Monday, September 20, 2010

A Recipe for Famine


My Yahoo! column on free enterprise and food security can be read here.

The image is of a 1944 drawing from Chittaprosad's Famine series. The work was featured in Saffronart's December 2001 auction, and is reproduced without permission.

26 comments:

r.daniel said...

That was great article, at least from what little I understand of the subject I hope so. I'm rating it a five and sharing it on facebook.

r.daniel said...

By the way, I thought the Supreme court's edict referred to rotting food grain specifically, and what about the whole Sachin Pilo t let them eat mobile fiasco in Rajasthan?

Girish Shahane said...

Thanks a lot, Daniel. Haven't followed the Sachin Pilot thing, will look it up soon.

seana said...

Thanks for the informative article on an area I'll admit up front not to know much about. It does baffle me that so much time and thought, not to mention energy and money, goes into these institutions and organizations trying to help at least ease hunger, with so many quite opposite effects.

I'm am not sure that the free market is not demonic, though. It certainly has created a lot of heartache and disaster over here.

Dsylexic said...

girish,i generally like your analysis.but here,you have set up a strawman and beat it to death.
plus your sources dont cover themselves with glory. amartya sen,jayati ghosh ...wow?. any more leftist comrades you missed out?. how about kim jong il or fidel infidel? i mean it takes the cake for objectivity.it might as well have been an op ed by JNU faculty of economic propaganda.

i suggest you read Peter Bauer instead of Jayati Ghosh.If futures trading "caused" price rise, then why do prices keep rising even when futures trading is banned?
shooting the messenger is an old trick.

why do you think central planning is necessary for food supplies?. if it can work for anything like mobile phones or pencils,why the big distrust that people cant feed themselves when left alone?

the british examples you gave and amartya sen quoted are examples of govt failure rather than market failure. if there was a natural disaster and food supplies fell short,do you think it was the free market that stopped working or was it the tariffs/import bans and pathetic govt provided transport system that broke down?
the 1944 famine is a great example of govt intervention gone wrong. norman montagu caused the currency crisis by massive rupee devaluation causing huge upheaval in the indian economy. wouldnt you think central planning in the most important commodity (ie money)has an effect on the rest of the economy?
we know how money being centrally planned by govts and central banks has caused and exacerbated business cycles and caused depressions and recessions galore.

you shouldnt judge the british era by what the rulers said,rather than what they did.what we had then was no free market.it was a subsistence economy getting slammed by monetary mismanagement and natural disaster at the same time. the old hoarding and bania bashing card is a bit too tired now.

too bad,you take examples of govt failure and show it as a problem of the markets. it is really a shame

Girish Shahane said...

Dyslexic, I will try to answer your points as best I can:
1) Amartya Sen and Jayati Ghosh: this a purely ad hominem attack on your part. You do not address the points Ghosh makes in her paper. My view and hers differ on a number of matters, but I found this particular paper fairly convincing. As for the Leftist bit, if you will only accept a critique of markets if it comes from a Libertarian, you're going to have a long wait.
2)I did not say that futures trading caused the price rise. Nor do I call for a ban on it. I mention that futures trading originally served as an important hedge. It changed its nature with the entry of speculative financial institutions with no connection to the food industry. Their sudden shift from real estate to commodities beginning in 2006 caused a huge price spike. That kind of spike is different from food inflation in general which, as you say, happens even in the absence of futures markets.
3) Mobile phones and pencils are not, in my view, comparable with food. We don't die for lack of pencils, and it's perfectly OK if many of us don't posses mobile phones. Food is one thing that a developed society ought to ensure for all its citizens. The market, I hope you agree, has no way of ensuring that. Perhaps you don't accept the idea that everybody should be fed. If that's the case, we simply have a philosophical disagreement about the nature of society we want to live in. But to suggest the market can ensure food security for all, as some imply, is rubbish.
4) Amartya Sen has worked on the Bengal famine of 1943, not on the famines of which I spoke. I did not mention the 1943 famine because the situation was complicated by the war economy. But the example of 1874 and 1876, with the role of Richard Temple in the two, shows how famine can be averted by government intervention, and exacerbated by the free market. It is wrong to blame a food shortage for the disaster: I've provided figures to show that huge amounts of food were exported from areas stricken by famine. In the face of those facts I don't see how you can put the catastrophe down to food shortage. Or, for that matter, down to bad transport, given that the transport was working rather well in taking food out of, say, Berar in 1899.
5) You say the situation in the 1870s was not in the context of a free market. But this is an excuse those supporting free enterprise can always provide because there has never been a completely free market anywhere in history.

