by the Sandwichman
Nothing restores a sandwichman's optimism like a pep talk from "economists" about how they've arranged things so there can't be "another depression like the 1930s"!
Case in point: an article by Charles Duhigg in the New York Times today assures readers that economists say "the odds of a full-blown depression are almost nonexistent."
Why? "incomes are more stable. Many more Americans hold jobs in service sectors, like medicine or education. And more Americans work for the government, which is less inclined to fire people just because the economy turns gloomy."
"Moreover, there are safety nets that can be traced to the Great Depression, like Social Security, unemployment benefits, food stamp programs..."
"Today, we have a lot more flexibility and we can prop up banks and the economy to give us enough time to let things stabilize..."
"... whatever name economists give the current downturn, we are unlikely to see the bread lines, shantytowns and dust bowl of the Great Depression. More likely, these economists say, would be a sudden increase in the number of people selling belongings on eBay."
For sure there won't be another depression like the 1930s. There also will not be another war like World War I or even World War II. But there already is the Iraq War and there already is homelessness, "foodbanks" and social economic exclusion. No breadlines? What about the ones that have been there throughout the boom years? Are they going to abolish those? How long those folks "selling their belongings on eBay" will have to wait for a free terminal at the public library is another question.
The public policy priority of the last 35 years has been to whittle away at the "safety nets", both regulatory and personal security. I see nothing in the NYT article about recent enthusiasm for "reforming" Social Security. Is that because those reform proposals relied on perpetually rising financial markets? Let me get this straight: Social Security, which a few years ago was headed for "bankruptcy", is the safety net that will spare the economy from the consequences of the credit crunch. Could you explain the logic again S L O W L Y, please, Mr. Duhigg?
In a word, ladies and gentlemen, BULLSHIT! Another thing that has changed since the 1930s is the carefully-orchestrated refusal to entertain progressive policy responses to emerging economic
difficulties. And economists have been at the forefront of the neoliberal gatekeeping. Policy ideas have to pass through the wringer of the market-friendly test. The result: wasteful bloat-is-growth policies that enrich the wealthiest and leave the rest to stagnate.
On cue, all the hacks and charlatans who have been clapping and chanting, "FREE MARKETS! FREE MARKETS!" will continue clapping and but begin chanting, "GOVERNMENT SAFETY NETS! GOVERNMENT REGULATIONS!" And all will be well, children.
Sunday, March 23, 2008
Friday, March 21, 2008
Swift Boating Obama: Can Hillary Still Get the Nomination?
So, the Right Wing has decided to ignore the jab at them in his eloquent speech about endlessly showing clips of Rev. Wright's more egregious moments. Last night I saw Hannity complaining that efforts by Obama to talk about Iraq, the economy, health care, or how the State Department has illegally raided his passport file to be "efforts to distract us from his problems with Reverend Wright," accompanied of course by yet more playing of the obnoxious clips. They seem to have found that this is a chink in Obama's armor that is open and that they can use to swift boat him down to defeat by endless repetition, along with distorted interpretations of his speech.
As for Hillary, the key will not be how she does in upcoming primaries (although losing in PA would really shut her down immediately), but how she stacks up against Obama in the head-to-head polls of each against McCain. As of last weekend, for the first time ever, she was doing better than Obama against McCain. If that develops to be a consistent pattern, then those superdelegates, most of them Dem officeholders worrying about reelection, might well surge to Hillary, her only chance. However, as of yesterday, the most recent Rasmusen tracking poll had McCain slaughtering both of them, but Hillary a bit worse: McCain 51% Hillary 41%, McCain 49% Obama 42%. Ugh.
As for Hillary, the key will not be how she does in upcoming primaries (although losing in PA would really shut her down immediately), but how she stacks up against Obama in the head-to-head polls of each against McCain. As of last weekend, for the first time ever, she was doing better than Obama against McCain. If that develops to be a consistent pattern, then those superdelegates, most of them Dem officeholders worrying about reelection, might well surge to Hillary, her only chance. However, as of yesterday, the most recent Rasmusen tracking poll had McCain slaughtering both of them, but Hillary a bit worse: McCain 51% Hillary 41%, McCain 49% Obama 42%. Ugh.
