manufacturing a food crisis

The Nation, by way of Alternet.net, explores the food crisis in Mexico and the Phillipines. One never has to read far before finding the usual suspects: International Monetary Fund, World Bank, and neoliberal economic policies wreaking bloody havoc.

When tens of thousands of people staged demonstrations in Mexico last year to protest a 60 percent increase in the price of tortillas, many analysts pointed to biofuel as the culprit. Because of U.S. government subsidies, American farmers were devoting more and more acreage to corn for ethanol than for food, which sparked a steep rise in corn prices. The diversion of corn from tortillas to biofuel was certainly one cause of skyrocketing prices, though speculation on biofuel demand by transnational middlemen may have played a bigger role. However, an intriguing question escaped many observers: how on earth did Mexicans, who live in the land where corn was domesticated, become dependent on U.S. imports in the first place?

The Mexican food crisis cannot be fully understood without taking into account the fact that in the years preceding the tortilla crisis, the homeland of corn had been converted to a corn-importing economy by "free market" policies promoted by the International Monetary Fund (IMF), the World Bank and Washington. The process began with the early 1980s debt crisis. One of the two largest developing-country debtors, Mexico was forced to beg for money from the Bank and IMF to service its debt to international commercial banks. The quid pro quo for a multibillion-dollar bailout was what a member of the World Bank executive board described as "unprecedented thoroughgoing interventionism" designed to eliminate high tariffs, state regulations and government support institutions, which neoliberal doctrine identified as barriers to economic efficiency.

There is no justification for this continuing effort to institute policies that practically guarantee an impoverished citizenry, the privatization and wholesaling to foreign entities of a nation's wealth, crushing debt, spiraling interest payments, and loss of independence and autonomy.

The classic definition of insanity proffered by Alcoholics Anonymous et al is doing the same thing again and again, expecting a different result. Since the Chicago school economists first began fucking around in South America, the results have been predictable and bloody and destructive, yet the same theories are repeatedly put into practice, despite having proven disastrous around the globe.

Of course they've not been disastrous for everyone. Huge multinational corporations have benefited greatly. They've been immensely enriched on the backs of the world's poor, so depending upon one's point of view, what I consider a disaster may not be so: I think starvation and death due to economic terrorism is a disaster. You?

There are heartening developments in South America and I'm hopeful that they'll continue. One bright spot is the South American Union agreed upon last Friday in a meeting of national leaders, with further talks now about a single currency for the region. It's a tenuous start and likely to falter, but the effort was based on the sound premises that there must be an alternative to American hegemony and that nations should band together to avoid falling victim to thuggish institutions like the IMF and the World Bank.

Whether it will fall apart if Venezuela's Hugo Chavez fails to win reelection remains to be seen; certainly his anti-American stance has been a driving force behind the general move of South American nations to fight US domination and that stance, too, has been the fuel for US efforts to derail his presidency. Chavez is feisty, but in a head to head battle, Chavez v. CIA, the CIA will likely be the ultimate victor.

hungry yet?

You may be soon. The food crisis worldwide is growing daily, creating desperate conditions for millions of people who rely on commodities of wheat and corn and rice. Almost everything I read mentions ethanol as a prime reason, but few sources note that the US has vast acreages of tillable land which could be turned to corn production if farmers weren't being paid to let it lie fallow.

Mr. Bush suggests that India is eating better, thus throwing the world into panic. India's justifiable response is "fuck you fat American pigs" and rightfully so. Nouveau riche China is increasing its consumption of meat and this, too, is blamed for the worldwide, spreading crisis in food.

But there's little discussion of how countries like Haiti lost their small farmers, because that is a tragedy that relates to mindnumbingly complex intervention by the never-benevolent IMF and World Bank, subsidized exports from this and other first world countries. It is mind numbing and important, because the destruction wrought upon Haiti and other 3d world nations by globalization and free market economics has been devastating. Another post, another day.


But almost none of the articles I read about the food crisis mention hedge funds and the speculation that is part and parcel of those secretive enterprises. They operate with billions and billions of capital with virtually no oversight or regulation. None of our presidential candidates, Democrat or Republican, have any interest in exploring the possibility of regulating these incredibly powerful financial institutions.

One hedge fund manager took home $3.8 billion last year. That's about $1.9 million an hour, assuming a standard work week of 40 hours and a standard (ha!) vacation of two weeks and that math takes me back to Teddy Kennedy's rant on the minimum wage, his desperate fight to get it raised to a little over $7 an hour for the lowest wage workers in this nation.

$3.8 billion in a year. That is, honestly, obscene. Obscene. And riches accumulated through hedge fund "work" are generally taxed at 15% ~ about what your average low- to mid-range wage worker pays in taxes.

