Thursday, September 22, 2011

Do Empty Stomachs cause Riots?

A full gut supports moral precepts
-Burmese Proverb

Spread the table and contention will cease
-English proverb

A society is only three meals away from anarchy.
-British Sci-Fi show, Red Dwarf
What causes riots? No, not the riots in London but riots in general, around the world? Researchers at the New England Complex Systems Institute in Cambridge, Mass. think they've found a clue.
This graph shows the average price of food and the riot events around the world. Above a certain food price threshold, social unrest sweeps the planet. It stands to reason that people become desperate when food is difficult to obtain. The French Revolution was preceded by a food crisis when the price of bread became too high for the common working man to afford (which led to the famous reply by the French queen, "Let them eat cake.")

The researches say that high food prices don't necessarily trigger riots themselves, they simply create a tipping point in which social unrest can flourish. "These observations are consistent with a hypothesis that high global food prices are a precipitating condition for social unrest," according to Marco Lagi.

Bottom Line

Why are food prices so high? One reason is traders speculating on the price of food, a problem that has worsened in recent years by the deregulation of the commodities markets and the removal of trading limits for buyers and sellers. (Recall what Enron did to the price of energy in California with abusive trading.)

A second reason is the conversion of corn into ethanol. The supply of corn for food has been greatly reduced. I recently read that half of the US corn supply is being turned into ethanol.

The US really needs to stop subsidising ethanol. We are using taxpayer money to make expensive fuel from corn and creating starvation as a byproduct.

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