Financial Markets Getting Really Weird: Negative Nominal Interest Rates
Textbooks and most theoretical papers tell us that zero is the floor on nominal interest rates. But news reports in the last few days, noted by both Paul Krugman and Brad DeLong, have announced that some repurchase agreements in New York have had negative nominal interest rates attached to them, parties paying to lend money to others. This seems to be tied to very low short term rates on US Treasury bills, barely above zero, pushed down by TED risk spread so that one month bill rates are about 2% below the 2.25 overnight federal funds rate, which is private interbank loans. Negative nominal rates were last seen in the US on repos when the ffr was at 1%, especially during August to November, 2003, as reported in a paper by Michael J. Fleming and Kenneth Garbade in the April, 2004 Current Issues in Economics and Finance, of the New York Federal Reserve Bank.
It is not just the occasional repos that have had negative nominal interest rates. Barrons in 2006 has reported on a curious financial instrument issued by Berkshire-Hathaway known as "squarz." These have had negative nominal rates on them. Also, in 1998 for a brief period very short term government securities in Japan had negative nominal interest rates, during the pit of their deflation, as reported in the Monetary Trends column of Daniel Thornton from the St. Louis Fed in January, 1999. And, finally, although this has never been reported in print, I was personally told by the individual who handled dealings between the Fed and Freddie Mac that on Dec. 31, 1986, the last day of the old tax code before the Reagan simplification, when many were trying to close a lot of deals, the federal funds rate itself briefly went into negative territory down to about - 1/2 percent, although it also soared as high as about 18% on that rather wild ride of a day. In any case, things are getting weirder and weirder in the current frenzy of the financial markets.
It is not just the occasional repos that have had negative nominal interest rates. Barrons in 2006 has reported on a curious financial instrument issued by Berkshire-Hathaway known as "squarz." These have had negative nominal rates on them. Also, in 1998 for a brief period very short term government securities in Japan had negative nominal interest rates, during the pit of their deflation, as reported in the Monetary Trends column of Daniel Thornton from the St. Louis Fed in January, 1999. And, finally, although this has never been reported in print, I was personally told by the individual who handled dealings between the Fed and Freddie Mac that on Dec. 31, 1986, the last day of the old tax code before the Reagan simplification, when many were trying to close a lot of deals, the federal funds rate itself briefly went into negative territory down to about - 1/2 percent, although it also soared as high as about 18% on that rather wild ride of a day. In any case, things are getting weirder and weirder in the current frenzy of the financial markets.
Tuesday, March 18, 2008
The Iranian Majlis election
Commentary has been muffled on the important Iranian parliamentary (Majlis) election. Most reports have said that Ahmadinejad's group, the Principalists, won and "reformers" lost, but with warnings of splits in the Principalists over economic issues. This is essentially correct, although things are more complicated. First, the pro-reform Khatami group appears to have gained seats from about 30 to about 50 (out of 290), despite being limited by the Council of Guardians to only running 120 total (and the Rafsanjani group did not run at all), see http://news.bbc.co.uk/2/middle_east/7299733.stm. The Principalists are reported to have gotten 71% of the seats, http://www2.irna.ir/en/news/view/line-24/0803166580104449.htm,
however a substantial block of these are "reformist" or "pragmatic" conservatives who are critical of Ahmadinejad on economic policy.
Most of the little commentary in the West has been scary, that Ahmadinejad has been backed. But the real subtext is the domination by Supreme Jurisprudent Ali Khamene'i, who encouraged the pragmatic conservatives while blocking the Khatami group, with the somewhat moderate former nuclear negotiator, Ali Larijani winning big in Qom, and poised to become Speaker of the Assembly. The key point is that Khamene'i has been very clear in supporting a civilian nuclear power program while opposing a military one, just what the US NIE reported this past fall. Thus, while many in the US do not like these guys, there is every reason to believe that they are not pursuing nuclear weapons, the underpinning of the Bush approach to Iran (and apparently that of McCain as well, who has just bizarrely announced that Iran has been training and supporting al Qaeda in Iraq, on which point Joe Lieberman had to correct him by whispering in his ear).
however a substantial block of these are "reformist" or "pragmatic" conservatives who are critical of Ahmadinejad on economic policy.
Most of the little commentary in the West has been scary, that Ahmadinejad has been backed. But the real subtext is the domination by Supreme Jurisprudent Ali Khamene'i, who encouraged the pragmatic conservatives while blocking the Khatami group, with the somewhat moderate former nuclear negotiator, Ali Larijani winning big in Qom, and poised to become Speaker of the Assembly. The key point is that Khamene'i has been very clear in supporting a civilian nuclear power program while opposing a military one, just what the US NIE reported this past fall. Thus, while many in the US do not like these guys, there is every reason to believe that they are not pursuing nuclear weapons, the underpinning of the Bush approach to Iran (and apparently that of McCain as well, who has just bizarrely announced that Iran has been training and supporting al Qaeda in Iraq, on which point Joe Lieberman had to correct him by whispering in his ear).