Judging by your tone, I doubt any facts will convince you. In a situation where even the crash of 2008 is being explained away as a result of government intervention rather than unregulated markets, I don't expect to convince dogmatic free marketeers of the causes of something that happened in the 1870s.

Dsylexic said...

telephony became ubiquitous in india when the govt got out of the business or atleast made way for the profit seeking banias. thats what i mean by using the mobile telephone example.if the govt gets out of the way, there is definitely going to be less starvation and not more.there is no example of a free market worsening things the govt got out of.
everybody needs to be a fed.ofcourse.thats a given.being a freedom lover doesnt make one heartless.somehow,you seem to assume that getting a bunch of netas and babus together will magically feed those apparently helpless infantile masses.where does that faith come from i wonder?. the stellar record of the govt?.it is easy to rubbish the market while holding out hope for the govt to improve.the market must be judged by outcomes,while central planners only on the basis of their intention?we can keep waiting for that selfless visionary to teleport himself from satya yuga OR take care of it by a grassroot market system.

the market is not a panacea for all the worlds ills.nor is it a magical kalpavriskh to feed everyone.you wont get a date on friday night or paranthas for breakfast just because of the market.but it is always better than govt controlled/centrally planned (softhearted but softheaded) because people can take better decisions for themselves than some babu far away in Kapital city

Dsylexic said...

i need to add: you seem to imply that we cant trust the market,epspecially because we are a poor nation.
well,the mythical corruption free PDS cannot exist in a poor country.a lack of a free market will ensure corruption persists and the market turns 'black' in hue.
unless there is freedom first,the vicious cycle will continue

Girish Shahane said...

Dyslexic, most humans can understand the difference between telephones and food. The market, unfortunately, cannot. Nor, apparently, can market worshippers.
In the twentieth century, for the first time in history, lots of countries ensured all their citizens were adequately fed. This happened, in every instance, through government intervention. The point is to make government progressively less inefficient and more accountable. We have seen the process play out in other democracies, which should give us hope.
I didn't say anything about trust in the market relating to our poverty. The market wrecked the world's economy in 2008, hurting rich as well as poor nations, though of course the poor always suffer disproportionately.

Dsylexic said...

the market wrecked the world economy?

as if the Federal reserve and its cheap credit is a part of the free market. ofcourse statists would think that wall street is a manifestation of free market.while it is nothing other than big business and govt going berserk.
bailouts are not a free market idea.bad businesses should die out.the fannies and freddies are simply not free market.with money being taken over by the state -with no control over its production ,except electoral expediency,you can expect the central banks to bend over and keep the printing presses going.

the developed countries did not "feed" their citizens.it was the explosion of agricultural productivity which has made food more available.hong kong was clearly poorer than india in 1960s.they cant even grow crops worth anything.you'd think unless a benevolent dictator like manmohan singh landed there,they'd all be starving.no,instead cowpertwaite simply got out of the way.he even refused to collect meaningless statistics like gdp etc.such data is the statists tool for central planning.
progressively make govts accountable?.how ,sir -especially in a poor country.?why assume that the govts are motivated by something other their own survival (give me an example where they arent).the govts become accountable only when they are irrelevant.like switzerland.anyone know the president of switzerland? they dont care.

have you considered that india is being kept deliberately poor by the export loving govt which wants to keep the rupee weak?half our food and oil problems would have gone if the rupee vs dollar pricing took in the fact that we dont suffer from a foreing exchng crisis. the rupee should be far more stronger.around 30 to the USD than what the loud export lobbies(not free market)want.

i suggest you read nidhi nath of economic times who writes on commodities.she makes eminently more sense about the food situation than a comrade ghosh.clearly the foods where there is a relative free market (because there are no neta godfathers)are doing just fine in the so called shortage.

there is nothing called a market fanatic.being a market lover just means that understanding people can take care of themselves without some bureaucrat making decisions for them.the bureaucrats themselves are no different from us ,so to expect that they are from a superior breed is sheer fallacy.btw,that is indeed the fantasy of statists like Krugman -nerds saving the world. we have seen that before.