I don't like hedge funds. I don't like the secretive nature of them, their ability to do on an incredibly damaging and very large scale what one-man-and-a-keyboard day traders were accused of doing to the stock market in the late '90s. That is manipulation on an unimaginable scale; having the ability to wreak havoc in the world's economy with no accountability at all. They can make money from things going well, but they can make as much, or more, when the economy goes to hell and the world is in crisis and it's a tiny little step to creating that very crisis in the interest of more profit.

Which brings me back to food. Britain's New Statesman says it far better than I.

This latest food emergency has developed in an incredibly short space of time - essentially over the past 18 months. The reason for food "shortages" is speculation in commodity futures following the collapse of the financial derivatives markets. Desperate for quick returns, dealers are taking trillions of dollars out of equities and mortgage bonds and ploughing them into food and raw materials. It's called the "commodities super-cycle" on Wall Street, and it is likely to cause starvation on an epic scale.

The rocketing price of wheat, soybeans, sugar, coffee - you name it - is a direct result of debt defaults that have caused financial panic in the west and encouraged investors to seek "stores of value". These range from gold and oil at one end to corn, cocoa and cattle at the other; speculators are even placing bets on water prices.

Just like the boom in house prices, commodity price inflation feeds on itself. The more prices rise, and big profits are made, the more others invest, hoping for big returns. Look at the financial websites: everyone and their mother is piling into commodities. It is the great bull market of the Noughties. The trouble is that if you are one of the 2.8 billion people, almost half the world's population, who live on less than $2 a day, you may pay for these profits with your life.

So we now have a food crisis, fast on the heels of a housing crisis, essentially created by the same conscienceless investment organizations whose sole aim is to turn a profit no matter the cost. I recognize that's the purpose of business; that's why the pure free market as proposed by Milton Friedman and other neoliberal economic asshats will never work. Unbridled greed is dangerous to living things.

At this point, there is little or no political interest in providing oversight of the hedge funds and their activities. No one is seriously proposing limiting them in any way; not in this country, never here, where we worship the myth of the free market, the very one subsidized by taxpayers in the form of corporate welfare.

In this country, most of us can suck it up and pay higher prices at the grocery store and cut back a little elsewhere. But we are fortunate, far more so than the world as a whole. What we can suck up and deal with, too many in the rest of the world cannot.

Just for one day ~ one single day ~ I would like to see Wall Street awash in the blood of innocents destroyed by greed. How much is enough for us? How much is enough for the man who takes home $3.8 billion dollars? How much is enough when that profit is taken at the cost of thousands of lives, of millions? And when will America wake up?

US exports misery and death: the failure of capitalism

The US has done more to create the current worldwide food crisis than any other nation. It is an outrage and one more reason why I find myself feeling ashamed of my country. This purported free market, the darling of right wingers everywhere, is supposed to save the world. But freedom is only free for the ultra rich and the biggest multinational corporations which line their pockets with government subsidies. The very, very few reap rich benefits from government policies and the actions of the IMF and the World Bank, while destroying entire cultures and indenturing the developing world. And now starving it. Profit over life. What a fucking shame.

In 1995, as a condition of providing a desperately needed loan, the International Monetary Fund required Haiti to cut its tariff on imported rice from 35% to 3%, the lowest in the Caribbean. The result was a massive influx of U.S. rice that sold for half the price of Haitian-grown rice. Thousands of rice farmers lost their lands and livelihoods, and today three-quarters of the rice eaten in Haiti comes from the U.S.[6]

U.S. rice didn’t take over the Haitian market because it tastes better, or because U.S. rice growers are more efficient. It won out because rice exports are heavily subsidized by the U.S. government. In 2003, U.S. rice growers received $1.7 billion in government subsidies, an average of $232 per hectare of rice grown.[7] That money, most of which went to a handful of very large landowners and agribusiness corporations, allowed U.S. exporters to sell rice at 30% to 50% below their real production costs.

In short, Haiti was forced to abandon government protection of domestic agriculture – and the U.S. then used its government protection schemes to take over the market.

There have been many variations on this theme, with rich countries of the north imposing “liberalization” policies on poor and debt-ridden southern countries and then taking advantage of that liberalization to capture the market. Government subsidies account for 30% of farm revenue in the world’s 30 richest countries, a total of US$280 billion a year,[8] an unbeatable advantage in a “free” market where the rich write the rules.

The global food trade game is rigged, and the poor have been left with reduced crops and no protections.

In addition, for several decades the World Bank and International Monetary Fund have refused to advance loans to poor countries unless they agree to “Structural Adjustment Programs” (SAP) that require the loan recipients to devalue their currencies, cut taxes, privatize utilities, and reduce or eliminate support programs for farmers.

All this was done with the promise that the market would produce economic growth and prosperity – instead, poverty increased and support for agriculture was eliminated.

The Food Crisis and the Failure of the Capitalist Model.