Another Hysterian on Social Security at WaPo: Allan Sloan
So, the drumbeat of hysteria about social security in the MSM continues today with Allan Sloan in the Washington Post. He has an egregious column repeating with no criticism the forecasts of the intermediate projection of SSA Trustees, and pronouncing that doom will arrive when the fund starts to supposedly run a deficit in 2017. This is supposedly because (gasp!) paying the cashed-in assets from the trust fund will require funds from the general fund.
So, I shall only not two things. One is that in the last ten years the economy has outperformed the low cost projection, and the low cost projection has a deficit never appearing, no 2017 at all. The second is that medicare is already running a deficit, which is rapidly rising, and the earth has not stood still (or, maybe that is why Bear Stearns failed?). The fiscal problem the US faces is medicare, and medical care more broadly, not social security.
So, I shall only not two things. One is that in the last ten years the economy has outperformed the low cost projection, and the low cost projection has a deficit never appearing, no 2017 at all. The second is that medicare is already running a deficit, which is rapidly rising, and the earth has not stood still (or, maybe that is why Bear Stearns failed?). The fiscal problem the US faces is medicare, and medical care more broadly, not social security.
Egalitarianism
Forbes counts 1062 billionaires. The number is increasing exponentially. Soon we will all be billionaires and the trickle down vindicated. Who cares about short run economic setbacks?
Monday, March 17, 2008
Confirmation of The Confiscation of American Prosperity
I cannot help but feel some satisfaction in watching recent event confirm the diagnosis found in my Confiscation of American Prosperity: From Right Wing Extremism and Economic Ideology to the Next Great Depression (Palgrave). The toxic combination of speculative excesses, financial deregulation, and unequal incomes, which make demand dependent on credit.
All the while, Panglossian economics insisted that this was the best of all possible worlds, except for some residues of the New Deal.
The book begins with the historical perspective that the earlier massive waves of inequality and free market dogmatism all led to disaster. This one may not become a renewal of the Great Depression. The Fed may succeed in reflating the bubble, but sooner or later the purge will occur.
UNEMPLOYMENT & KEYNES
by the Sandwichman
Forget about Bear Stearns. It's the long term fallout from the credit crisis that people should be worried about. In a word: unemployment. Somebody has to pay to clean up the mess the financial oligarchy has made.
You know who.
Ultimately, the only way to underwrite the Fed's bailout activity is through wage cuts for ordinary working people. Massive wage cuts. For structural and historical reasons, such cuts can't occur smoothly and easily. So the first round of real wage cuts takes the form of inflation combined with a freeze of nominal wages. We've already seen the beginning of steep increases in food and energy costs. The credit crisis will supply the motivation for capping employment earnings.
There's just one problem (or several): the erosion of dispoable income, combined with an end to easy credit will work its way through the system to depress effective demand for commodities. And don't look to Keynes for a solution. For one thing, it's the long run -- he's dead. For another, Keynes never offered a magic solution for indefinitely continuing to stimulate demand in an already credit and inflation bloated system.
Keynes's answer -- applicable long before we would have gotten to this point -- was essentially the same as Marx's: limit the hours of work.
In a letter to the poet, T.S. Eliot, dated April 5, 1945, Keynes identified shorter hours of work as one of three “ingredients of a cure” for unemployment. The other two ingredients were investment and more consumption. Keynes regarded investment as "first aid," while he called working less the "ultimate solution." A more thorough and formal presentation of his view appeared in a note Keynes prepared in May 1943 on "The Long-Term Problem of Full Employment." In that note, Keynes projected three phases of post-war economic performance. During the third phase, estimated to commence some ten to fifteen years after the end of the war, "It becomes necessary to encourage wise consumption and discourage saving, –and to absorb some part of the unwanted surplus by increased leisure, more holidays (which are a wonderfully good way of getting rid of money) and shorter hours."
Forget about Bear Stearns. It's the long term fallout from the credit crisis that people should be worried about. In a word: unemployment. Somebody has to pay to clean up the mess the financial oligarchy has made.