Girish Shahane said...

Dyslexic, I'm afraid this conversation is getting nowhere. I've had enough discussions with free market fundamentalists, and this just gives me a feeling of deja vu.
If you really think that a rise in food output fed everybody in Europe rather than government programmes, well, all I can say is that is sheer delusion. You labour under a misconception about the relationship between food production and food access that is precisely what my column demolishes. The simple fact is that prices rise and fall in any market; if they rise enough in the food market, they outstrip the purchasing power of the poor. When that happens, a risk of starvation grows and if high prices continue, we have mass starvation. I'd like to know how your model of an ideal market can stave of this simple outcome. Unless you answer this clearly, any further rhetorical flourishes on your part are utterly pointless.
As far as the 2008 crisis goes, it's the same story: you blame the fact that the market was not perfectly free, but then there has not been a free market anywhere in history, so you adopt a convenient, unfalsifiable position, as do all Libertarians. The rest of the world though, sees the fact that complex derivatives arising from deregulated markets caused the financial meltdown, which in turn caused the massive recession.

You have not in all these responses provided even a shred of data to back up your case. I, in my column, provided data related to the 1876 famine, the Berar famine, the situation in the Sahel, the Malawi crisis of 2005 and actions taken after. You have not repudiated any of the data, but simply rejected the logical conclusions drawn from the facts.
But then that's the way fundamentalists think and argue.

Girish Shahane said...

I also suggest you read about the Irish famine of 1842, which led to a 20% - 25% fall in the population through starvation and emigration. About one in ten citizens died and an equal number emigrated. Through the famine, Ireland continued to export meat and grain to Britain.
As opposed to this, when famine hit in the 1780s, restrictions on exports were put in place and food prices dropped quickly.
There are mountains of evidence to show that famine is not usually a result of aggregate food shortages. But free marketeers live in the 19th century, not the 21st, and therefore don't have any use for data of this sort.

Dsylexic said...

http://mises.org/freemarket_detail.aspx?control=88

the irish famine was caused by the brit policies .old bunkum debunked long back

Dsylexic said...

also,blaming deregulation for the fin crises is like the govt blaming the railings on the sides of the road for not preventing motorists from crashing ,while it spreads slick oil on the highway.
the recession was NOT caused by the meltdown.it was caused by the unsustainable BOOM that was fueld by the cheap credit.really,do the statists keynesians have any credibility when they didnt even see the meltdown come?.

the poor lending standards and sick incentives to rating agencies were ofcourse waiting to happen.
regulators will never be able to prevent crises.plus who regulates this wise regulator?

access to food comes from good transport infrastrucure and low tariffs.not FCI and PDS.i dont see any evidence of govt sponsored food programs being the cause of accessibility of food.dont tell me that it is the food stamps which prevents famine in the US.

Girish Shahane said...

Of course food stamps prevent starvation in the US. How would people on food stamps eat otherwise?
You have not addressed the model I outlines, so further debate is pointless. Please stop writing on this thread unless you address that model, of rising prices and people being priced out of the market.
That free market piece on the Irish famine doesn't say a word about food exports. Amazing. Of course there were governmental goof ups; there always are. And it's convenient to point to them when, as I said, you cannot provide a single example in your defence since a truly free market has never existed.
There are always multiple reasons behind any event of the magnitude of the meltdown and recession, or the Irish famine for that matter. Governments don't usually cover themselves in glory. But remember the recession occurred even where credit was not cheap, and where real estate loans were carefully managed. It happened in these places because of the massive credit squeeze that followed the financial meltdown. Which was primarily caused by speculation in complex derivatives. A fall in the real estate market would have only a local effect; it was the unregulated global market in derivatives that made it so massive.

