Biofuels, Soaring Food Prices and Iowa
By ROBERT BRYCE | CounterPunch | February 25, 2011
When the chairman of the world’s largest food company says that using food crops to make biofuels is “absolute madness,” sensible people should take heed.
Alas, President Obama, along with a Congress that is dominated by Big Ag interests, just doesn’t seem to care that Peter Brabeck, the chairman of the Swiss food giant, Nestle, made that very declaration last month. And that blithe ignorance of the madness of biofuels is resulting in some truly horrifying results. Here are the numbers: This year, the US corn ethanol sector will consume 40 percent of all US corn – that’s about 15 percent of global corn production or 5 percent of all global grain – in order to produce a volume of motor fuel with the energy equivalent of about 0.6 percent of global oil needs.
Congress not only lavishes subsidies on the corn ethanol scam, it has mandated the use of corn ethanol, and provided tariff protections to an industry that is helping push global food prices to all-time highs and shrink grain reserves at the very same time that global grain production is faltering and protests over food prices are commonplace.
The quantity of grain to be consumed this year for US ethanol production – 4.9 billion bushels – boggles the mind. That’s more than twice as much as all the corn produced in Brazil and more than six times as much as is grown in India. Put another way, that’s more corn than the output of the European Union, Mexico, Argentina, and India combined.
Despite these facts, last month, President Obama, in his State of the Union speech, said “we can break our dependence on oil with biofuels.” Meanwhile, the Iowa Caucus, the nation’s first presidential primary is now less than one year away. And Newt Gingrich, the former speaker of the US House, who’s dearly hoping that he can be a viable candidate for the 2012 Republican presidential nomination, was recently in Iowa cravenly wooing the ethanol producers and slamming “big city” critics of the ethanol industry. Alas, there’s little reason to expect much bravery out of Gingrich’s fellow Republicans on Capitol Hill. Speaker of the House John Boehner recently told reporters not to expect cuts to the ethanol subsidies because they are “not in the discretionary spending pot.”
While Obama prevaricates and Congress dithers, ethanol boosters are once again claiming that their sector has negligible effect on grain prices. Instead, they blame surging grain prices on, well, everything but their industry. To be sure, bad weather in Russia and Australia has cut grain harvest in those countries. In addition, rising demand for grain in the developing world is affecting prices.
But the events of the last few weeks — corn futures at near-record highs and social unrest related to food prices – are nearly identical to the mayhem that occurred in 2007 and 2008. Back then, at least 15 studies, including ones by Purdue University, the World Bank and the Congressional Research Service, exposed the link between increasing ethanol production and higher food prices. Soaring food prices led to violent protests in Egypt, Cameroon, Ivory Coast, Haiti, Mauritania, Ethiopia, Madagascar, the Philippines and Indonesia. And worries about adequate food stocks led several countries to ban food exports.
New studies are, once again, finding a direct link between the corn ethanol scam and higher food prices. In December, a study by two US agriculture economists, Thomas Elam and Steve Meyer, found that corn prices are being pushed dramatically higher by demand from the ethanol sector. Elam and Meyer, who have done consulting work for the meat industry, found that without the ethanol mandates, the average price of corn would now be lower by more than $2 per bushel. And they conclude that “biofuels policy has caused significant cost increases for all users of feedgrains.”
There are many unfortunate aspects to America’s corn ethanol insanity. But among the most unfortunate is that US policymakers were warned, and they were warned by the Rand Corporation, one of the most conservative defense-oriented think tanks in America. In May 2008, Rand Corporation issued a report which said that diverting corn to the ethanol sector was not only bad economics, but a security threat: “Using corn for ethanol is economically inefficient and has harmed US national security. Diverting corn from food to ethanol production has pushed up world market prices for grains and other foods, which, in 2008, resulted in riots in a number of developing countries.”
In recent weeks, we’ve seen food-price hikes and protests that are reminiscent of 2008. There have been food riots in Algeria and Mozambique. Last month, some 8,000 Jordanians protested in the streets of Amman and other cities to protest rising food prices. In Egypt, the world’s biggest wheat importer, wheat prices are up by 30 percent over the past 12 months. This week, protesters took to the streets in India to protest surging food costs.
The surging price of wheat is being stoked by rising corn prices, which have doubled over the past six months and are now at about $7 per bushel. “Higher corn prices always means higher wheat prices,” says Bill Lapp, president of Advanced Economic Solutions, an Omaha-based commodity consulting firm.
David Orden, a senior research fellow at the International Food Policy Research Institute in Washington, told me that surging corn prices is “a continuation of what happened in 2008.” The push for biofuels, he said, “has clearly tightened up agricultural commodity markets. That’s good for farmers, but it is not good for poor people around the world.”
Many of those poor live in the US. Some 43.6 million Americans, about 14 percent of the population, are now receiving federal food stamps. Since October 2008, the number of Americans relying on food stamps jumped by 41.5 percent and enrollment in the program has increased for 26 consecutive months. And thanks to the ethanol scam, those many millions are being priced out of the meat aisle. Over the past year, beef prices have risen more than 6 percent and pork prices are up 11 percent. Economists are expecting overall grocery prices in the US to rise by about 5 percent this year.