You know who.
Ultimately, the only way to underwrite the Fed's bailout activity is through wage cuts for ordinary working people. Massive wage cuts. For structural and historical reasons, such cuts can't occur smoothly and easily. So the first round of real wage cuts takes the form of inflation combined with a freeze of nominal wages. We've already seen the beginning of steep increases in food and energy costs. The credit crisis will supply the motivation for capping employment earnings.
There's just one problem (or several): the erosion of dispoable income, combined with an end to easy credit will work its way through the system to depress effective demand for commodities. And don't look to Keynes for a solution. For one thing, it's the long run -- he's dead. For another, Keynes never offered a magic solution for indefinitely continuing to stimulate demand in an already credit and inflation bloated system.
Keynes's answer -- applicable long before we would have gotten to this point -- was essentially the same as Marx's: limit the hours of work.
In a letter to the poet, T.S. Eliot, dated April 5, 1945, Keynes identified shorter hours of work as one of three “ingredients of a cure” for unemployment. The other two ingredients were investment and more consumption. Keynes regarded investment as "first aid," while he called working less the "ultimate solution." A more thorough and formal presentation of his view appeared in a note Keynes prepared in May 1943 on "The Long-Term Problem of Full Employment." In that note, Keynes projected three phases of post-war economic performance. During the third phase, estimated to commence some ten to fifteen years after the end of the war, "It becomes necessary to encourage wise consumption and discourage saving, –and to absorb some part of the unwanted surplus by increased leisure, more holidays (which are a wonderfully good way of getting rid of money) and shorter hours."
Duane Chapman
Somehow I missed the news that Duane Chapman died last summer — he was only 66 years old. Duane taught environmental economics at Cornell and did pioneering work on several fronts. It was from him that I first learned, back in the mid-1980s, about the importance of the environment-trade nexus; he was years ahead of that curve. He produced a powerful critique of a different sort of curve, Environmental Kuznets, showing that it is an artifact of looking at production rather than consumption footprints. His textbook, Environmental Economics: Theory, Application and Policy, failed to find its audience, but it was sprinkled with analytical gems found nowhere else. While his style could sometimes be a bit gruff, he was never less than warm and supportive to me. I’m grateful I had the opportunity to get to know him.
Sunday, March 16, 2008
Fire Sale at Bear Stearns. Who's Next?
So, J.P. Morgan Chase has just bought Bear Stearns for $2 per share. BS's stock was at $30 per share on Friday and was as high as $170 per share at one point last year. This means JPM paid about $1 billion total for BS, less than BS's net income in some recent years. The only thing too bad about this, given BS's unwillingness to share any of the costs of stabilizing the markets after the 1998 LTCM crisis, is that about a third of the BS shares are owned by its employees, one of the major banks closest to being worker-owned. They are definitely taking a major bath.
Of course, the other question has got be, who's next? The Fed has now made two major innovative efforts to stabilize the markets in the last two weeks, but the TED spread has barely budged, and both Carlyle and Citigroup have been in trouble as well as BS. Major financial entities are hurting, and the dollar continues to fall while oil has now gone above $110 per barrel. The Fed is running out of arrows in its quiver.
Of course, the other question has got be, who's next? The Fed has now made two major innovative efforts to stabilize the markets in the last two weeks, but the TED spread has barely budged, and both Carlyle and Citigroup have been in trouble as well as BS. Major financial entities are hurting, and the dollar continues to fall while oil has now gone above $110 per barrel. The Fed is running out of arrows in its quiver.
Health Care Growth: Wasteful Bloat, Jobs Program, or Better Care?
This graphic shows that health care accounts for nearly half the increase in private sector jobs from March 01 to December 07. Questions: Does this increase translate into better health care or more bureaucratic bloat? Is wasteful health care the new jobs program?
Mankiw vs the Muggles
For those of you living on another planet, Muggles are the pathetic characters in the Harry Potter stories who have no magical powers. They are oblivious to the action going on around them. Mankiw, in his latest NYT column, contrasts Muggles to economists, who have magic to burn. The economists, it seems, understand the glories of free trade, while the uninformed Muggle-masses think that globalization is draining their wallet. This is reflected in politics, he says, where honest Republicans like McCain (to whom this column attempts a reposition) do battle with protectionist Democrats – who, with luck, are merely pandering.