Dsylexic said...

a)mises article did adress the export issue.british landowners in ireland chose to export since it benefited them.it is a reflection of cruel british colonial policies than a breakdown of free market
b)food stamps cause perverse incentives for the poor to remain poor.they now buy pizza and beer at 7-11s .earlier soup kitchens and churches did an admirable job in the great depression.now they have been marginalized ,while creating a population that is incentivized to remain dependent on food stamps.we'll soon go that way with RTF and RTE.
c)i read up Rajni Palme Dutt-a socialist -she is clear -the brits were no free market champions.they were mercantile malthusians who saw no benefit in keeping those who were dying from doing so.since thye would die anyway.tax collections were high and remained so even in the famine eras.the govt didnt cut taxes or provide any good governance while natural disasters devastated the citizens.
though i remain relatively ignorant about british india,your article did provoke me to look up Mike Davis's 'Victorian Holocausts'.
Davis on Viceroy Lytton " through the autumn of 1876, while the kharif crop was withering in the fields of southern India, Lytton had been absorbed in organising the immense Imperial Assemblage in Delhi to proclaim Victoria Empress of India.” The weeklong feast for 68,000 guests, points out Davis, was an orgy of excess. It proved to be “the most colossal and expensive meal in world history.” Through the same week as this spectacular durbar, “100,000 of the Queen Empress’ subjects starved to death in Madras and Mysore” alone.

no different than CWG and the rotting FCI piles.MM singh our modern day lytton.

when food prices rise alarmingly,the govt shouldnt keep quiet,it should cut taxes like there is no tomorow.it should try to steal less and less.the opposite of what the british did.

this is my last post,since you find them pointless.i'd have appreciated a place on yahoo to discuss the opinion pieces (or i should get my own blog).

Girish Shahane said...

Here are my responses, point by point:

a) The landowners in Ireland (who were absentee landowners but for the most part NOT British) saw a benefit in exporting to Britain because that's where demand / purchasing power lay. When purchasing power drops within a community, those with a surplus benefit by exporting food. That's the way a market functions. It's not cruel colonial policies, it is the ruthless logic of the free market. Again and again, in contexts colonial and non-colonial, you see food being exported from hard hit regions. That's what gives the lie to the idea that famines are a result of a shortage of food.

b) Your idea of soup kitchens and churches performing acts of charity being preferable to food stamps is a classic failed solution. As I wrote in my article, individual acts of charity have never staved off mass starvation. Your contention about the poor getting lazy is something that was said of peasants who starved in India and Ireland. You're using exactly the same words as the colonial administration used. Which is not surprising, since you share their free market ideals.

c) Late Victorian Holocausts is an important book. Since you quote it about the Lytton durbar, you should also approve its extensive condemnation of laissez faire policies and their impact on famines. The entire book is the strongest support to my argument. Of course, you might choose to just quote this one aspect and reject the rest of the book, but it should be placed on record that the entire purpose of the book is to show the negative impact of free market policies.

d) "When food prices rise, the government should cut taxes". This prescription presumes the government places a tax burden on citizens. However, in an ideal free market world there would be no such burden. Prices, though, would still rise and fall. What I'm asking is how the free market model would deal with the fact that many consumers would be priced out of the food market when prices rose. The government would have no role to play within this free market model.

Since you like the idea of soup kitchens so much, I suppose that's your solution to those priced out of markets. Well, I've already addressed that. If we left everything up to charitable individuals, Pakistan would be coping with a terrible famine right now.

Dsylexic said...

ah,now you speak of the the food being unavialble in an ideal free market.thats interesting. why do you think the ideal free market(which doesn't exist) would not be able to deal with planning ahead for natural disasters?. it doesn't take much imagination to think of flood insurance and such. a natural disaster blows away people's savings.no wonder they lose their purchasing power.if people live in such an area,there can be manifold free market solutions.since you presume to knock at an ideal free market,this is all i can say.-people can do without mai baap sarkar.but ofcourse sarkar wants to tax them -mainly in a sly manner -thru relentless inflation.they keep losing their purchasing power slowly.and they dont even realise it.then the disaster flood strikes.

inspite of all such deficiences,individuals and private entities have helped enormously in bihar floods and the tsunami or even haiti.
pakistan is probably starving,i cant be sure -despite and also because of the govt..people are probably reluctant to help -because they know that donating to the govt there is like feeding a black hole.

secondly,"A fall in the real estate market would have only a local effect". thats a reflection of classic keynesian lack of capital theory.housing bubbles dont exist in vacuo.this is really beyond the scope of your article,but when a housing bubble is created,it has already diverted resources from the rest of the economy.capital is not homogenous as statist planners and their equations assume.when the housing boom is in progress caused by money that doesnt really exist, jobs that should NOT exist spring up elsewhere in the economy.(hayek and mises do a better job of fleshing out a full theory called ABCT).no wonder when the bust comes,everyone is threatened.this business cycle is not caused by the free market.it is caused by central banks and the fractional reserve system

Girish Shahane said...

