Sharply rising food prices are making politicians sit up and do something. But what?
Pegging prices is one option but this alone does nothing to address the underlying problem. On the contrary, it is a disincentive to produce food and bring it to where it is most needed. But when people are poor and have insufficient purchasing power, what else can be done.
It is said that third world farmers are too poor to purchase seeds. On the face of things, this is strange. Presumably they have got a good price for selling the crops they have just harvested, especially if food is in short supply, as is claimed. Or perhaps the farmers have got a bad price and someone else is cashing in. The temptation is to blame greedy middlemen, but they make nothing unless they both buy and sell, and in selling where they will get the best price, they are channelling the food to where there is most demand. Which may not be the same thing as where is it most needed, but if people are poor they cannot demand.
So there are two question. First, who owns the land on which the farmers are growing the crops? Could it be that landowners are charging too much rent and leaving farmers with insufficient to buy seeds? Second, why are there all these poor people? It is not a natural state of affairs. I suspect they are being prevented from earning a livelihood through exclusion from the means of production. Again, it is an issue of land tenure. But none of the commentators or politicians seems to have noticed.
I got involved in a discussion with a Youtuber called “Philosophy all along”. This was in connection with criticism of Trump’s policy of deporting illegal migrants, which he argued would be bad for the economy as it would reduce demand. This implies that there is a need to import people to sustain demand. There is no obvious reason why a population should not be able to consume everything that the same population produces. If it can not, then something else is going on. It is a basic principle that wages are the least that workers will accept to do a job. Wages are a share of the value added by workers through their wages. The remainder is distributed as economic rent, after government has taken its cut in taxes. Monopoly profit is a temporary surplus that after a delay gets absorbed into economic rent. Land values in Silicon Valley are an example of this; it's like a gold rush. The miners get little out of it. Rent and tax syphon purchasing power away from those who produce the g...
Kommentarer