But the real – and likely more dangerous – food-price increases will happen outside the US. Last year, the OECD projected that global grain prices are likely to be as much as 40 percent higher by 2020, and a London-based non-profit entity, ActionAid, predicted that some 600 million more people could be left hungry by 2020 due to increased production of biofuels.
Brabeck, the chairman of Nestle, the world’s biggest food company, has rightly put the spotlight on the biofuels madness. As the head of a company with $100 billion in annual food-related revenues, Brabeck clearly has a keen understanding of the global food industry. And last month during the World Economic Forum in Davos, he identified the stunningly obvious solution to the ongoing insanity. “No food for fuel,” he said.
“No food for fuel” should be the rallying cry on Capitol Hill and at the United Nations. It should be a required oath for all of the candidates (and Gingrich in particular) who are planning to campaign in Iowa for the 2012 presidential contest. As the biggest ethanol-producing state, Iowa has long had a stranglehold on America’s presidential selection process because it holds the first primary. And because it holds the first primary, the state’s powerful agriculture interests have, for decades, prevented viable candidates from speaking out against the corn ethanol madness.
It’s time – no, it’s long past time — to heed Brabeck’s advice. Stop the madness.
Violent riots in Algeria take first toll
Press TV – January 8, 2011
An 18-year-old youth has been killed in riots in Algeria, becoming the first casualty since the outbreak of clashes over soaring food prices and rampant unemployment in the African country.
Azzedine Lebza was hit by a bullet in Ain Lahdjel in the M’Sila region, 300 kilometers (180 miles) southeast of Algiers and died instantly as youths clashed with police in the capital and several other towns, AFP reported on Saturday.
But Algerian authorities have not yet confirmed the death.
Citizens in the North African country started to protest nationwide when the government announced price increases for basic commodities such as oil and sugar at the beginning of this year.
The official APS news agency said protesters ransacked government buildings, bank branches and post offices in “several eastern cities” overnight, including Constantine, Jijel, Setif and Bouira.
On Friday afternoon, rioting youths set shops on fire in the capital and clashed with police in several other cities.
Meanwhile, police fired tear gas and water cannons at young people hurling stones and glass bottles at security forces.
The General Union of Algerian Traders and Artisans said consumer prices had increased 20% to 30% in recent days, especially the prices of sugar and oil.
The prices of flour, cooking oil, and sugar have doubled in Algeria over the past few months.
According to the International Monetary Fund, about 75 percent of Algerians are under the age of 30, and 20 percent of the youth are unemployed.
The still-unfolding riots have raised the specter of a political turmoil reminiscent of the 1990s that triggered 10 years of civil strife.
Monsanto and the big fat lie of food safety
By M. Gray | Food Freedom | November 7, 2010
Vandana Shiva doesn’t mince words. Food safety is food fascism:
“Risk Assessment in the hands of centralized corruptible agencies is no protection for consumers as the disease and health epidemic in the U.S. linked to over processed, industrial foods show. Even while the U.S. is at the epicenter of the food related public health crises, the U.S. government is trying to export its Food laws which deregulate the industry and over regulate ordinary citizens and small enterprise. This deregulation of the big and toxic and over regulation of the small and ecological is at the core of Food Fascism …”
The Nazi Minister of Propaganda, Joseph Goebbels, is equally straightforward:
“If you tell a lie big enough and keep repeating it, people will eventually come to believe it. The lie can be maintained only for such time as the State can shield the people from the political, economic and/or military consequences of the lie. It thus becomes vitally important for the State to use all of its powers to repress dissent, for the truth is the mortal enemy of the lie, and thus by extension, the truth is the greatest enemy of the State.”
What’s the truth?
Michael Taylor, the Monsanto executive who gave this country rBGH, deregulated GMOs, and kept GMOs all unlabeled, thanks to Obama, is “The Food Safety Czar” at the FDA.
That Czar, “[t]he person who may be responsible for more food-related illness and death than anyone in history,” has been using “food safety” as a weapon against small local farms and local food co-ops. (For any who missed the Rawesome Raid, here’s the video on youtube.)
The consequences of the lie can no longer be hidden. They are showing up in Missouri, South Dakota, Pennsylvania, Georgia, New York, Michigan, Ohio, Vermont, California, Massachusetts, Maine, Wisconsin, and most recently in Washington.
The places being shut down are providing the most wholesome and nutritious food available and their tests come back clean, but the places are closed down regardless, often with no means of reopening. The problem is they are not within a just or even rational legal framework but one run by Monsanto, a company which devised a means to sue farmers for labeling their milk honestly, as rBGH-free.
Requirements farmers are being asked to meet include such violations of civil and human rights as keeping the names, addresses and phone numbers of customers and limits of on how much milk they can produce (If the milk is safe, on what basis does the state limit how much can be produced? And what other food has limits on production?). They face closings over missing a single page of pasteurization information, and shutting down of a food club with demands for paper work and names of customers even without charges being filed.