I wish Mankiw all the best in his courtship of McCain, but the guy really doesn’t get it about trade. This is not a matter of free trade versus protectionism. OK, that archaic duality comes up periodically in a small way (like the recent spat over the Pentagon’s spurning of Boeing tankers), but it is not the main issue. There are two big facts that menace the US economy like twin Voldemorts, the long-term erosion of wages for most of the population and the buildup of massive current account deficits. These are almost surely related, though not in any simple way. Intensifying competition among the world’s workers has been great for investors, bad for wages, and poison for the US international position.
The question is not whether there should be trade or not, but under what rules it should take place. NAFTA was not a one-page flyer announcing free trade in North America. Renegotiating it to promote more equity and sustainability is not flat-earth economics. But above all, thinking that a trade deficit of 5+% of GDP, year after year, is rendered benign by the writings Smith, Ricardo, or for that matter Samuelson is to live in a world of magic, not reality. The Muggles are right.
I wish Mankiw all the best in his courtship of McCain, but the guy really doesn’t get it about trade. This is not a matter of free trade versus protectionism. OK, that archaic duality comes up periodically in a small way (like the recent spat over the Pentagon’s spurning of Boeing tankers), but it is not the main issue. There are two big facts that menace the US economy like twin Voldemorts, the long-term erosion of wages for most of the population and the buildup of massive current account deficits. These are almost surely related, though not in any simple way. Intensifying competition among the world’s workers has been great for investors, bad for wages, and poison for the US international position.
The question is not whether there should be trade or not, but under what rules it should take place. NAFTA was not a one-page flyer announcing free trade in North America. Renegotiating it to promote more equity and sustainability is not flat-earth economics. But above all, thinking that a trade deficit of 5+% of GDP, year after year, is rendered benign by the writings Smith, Ricardo, or for that matter Samuelson is to live in a world of magic, not reality. The Muggles are right.
Two Takes on Reining in Health Care Costs
In the U.S. doctors are cutting the price of medicine by reducing the doses that they offer patients. This tactic is understandable because some medicines cost several hundred thousand dollars per year.
In Thailand, the health ministry is recommending that the government ignore patents.
Zamiska, Nicholas. 2008. "Thai Ministry to Recommend Ignoring Patents on Cancer Drugs." Wall Street Journal (11 March): p. A 16.
http://online.wsj.com/article/SB120515886199824251.html
"Thailand's new health minister announced that he would urge the Thai government to continue to ignore patents on several cancer drugs, disappointing big pharmaceutical companies that had hoped Bangkok might roll back a policy of overriding patents in the name of public health."
"Ever since a bloodless military coup in Thailand in September 2006, the military-installed government had been battling big pharmaceutical companies, threatening to sidestep their patents on drugs for AIDS and other diseases if they didn't drop the price of their medications. The Thai government argued that since the country's poor population couldn't afford the lifesaving drugs, and the government didn't have sufficient funds to cover their cost, drug companies should put public health before profit and cut the cost of the medications."
Pollack, Andrew. 2008. "Cutting Dosage of Costly Drug Spurs a Debate." New York Times (16 March).
http://www.nytimes.com/2008/03/16/business/16gaucher.html?ref=business
"Cerezyme, used to treat a rare inherited enzyme deficiency called Gaucher disease, costs $300,000 a year. Sales of Cerezyme totaled $1.1 billion last year, making it a blockbuster by industry standards."
"Shauna Mangum, of Farmington, N.M., began treatment in 2000, at a cost of more than $400,000 a year. The next year, the premiums for everyone in her insurance pool went up by $180 a month."
Doctors are considering cutting the dosage to save money, setting off a strong debate about the practice.
In Thailand, the health ministry is recommending that the government ignore patents.
Zamiska, Nicholas. 2008. "Thai Ministry to Recommend Ignoring Patents on Cancer Drugs." Wall Street Journal (11 March): p. A 16.
http://online.wsj.com/article/SB120515886199824251.html
"Thailand's new health minister announced that he would urge the Thai government to continue to ignore patents on several cancer drugs, disappointing big pharmaceutical companies that had hoped Bangkok might roll back a policy of overriding patents in the name of public health."
"Ever since a bloodless military coup in Thailand in September 2006, the military-installed government had been battling big pharmaceutical companies, threatening to sidestep their patents on drugs for AIDS and other diseases if they didn't drop the price of their medications. The Thai government argued that since the country's poor population couldn't afford the lifesaving drugs, and the government didn't have sufficient funds to cover their cost, drug companies should put public health before profit and cut the cost of the medications."