Thanks for your comments, Dyslexic; as this debate progressed, I'm happy you provided some references to back up your case instead of the name calling you started with.
I don't want to get into a debate about the real estate market and the meltdown; I've already said I think you're view is utterly mistaken.
About insurance and such, yes, some people will be able to get it because they can afford it; most poor people will not. They live from hand to mouth and will not give up a bit of what little they have in order to forestall a future emergency.

DS said...

I got tired of reading the argument in comments.Valid points you both make sometimes. But read the article. Girish, it's great and precisely as it stirs debate. We have a difficult choice. An inefficient government or a venal free market. Not much choice. But in this New India greed the market is unlikely to listen to debate or care about people other than as pencils or phones. That is scary. There's a sliver of hope of public outcry bearing down on a government to effect some remedy. Ideally a government using an honest private distribution service would be a dream. And perhaps with these kind of reserves, even releasing half of reserves would ameliorate the starvation crisis without causing the prices to crash dramatically and setting the whole wheel of consequences you describe into motion.It has to stay in the public sector. As rightly pointed out private charity cannot be a remedy in mass starvation and I am cynical about the free market having compassion to deliver where it's most needed rather than where the quickest buck is to be made.

chandra said...

I don't find anything relevant in your argument against free trade and famine policy in British India. It does not mean that I am supported of any particular system. Infact how these polices were unfolded is more important to understand than blindly applying in present day context. I have one thing to say simply read the Second Chapter of Prof.Ambijaran Book Classical Political Economy and British Policy in India
By S. Ambirajan

I am sure you would find yourself totally different after reading just second chapter of the above book.

A little more see my blog post (http://hayekorder.blogspot.com/2010/09/state-failure-harm-more-than-anything.html)

But not least I would thank you for writing this kind (A Recipe for Famine) of column!

Girish Shahane said...

Chandra, I had read that post before you wrote to me about it. It's pointless rebutting it because there are no arguments or facts to rebut.
I will say this: before writing the first of my two columns on food, I read Kaushik Basu's paper on the economics of foodgrain management. I think it's a sensible paper and my conclusions tally closely with his. He also makes a strong case against a free market in foodgrain production and distribution, something you appear to have missed.

Girish Shahane said...

Also, it is mind boggling that you quote the work of Ambirajan as an antidote to my argument. Ambirajan's view of British administrators is exactly the same as the one I have outlined, namely that they tried as best they could to follow free market principles, and this caused a succession of disasters.
Earlier in this argument, Dyslexic quoted approvingly from Late Victorian Holocausts, another book that is a denunciation of free markets and British free market policies. I can only conclude that you have either not read or not understood the papers / books that in your view counter my point of view. They do not: Basu, Ambirajan and Davies are all critical of free market policies.

chandra said...

I really don't want to play the 'blame game' it is not the point of who was critical against the free market system particularly with reference to Prof Ambirajan's work. He shows clearly that the situation that appeared then instead of pointing which was bad and good from today's context that is what others have done. Secondly, others (Sen, etc) have not really showed in their works which is the point here.

In case if you would attended the 12th Dharm Narain Memorial Lecture, 2010 i am sure you would have sensed more what Mr.Basu means in his paper on food management.

http://www.iegindia.org/events/dnlecture12inv.pdf

Girish Shahane said...

Frankly, Chandra, I can't make head or tail of what you're saying. Try learning English. Might help you understand the economists you quote.

chandra said...

The demand for advice/suggestion is zero percent here. In fact, I only remember what Albert Einstein wrote in his article titled Why Socialism?

http://ia700107.us.archive.org/21/items/AlbertEinsteinWhySocialism/Einstein-Socialism.pdf

I quote from Einstein article:

“It is easy to raise such questions, but difficult to answer them with any degree of assurance. I must try, however, as best I can, although I am very conscious of the fact that our feelings and strivings are often contradictory and obscure and that they cannot be expressed in easy and simple formulas.”

Further:

“If we ask ourselves how the structure of society and the cultural attitude of man should be changed in order to make human life as satisfying as possible, we should constantly be conscious of the fact that there are certain conditions which we are unable to modify. As mentioned before, the biological nature of man is, for all practical purposes, not subject to change.”