There are no “food safety” violations here, only the violation of a corporation shutting people down who are providing safe food and cutting off people depending on them for that food.
The list of raids since Obama came in is incomplete. It comes on top of SWAT team raids that occurred under Bush – also without reasonable cause, and repeatedly against a single farmer, and sometimes without any cause.
Food (especially milk products), equipment and personal computers are seized by state agents without a warrant and destroyed (sometimes running into hundreds of thousands of dollars of losses) which is followed by destruction of the farmers’ own food, stored for the family for the year. None is replaced and the farmer is not compensated.
Under such an FDA regime, “food safety” has lost all meaning. It is a farce of paperwork and a complex, irrelevant (to true safety of food) regulations which allow for governmental discretion in how standards must be met or maliciously assuring they can never be met, and in how penalties are applied. It is an arrangement that keeps doors wide open to willful government injustices. Lost in this complicated, pretense-filled, science-sounding bureaucratic system is the fact that “food safety” has nothing whatever to do with the actual safety of the food.
When it comes to literal food safety, the FDA, tasked to protect food, has illegally allowed antibiotics, hormones and slaughterhouse waste (all banned for years in Europe) to enter the food supply, along with pesticides and GMOs, with none ever having been tested for safety in humans. And those toxic items remain there today despite decades of studies (by scientists outside the FDA) proving their danger conclusively. How many people have died from this exposure, and not from acute infections but from chronic diseases such as cancer, diabetes, heart disease and more?
Those toxic substances are all corporate products and the bases of the immense profits to Monsanto, agribusiness in general, the food industry, and especially to the pharmaceutical industry which both sells the toxins and many of the food “additives” and then, after the food is consumed, swoops in like a vulture to pick the bones clean from perhaps the most profitable aspect of all – the steadily increasing diseases it and its brother corporations are assuring.
America does produce safe food but it is produced outside of the industrial [model] based on drugs chemicals, animal confinement, and GMOs. It comes only from the farms Monsanto is working to shut down.
That the FDA is concerned with “food safety” is a fiction propped [up] by propaganda. This is perhaps best exemplified by the raids occurring now, most of them involving raw milk.
The “food safety” stage was set by a long standing government smear campaign around raw milk’s alleged threat to health, giving the public the impression that the FDA was on the job protecting them from dangerous pathogens on farms. The public was unaware of how often the government accused farmers of producing milk with salmonella or another pathogen, shut the farmer down for a few weeks, and put that scare-mongering news in the media. But when the tests came back clean, that did not make the news. In the meantime, the farmer’s reputation was damaged and weeks of income were lost. Farmers, to defend themselves, began taking samples at the same time the government did, and having independent labs quickly confirm the milk was safe, undermining the government ruse.
In any case, the false accusations did not dampen the rapidly growing demand for raw milk. Perhaps because the milk is clean and the rigmarole of testing wasn’t offering a means to shut down dairy farmers Monsanto is now shutting them and food buying clubs down anyway, dropping all pretense of cause.
This becomes yet more absurd and unjust since the reality is that raw milk is the cleanest milk in the country whereas pasteurized milk in supermarkets contains pesticides, hormones, antibiotics, pus and GMOs. And pathogens. For while the FDA is accusing raw milk of being unsafe, in truth, the FDA is ignoring 5 to 20% of pasteurized milk in supermarkets, coming from the dairy industry, can be cultured for the Crohn’s bacterium. It is contaminated with a disease bacterium. The FDA has known this for more than a decade and done nothing about it, not even informing researchers and doctors searching for the cause that pasteurized milk is a likely source.
And to make the FDA’s actions more ludicrous in terms of “food safety,” the raw milk they are trying to get rid of is sought after by many in order to treat Crohn’s disease.
“Food safety” under Monsanto is Orwellian regulations enlarged to the specter of a Howitzer, easy to swing around and aim at small farms and food co-ops providing incontrovertibly safe, nutritious food, in order to shut them down. But somehow the big gun is permanently jammed when it comes pointing at giant corporate facilities sending out contaminated food to millions, sickening and even killing people. Those facilities, despite deaths, have not been closed for a single day.
The FDA (Monsanto) claims it can’t deal with the big corporate offenders without more fire power, so it wants a much, much bigger weapon and total discretion to act whenever and however it decides. The farmers and local food producers, wide-eyed, call out to the country, “Look who their target has been! Look who their target is now!” Given Monsanto overriding existing legal constraints to shut down people doing everything right, their intent is clear as is their drive. With the force and scope of what the “food safety” bills contain, Monsanto would be freed up to obliterate small farming and all local food systems in the US.
Colbert has done a show on the armed FBI raid in LA, and Olbermann did a show on a proposed Miami law that would use “food safety” to criminalize donating to the homeless. Word is starting to get out that something serious is occurring around food and Americans’ rights to produce it and use it freely. Monsanto would probably agree, since it has been appearing in court (as FDA’s “food safety” division) to try to remove human rights around food and health.
