ShrinkWrapped suggests that rising food prices have more than a little to do with the current situation in Egypt.
Keith McCullough, writing in Fortune, argues that bad monetary policy on the part of the US, and consequent loss of confidence in the dollar, is at the root of the increased prices.
Business Insider has charts on global food prices and a piece about 25 countries whose governments could get crushed by food price inflation.
Lots of information about supply and demand for grains, here.
8 thoughts on “Food Prices and Revolution”
I have one word for you: ethanol.
“Food and failed Arab states” by Spengler
“Even Islamists have to eat.”
Everyone is paying a price for political corruption in America, which is what the legal mandates for corn-based ethanol and the Fed’s “qualitative easing” aka creating so much valueless “currency” are, because the American economy and food production form such a large proportion of the world’s economy and international food market.
Writing in today’s WSJ, Hernando de Soto talks about the impact of over-regulation, corruption, and bad property law on Egypt’s situation. Excerpts:
“(a study showed that) Egypt’s underground economy was the nation’s biggest employer…As far as real estate is concerned, 92% of Egyptians hold their property without normal legal title..We estimated the value of all these extralegal businesses and property, rural as well as urban, to be $248 billion—30 times greater than the market value of the companies registered on the Cairo Stock Exchange and 55 times greater than the value of foreign direct investment in Egypt since Napoleon invaded”
“The entrepreneurs who operate outside the legal system are held back. They do not have access to the business organizational forms (partnerships, joint stock companies, corporations, etc.) that would enable them to grow the way legal enterprises do. Because such enterprises are not tied to standard contractual and enforcement rules, outsiders cannot trust that their owners can be held to their promises or contracts.”
“Due to burdensome, discriminatory and just plain bad laws, it is impossible for most people to legalize their property and businesses, no matter how well intentioned they might be.
The examples are legion. To open a small bakery, our investigators found, would take more than 500 days. To get legal title to a vacant piece of land would take more than 10 years of dealing with red tape. To do business in Egypt, an aspiring poor entrepreneur would have to deal with 56 government agencies and repetitive government inspections.
All this helps explain who so many ordinary Egyptians have been “smoldering” for decades. Despite hard work and savings, they can do little to improve their lives.”
The Consumer Price Index calculations have been altered to show only politically correct inflation. Because all inflation is politically incorrect, prices can soar when inflation is 0%.
Food prices go up when oil prices go up because the tractors used to plow the field, the harvester used to harvest the crop, the furnaces used to heat the barn and farm house, the trucks use to move the crop to the nearest middleman, the trucks, trains and barges used to haul the crop to processors or wholesalers, the trucks needed to move the food products to grocery stores all use oil-based fuels. Even the packaging uses plastics derived from oil.
So when a person who produces the CPI says the price of oil has nothing to do with the price of fuel he is simply stating Government rules for creating the Consumer Price Index.
So what are the Egyptians going to do when they find out that you can’t eat free elections (if they ever get that far)? That’ll be just the time for the next strongman to move in.
Lukas…”you can’t eat free elections”…but you CAN eat the rule of law/property rights/honest government, given the association of these things with economic growth.
David, even so, it takes some time for the fruits of economic growth to reach the general population.
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