovered the last time you tried to score some Bolivian flake cocaine.

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