Realizing that who is behind FDA “food safety” (Monsanto of documentary fame) begins to lift the veil from the FDA’s claims that it must have more power to go after corporate violators, to reveal the Howitzer beneath, one which Monsanto is using only against hard-working people providing exactly what the country says it wants – a local food economy, safe food, local jobs, food security, and little carbon footprint.
Vandana Shiva says this partnership between the state and corporations is corporate rule. Is that the truth about “food safety”?
Obama’s Electric Vehicle Fetish
Cars for the Elite
By ROBERT BRYCE | November 11, 2010
Imagine an American president who, during a press conference, extols the importance of cars made by Mercedes Benz or BMW. The reaction, particularly on Fox News, is easily envisioned: outraged cries of “elitist” and “out of touch” would persist for days or even months afterward.
That, in essence, is exactly what President Barack Obama did last Wednesday. Obama acknowledged the thumping that the Democrats took at the polls on November 2, and went on to discuss the need for more all-electric vehicles, at one point saying “There’s a lot of agreement around the need to make sure that electric cars are developed here in the United States.”
Fine. Both Mercedes and BMW manufacture cars in the U.S. But here are two essential points: Those two automakers each control about the same percentage of the domestic car market that automotive analysts believe electric cars will have by 2020. Second, and perhaps more important: the same people who buy Benzes and Beemers – the wealthy – are the ones most likely to buy a new electric car.
Obama’s electric vehicle fetish reflects much of the inanity of our discussions about energy. The idea that oil is bad, and that we must therefore throw vast sums of money at efforts aimed at fueling our automotive fleet with something else – anything else – ignores both economic realities and the myriad problems inherent with EVs.
First, the economic realities. Earlier this year, Deloitte Consulting released a report on EVs which found that the most likely buyers are people with household incomes “in excess of $200,000” and “who already own one or more vehicles.” Furthermore, Deloitte expects those buyers to be “concentrated around southern California where weather and infrastructure allow for ease of EV ownership.”
Deloitte concluded that the US now has about 1.3 million consumers who “fit the demographic and psychographic profiles” of expected EV buyers. It went on, saying that mass adoption of the EV “will be gradual” and that by 2020, perhaps 3 percent of the US car market could be amenable to EVs. The report also says that the keys to “mass adoption are 1) a reduction in price; and 2) a driving experience in which the EV is equivalent to the internal combustion engine.”
Think about those numbers. Out of 300 million Americans, perhaps 1.3 million of them – with many of those living in areas in or around Los Angeles and San Diego — are likely to buy an EV.
Deloitte’s projections are exactly the same as those recently put forward by Johnson Controls Inc., a company that makes batteries for cars and is building two new plants in order to supply the EV market. Last month, the Wall Street Journal reported that Johnson Controls’ research “found that the pool of US customers for whom an electric car makes financial sense – those who travel many miles a year, but on short trips – is very small, about three percent of drivers.”
Hmmm. Three percent of drivers? In both 2009 and 2010, Mercedes and BMW each controlled about 2 percent of the US auto market.
Why will EVs be playthings for the rich? The answer is simple: the history of the EV is a century of failure tailgating failure. Consider this quote: In 1911, the New York Times declared that the electric car “has long been recognized as the ideal solution” because it “is cleaner and quieter” and “much more economical” that gasoline-fueled cars.
Whenever you hear about the wonders of the new hybrid-electric Chevrolet Volt, which at $41,000 per copy costs as much as a new Mercedes-Benz C350, consider this assessment by a believing reporter: “Prices on electric cars will continue to drop until they are within reach of the average family.” That line appeared in the Washington Post on Halloween, 1915.
And since the Volt is being built by GM, ponder this news item which declared that the carmaker has found “a breakthrough in batteries” that “now makes electric cars commercially practical.” The batteries will provide the “100-mile range that General Motors executives believe is necessary to successfully sell electric vehicles to the public.” That story was published in the Washington Post on September 26, 1979.
The problem today is the same as it was in 1911, 1915, and 1979: the paltry energy density of batteries. On a gravimetric basis, gasoline has 80 times the energy density of the best lithium-ion batteries. Of course, electric-car supporters will immediately retort that electric motors are about four times more efficient than internal combustion engines. But even with that four-fold advantage in efficiency, gasoline will still have 20 times the energy density of batteries. And that is an essential advantage when it comes to automobiles, where weight, storage space, and of course, range, are critical considerations.
Despite the all-electric automobile’s long history of failure, despite the fact that EVs will likely only be driveway jewelry for the wealthy, the Obama administration is providing more than $20 billion in subsidies and tax breaks for the development and production of cars that use electricity instead of oil.
Indeed, the administration keeps throwing money at EVs despite a January 2009 report published by the Department of Energy’s Office of Vehicle Technologies, which said that despite the enormous investments being made in plug-in hybrid-electric vehicles and lithium-ion batteries, four key barriers stand in the way of their commercialization: cost, performance, abuse tolerance, and life. The key problem, according the DOE analysts, was—predictably—the battery system. The report concludes that lithium-based batteries, which it calls “the most promising chemistry,” are three to five times too expensive, are lacking in energy density, and are “not intrinsically tolerant to abusive conditions.”