Pollack, Andrew. 2008. "Cutting Dosage of Costly Drug Spurs a Debate." New York Times (16 March).
http://www.nytimes.com/2008/03/16/business/16gaucher.html?ref=business
"Cerezyme, used to treat a rare inherited enzyme deficiency called Gaucher disease, costs $300,000 a year. Sales of Cerezyme totaled $1.1 billion last year, making it a blockbuster by industry standards."
"Shauna Mangum, of Farmington, N.M., began treatment in 2000, at a cost of more than $400,000 a year. The next year, the premiums for everyone in her insurance pool went up by $180 a month."
Doctors are considering cutting the dosage to save money, setting off a strong debate about the practice.
Friday, March 14, 2008
The Role of Multinationals in the U.S. Economy
Michael Mandel, late of Dollars and Sense, may have returned to his roots, questioning the role of the multinationals, although suggesting that they have the potential to contribute to an economic recovery. He notes that the 150 U.S.-based nonfinancial multinationals cut more than 2 million jobs between 2000 and 2005, while they are hoarding more than $500 billion in cash.
A header describes the role of the multinationals as "exporting jobs, not goods."
Mandel, Michael. 2008. "Multinationals: Are They Good for America?" Business Week (28 February): pp. 41-51.
41: "the top 150 U.S.-based nonfinancial multinationals, which include the likes of Hewlett-Packard, Pfizer, eBay, and Sara Lee, had more than $500 billion in cash and short-term investments at the end of 2007."
41: "Figures collected by the Bureau of Economic Analysis suggest the multinational sector has in some ways been a drag on the U.S. economy since 2000. From 2000 to 2005, the last year for which full data are available, U.S. multinationals cut more than 2 million jobs at home, even as employment in the rest of the private sector grew -- and there's no sign the trend has significantly reversed."
A header describes the role of the multinationals as "exporting jobs, not goods."
Mandel, Michael. 2008. "Multinationals: Are They Good for America?" Business Week (28 February): pp. 41-51.
41: "the top 150 U.S.-based nonfinancial multinationals, which include the likes of Hewlett-Packard, Pfizer, eBay, and Sara Lee, had more than $500 billion in cash and short-term investments at the end of 2007."
41: "Figures collected by the Bureau of Economic Analysis suggest the multinational sector has in some ways been a drag on the U.S. economy since 2000. From 2000 to 2005, the last year for which full data are available, U.S. multinationals cut more than 2 million jobs at home, even as employment in the rest of the private sector grew -- and there's no sign the trend has significantly reversed."
The Return of Limits to Growth
We are now experiencing something that few remember occurred in the early 1970s, a simultaneous surge of both food and energy prices, which are interlinked, the era in which the book, The Limits to Growth came out to much attention. Grain prices more than doubled in late 1972 and remained high until 1975, with that runup preceding the quadrupling of crude oil prices that hit at the end of 1973, giving us the staglation of 1974 and after. What is going on today has come on more gradually, but combined with the financial market problems and the appearance of finally running out of any serious spare capacity in the crude oil sector, looks potentially a lot worse.
I note a similarity between The Great World Food Crisis of then and now, besides the role of rising energy prices. That is a surge of demand for meat, which is wasteful in terms of grain use. In 1972 it was Russia, with Nixon quietly approving a stealth major purchase of massive amounts of US grain by the Soviets as part of his early detente. The Soviets were interested in increasing the amount of meat in their diet and were also facing some grain shortage problems due to bad weather. Today, China in particular is buying more grain to feed a rising demand for meat, and we also have bad drought in Australia pinching supply, quite aside from all the assinine shifting of corn production to ethanol in Iowa driven by subsidies, and propped up by the presidential politics of having Iowa go first in the selection process.
I note a similarity between The Great World Food Crisis of then and now, besides the role of rising energy prices. That is a surge of demand for meat, which is wasteful in terms of grain use. In 1972 it was Russia, with Nixon quietly approving a stealth major purchase of massive amounts of US grain by the Soviets as part of his early detente. The Soviets were interested in increasing the amount of meat in their diet and were also facing some grain shortage problems due to bad weather. Today, China in particular is buying more grain to feed a rising demand for meat, and we also have bad drought in Australia pinching supply, quite aside from all the assinine shifting of corn production to ethanol in Iowa driven by subsidies, and propped up by the presidential politics of having Iowa go first in the selection process.
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