Remember when Barack Obama, the presidential candidate, berated the Bush administration for not paying attention to the science? In December 2008, shortly after being elected to the White House, he declared, “It’s time we once again put science at the top of our agenda and worked to restore America’s place as the world leader in science and technology.”
Restoring America’s leadership in science and technology is a worthy goal. But by attempting to pick winners in the car business — arguably the world’s single most competitive industry — the Obama administration is forgetting history and the panoply of problems that have kept EVs in the garage since the days of Thomas Edison. It’s time to unplug this subsidy-dependent industry and let the free market work.
I Am So Tired of Malthus
By Willis Eschenbach | Watts Up With That? | September 8, 2010
Daily we are deluged with gloom about how we are overwhelming the Earth’s ability to sustain and support our growing numbers. Increasing population is again being hailed as the catastrophe of the century. In addition, floods and droughts are said to be leading to widespread crop loss. The erosion of topsoil is claimed to be affecting production. It is said that we are overdrawing our resources, with more people going hungry. Paul Ehrlich and the late Stephen Schneider assure us that we are way past the tipping point, that widespread starvation is unavoidable.
Is this true? Is increasing hunger inevitable for our future? Are we really going downhill? Are climate changes (natural or anthropogenic) making things worse for the poorest of the poor? Are we running out of food? Is this what we have to face?
Fortunately, we have real data regarding this question. The marvelous online resource, the UN Food and Agriculture Organization (FAO) statistics database called FAOSTAT, has data on the amount of food that people have to eat.
Per capita (average per person) food consumption is a good measure of the welfare of a group of people because it is a broad-based indicator. Some kinds of measurements can be greatly skewed by a few outliers. Per capita wealth is an example. Since one person can be a million times wealthier than another person, per capita wealth can be distorted by a few wealthy individuals.
But no one can eat a million breakfasts per day. If the per capita food consumption goes up, it must perforce represent a broad-based change in the food consumption of a majority of the population. This makes it a good measure for our purposes.
The FAOSTAT database gives values for total food consumption in calories per day, as well as for protein and fat consumption in grams per day. (Fat in excess is justly maligned in the Western diet, but it is a vital component of a balanced diet, and an important dietary indicator.) Here is the change over the last fifty years:
Figure 2. Consumption of calories, protein, and fat as a global average (thin lines), and for the “LDCs”, the Least Developed Countries (thick lines) . See Appendix 1 for a list of LDCs.
To me, that simple chart represents an amazing accomplishment. What makes it amazing is that from 1960 to 2000, the world population doubled. It went from three billion to six billion. Simply to stay even, we needed to double production of all foodstuffs. We did that, we doubled global production, and more. The population in the LDCs grew even faster, it has more than tripled since 1961. But their food consumption stayed at least even until the early 1990s. And since then, food consumption has improved across the board for the LDCs.
Here’s the bad news for the doomsayers. At this moment in history, humans are better fed than at any time in the past. Ever. The rich are better fed. The middle class is better fed. The poor, and even the poorest of the poor are better fed than ever in history.
Yes, there’s still a heap of work left to do. Yes, there remain lots of real issues out there.
But while we are fighting the good fight, let’s remember that we are better fed than we have ever been, and take credit for an amazing feat. We have doubled the population and more, and yet we are better fed than ever. And in the process, we have proven, once and for all, that Malthus, Ehrlich, and their ilk were and are wrong. A larger population doesn’t necessarily mean less to eat.
Of course despite being proven wrong for the nth time, it won’t be the last we hear of the ineluctable Señor Malthus. He’s like your basic horror film villain, incapable of being killed even with a stake through the heart at a crossroads at midnight … or the last we hear of Paul Ehrlich, for that matter. He’s never been right yet, so why should he snap his unbeaten string?
APPENDIX 1: Least Developed Countries
Africa (33 countries)
Angola
Benin
Burkina Faso
Burundi
Central African Republic
Chad
Comoros
Democratic Republic of the Congo
Djibouti
Equatorial Guinea
Eritrea
Ethiopia
Gambia
Guinea
Guinea-Bissau
Lesotho
Liberia
Madagascar
Malawi
Mali
Mauritania
Mozambique
Niger
Rwanda
São Tomé and Príncipe
Senegal
Sierra Leone
Somalia
Sudan
Togo
Tanzania
Uganda
Zambia
Eurasia (10 countries)
Afghanistan
Bangladesh
Bhutan
Cambodia
East Timor
Laos
Maldives
Myanmar
Nepal
Yemen
Americas (1 country)
Haiti
Oceania (5 countries)
Kiribati
Samoa
Solomon Islands
Tuvalu
Vanuatu
LATE VICTORIAN HOLOCAUSTS BY MIKE DAVIS
BOOK REVIEW
Critics of globalization point out with some justice that poor people around the world suffer far more than the citizens of industrialized nations during downturns in the global economy. Peasants in developing countries can find their lives hanging in the balance during a rise in food prices or a decline in the global market value of the goods they produce. Never was this more true than during the hey-day of the European imperialism in the last three decades of the nineteenth century. Aggressive trade practices and the ruthless use of military force effectively subdued nations in Asia, Africa, and South America and brought these countries into a global trade system. By the 1870s, and certainly by the turn of the century, many European countries, above all Great Britain, had created the world’s first global market economy. Financial markets in London, Paris, Amsterdam, and elsewhere were linked by telegraph to places where raw materials were produced for European consumption, while established trade routes were patrolled by European navies (particularly the Royal Navy). The economic power of the extensive British Empire was unparalleled and the inner workings of the global system dominated by London determined the fate of innumerable people around the world.
It is with the workings of the British economic system and their impact on indigenous populations in India, China, and elsewhere that Mike Davis’ book Late Victorian Holocausts is concerned. Davis’ point of departure is a simple question. Why is it that widespread hunger in Western Europe disappeared in the nineteenth century while famine and disease raged throughout multiple places in what today we would call the “Third World”? Davis provides a simple answer: European imperialism (especially British imperialism) created a global economic system through which the food and wealth of conquered nations (i.e. colonies) was siphoned off for the benefit of wealthy and powerful Europeans, while those in the colonies were left to starve and die. The result was mass death (what Davis calls “holocausts”) on an unprecedented scale in India, China, Brazil and other places, that was most intense during the El Niño drought years of 1876-77 and 1888-1902.
This imperial global economic system was certainly not a “free” market in any sense of the word. It was in fact bolstered by a long series of tariffs and unfavorable trade relationships that were forced by Europeans upon the peoples they conquered. Colonies were in turn subjected to economic pressure dictated by and manipulated from financial centers in Western Europe. It was these economic forces, as well as brutal gunboat diplomacy, that Davis argues created the Third World as we know it today.
THE “FREE MARKET” AS A MECHANISM OF MASS MURDER
Davis’ primary focus in fleshing out his story is the crown jewel of Britain’s colonial empire: India. Drought was the precipitating cause of the hardship faced by the Indian people. However, Davis demonstrates with statistics and anecdotes that it was the unregulated “free market” system imposed on India by Britain that led to the deaths of tens of millions in the mid-1870s and late 1880s.
How did death and human suffering on such a massive scale happen? Following the English conquest of India in the early nineteenth century, economic relationships in the sub-continent underwent revolutionary changes. Thousands of miles of railroad track were laid. Telegraph wire was strung between outlying areas and the capitol city of Bombay (Mumbai today). Central grain collection depots were created and Indian grain was exported in massive quantities to the British Isles. Also, Indian subsistence farmers were gradually forced out in favor of large land enclosures. Within these new enclosures cash crops like cotton were planted, which supplied the textile mills of Lancashire, but which could not feed the Indian peasants who farmed the land. Finally, the tax burden upon the Indian peasantry was increased exorbitantly to pay for these “improvements”. British authorities needed the revenue to finance war in neighboring Afghanistan.
The innovations imposed by the British on India re-directed the trajectory of Indian commerce and especially food production toward Great Britain and away from the local village markets where the food was needed. Rail lines and the adjacent grain depots enabled British authorities to stockpile grain and keep it under guard away from the people who needed it most, while telegraph lines dictated the price of grain on world commodities markets to local producers. When grain prices rose across the board in global trading, peasants could not afford to buy food.
In the face of these crippling economic forces, British colonial authorities did nothing, primarily because they would not “tamper” with the operation of the liberal “free” market that Britain had created. The Viceroy of India during the famine years of the 1870s was Lord Lytton, a mentally unbalanced English noble. Davis recounts that in the midst of widespread famine and the deaths of millions all around him, Lytton maintained a strict laissez-faire attitude toward famine relief. As Lytton wrote at the time, “there is to be no interference of any kind on the part of the Government with the object of reducing the price of food,” a policy proposal Lytton termed “humanitarian hysterics” and “cheap sentiment”. (p. 31)
Lytton and his fellow administrators preferred instead to blame the “laziness” of famine victims themselves for causing their own dire fate. Citing Lord Temple, “Nor will; many be inclined to grieve much for the fate which they brought upon themselves, and which terminated lives of idleness and too often of crime”. (p. 41) The task of saving life, therefore, was “beyond our power to undertake,” claimed Temple and Lytton, and it was “a mistake to spend so much money to save a lot of black fellows”. (p. 37)
British officials were thus completely unwilling to intervene in the operation of the “free” market despite seeing death on a massive scale all around them. Overall at least 7.1 million people, and perhaps as many as 10.3 million people, died during the famine years of 1876-1878. (p. 111) Furthermore, despite death on this scale and falling production caused by drought, British officials in India still managed to export 6.4 million cwt. of wheat to Great Britain. (p. 31)
LIFE AND DEATH FOLLOWS THE MARKET CYCLE
The years following 1879 were a time when the world market continued to expand. Monsoonal rains settled back into a normal pattern and grain production around the world rose considerably. These were also years when Britain and other colonial powers expanded their reach into the interior of the subjugated countries they held. In India, even more land is brought under cultivation. These lands are then connected to the market by expanded telegraph and rail lines. Then in 1888-89 and 1891-92, the bottom again fell out of the system as El Niño drought gripped the temperate regions of Asia once more.
The resulting death from famine and disease, caused by the very same factors operating in India and elsewhere in the 1870s, was unfathomably huge. By 1902 in India alone between 12.2 and 29.3 million people perished. In China, where the British, Americans, and other European powers controlled practically all trade using military force, between 19.5 and 30 million people died. In Brazil another 2 million perished over the same time span. (p. 7).
THE “FREE” MARKET AND THE MAKING OF THE THIRD WORLD
Mike Davis demonstrates beyond a doubt that the economic structure of exploitative globalization is not a new phenomenon in the world. The lives of millions of people who formerly had survived in localized economies based on subsistence farming were wiped out “in the process of being forcibly incorporated” into the modern world system. (p. 9) Davis reminds us that markets are never free and they never operate according to “iron laws” of economics. Rather, markets are created and often the power underpinning their operation is fiscal manipulation and simple brute force.
Great Britain’s global imperial economy was a case in point. It was never a “free” market. England imposed unfavorable trade terms and high tariff walls on India, China and on all of the other countries in its empire. Local economies forced open by the British were sucked dry of their vital raw materials and in return peasants were forced to buy expensive British manufactured goods. This practice was put into place throughout the colonial world by France, Portugal, Spain, Germany and other colonial powers. If anything, the economies of European colonies were more captive markets than free markets.
The latter point is perhaps the most important conclusion of Late Victorian Holocausts; specifically, that what we call the Third World today was a product of European and, to a lesser extent, American economic exploitation. The incorporation of formerly powerful countries like China and India into the global economy by Great Britain and others effectively destroyed indigenous production. Contrary to conventional wisdom, until around 1850, India and China had actually held their own against Europeans when it came to industrial production. The localized production of wealth and industry, however, was halted and then reversed by the imposition of the global economic system. It is for this reason, Davis concludes, that India’s per capita income did not increase between 1757 and 1947; and in fact declined by more than 50% between 1850 and 1900. (p. 311).
How Goldman gambled on starvation
Speculators set up a casino where the chips were the stomachs of millions. What does it say about our system that we can so casually inflict so much pain?
By Johann Hari | The Independent | 2 July 2010
By now, you probably think your opinion of Goldman Sachs and its swarm of Wall Street allies has rock-bottomed at raw loathing. You’re wrong. There’s more. It turns out that the most destructive of all their recent acts has barely been discussed at all. Here’s the rest. This is the story of how some of the richest people in the world – Goldman, Deutsche Bank, the traders at Merrill Lynch, and more – have caused the starvation of some of the poorest people in the world.
It starts with an apparent mystery. At the end of 2006, food prices across the world started to rise, suddenly and stratospherically. Within a year, the price of wheat had shot up by 80 per cent, maize by 90 per cent, rice by 320 per cent. In a global jolt of hunger, 200 million people – mostly children – couldn’t afford to get food any more, and sank into malnutrition or starvation. There were riots in more than 30 countries, and at least one government was violently overthrown. Then, in spring 2008, prices just as mysteriously fell back to their previous level. Jean Ziegler, the UN Special Rapporteur on the Right to Food, calls it “a silent mass murder”, entirely due to “man-made actions.”
Earlier this year I was in Ethiopia, one of the worst-hit countries, and people there remember the food crisis as if they had been struck by a tsunami. “My children stopped growing,” a woman my age called Abiba Getaneh, told me. “I felt like battery acid had been poured into my stomach as I starved. I took my two daughters out of school and got into debt. If it had gone on much longer, I think my baby would have died.”
Most of the explanations we were given at the time have turned out to be false. It didn’t happen because supply fell: the International Grain Council says global production of wheat actually increased during that period, for example. It isn’t because demand grew either: as Professor Jayati Ghosh of the Centre for Economic Studies in New Delhi has shown, demand actually fell by 3 per cent. Other factors – like the rise of biofuels, and the spike in the oil price – made a contribution, but they aren’t enough on their own to explain such a violent shift.
To understand the biggest cause, you have to plough through some concepts that will make your head ache – but not half as much as they made the poor world’s stomachs ache.
For over a century, farmers in wealthy countries have been able to engage in a process where they protect themselves against risk. Farmer Giles can agree in January to sell his crop to a trader in August at a fixed price. If he has a great summer, he’ll lose some cash, but if there’s a lousy summer or the global price collapses, he’ll do well from the deal. When this process was tightly regulated and only companies with a direct interest in the field could get involved, it worked.
Then, through the 1990s, Goldman Sachs and others lobbied hard and the regulations were abolished. Suddenly, these contracts were turned into “derivatives” that could be bought and sold among traders who had nothing to do with agriculture. A market in “food speculation” was born.
So Farmer Giles still agrees to sell his crop in advance to a trader for £10,000. But now, that contract can be sold on to speculators, who treat the contract itself as an object of potential wealth. Goldman Sachs can buy it and sell it on for £20,000 to Deutsche Bank, who sell it on for £30,000 to Merrill Lynch – and on and on until it seems to bear almost no relationship to Farmer Giles’s crop at all.
If this seems mystifying, it is. John Lanchester, in his superb guide to the world of finance, Whoops! Why Everybody Owes Everyone and No One Can Pay, explains: “Finance, like other forms of human behaviour, underwent a change in the 20th century, a shift equivalent to the emergence of modernism in the arts – a break with common sense, a turn towards self-referentiality and abstraction and notions that couldn’t be explained in workaday English.” Poetry found its break with realism when T S Eliot wrote “The Wasteland”. Finance found its Wasteland moment in the 1970s, when it began to be dominated by complex financial instruments that even the people selling them didn’t fully understand.
So what has this got to do with the bread on Abiba’s plate? Until deregulation, the price for food was set by the forces of supply and demand for food itself. (This was already deeply imperfect: it left a billion people hungry.) But after deregulation, it was no longer just a market in food. It became, at the same time, a market in food contracts based on theoretical future crops – and the speculators drove the price through the roof.
Here’s how it happened. In 2006, financial speculators like Goldmans pulled out of the collapsing US real estate market. They reckoned food prices would stay steady or rise while the rest of the economy tanked, so they switched their funds there. Suddenly, the world’s frightened investors stampeded on to this ground.
So while the supply and demand of food stayed pretty much the same, the supply and demand for derivatives based on food massively rose – which meant the all-rolled-into-one price shot up, and the starvation began. The bubble only burst in March 2008 when the situation got so bad in the US that the speculators had to slash their spending to cover their losses back home.
When I asked Merrill Lynch’s spokesman to comment on the charge of causing mass hunger, he said: “Huh. I didn’t know about that.” He later emailed to say: “I am going to decline comment.” Deutsche Bank also refused to comment. Goldman Sachs were more detailed, saying they sold their index in early 2007 and pointing out that “serious analyses … have concluded index funds did not cause a bubble in commodity futures prices”, offering as evidence a statement by the OECD.
How do we know this is wrong? As Professor Ghosh points out, some vital crops are not traded on the futures markets, including millet, cassava, and potatoes. Their price rose a little during this period – but only a fraction as much as the ones affected by speculation. Her research shows that speculation was “the main cause” of the rise.
So it has come to this. The world’s wealthiest speculators set up a casino where the chips were the stomachs of hundreds of millions of innocent people. They gambled on increasing starvation, and won. Their Wasteland moment created a real wasteland. What does it say about our political and economic system that we can so casually inflict so much pain?
If we don’t re-regulate, it is only a matter of time before this all happens again. How many people would it kill next time? The moves to restore the pre-1990s rules on commodities trading have been stunningly sluggish. In the US, the House has passed some regulation, but there are fears that the Senate – drenched in speculator-donations – may dilute it into meaninglessness. The EU is lagging far behind even this, while in Britain, where most of this “trade” takes place, advocacy groups are worried that David Cameron’s government will block reform entirely to please his own friends and donors in the City.
Only one force can stop another speculation-starvation-bubble. The decent people in developed countries need to shout louder than the lobbyists from Goldman Sachs. The World Development Movement is launching a week of pressure this summer as crucial decisions on this are taken: text WDM to 82055 to find out what you can do.
The last time I spoke to her, Abiba said: “We can’t go through that another time. Please – make sure they never, never do that to us again.”
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The Geopolitics behind the War in Yemen (I)
By Mahdi Darius NAZEMROAYA | Strategic Culture Foundation | 30.03.2015
The United States and the Kingdom of Saudi Arabia became very uneasy when the Yemenese or Yemenite movement of the Houthi or Ansarallah (meaning the supporters of God in Arabic) gained control of Yemen’s capital, Sanaa/Sana, in September 2014. The US-supported Yemenite President Abd-Rabbuh Manṣour Al-Hadi was humiliatingly forced to share power with the Houthis and the coalition of northern Yemenese tribes that had helped them enter Sana. Al-Hadi declared that negotiations for a Yemeni national unity government would take place and his allies the US and Saudi Arabia tried to use a new national dialogue and mediated talks to co-opt and pacify the Houthis.
The truth has been turned on its head about the war in Yemen. The war and ousting of President Abd-Rabbuh Manṣour Al-Hadi in Yemen are not the results of «Houthi coup» in Yemen. It is the opposite. Al-Hadi was ousted, because with Saudi and US support he tried to backtrack on the power sharing agreements he had made and return Yemen to authoritarian rule. The ousting of President Al-Hadi by the Houthis and their political allies was an unexpected reaction to the takeover Al-Hadi was planning with Washington and the House of Saudi. … continue
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