It is always a pleasure to read Amartya Sen. He is a Nobel Prize winner (1998), has written extensively on famine, hunger, gender issues, human rights and politics. He is a serious if gentle critic of much of the determinism that accompanies proponents of today's globalization policies (those that insist the world has no choice but to open its markets and privatize economic services). He is a professor at Harvard University.
All too rare among economists, he argues convincingly from philosophical and ethical principle, not from some arbitrary imposition of economic "law" (that increased demand will always raise prices, or that lower tariffs will always reduce prices in local markets). He is an empirical economist, preoccupied with what happens when economics mixes with politics and social norms and culture. Among many ideas, he and Jean Drèze proposed ameliorating the situation of widows in traditional Hindu culture, who often find themselves utterly dependent on relatives and all too often neglected or even abused. Their idea was simple: a directed government pension that would provide the widows with some economic independence and the improved social standing that accompanies an income.
Amartya Sen's op-ed in the New York Times earlier this week returns to the argument he made in the first book of his that I read, Poverty and Famines. Namely, that is not just poverty that makes people vulnerable to hunger, but inequitable income growth. The example he gives in his op-ed is 1943 Bengal, when the boom created by a war economy in the city of Calcutta, combined with government policies that bought up food in rural areas to try to keep food inflation down in the cities, resulted in some 2 to 3 million deaths in those rural areas. The boom raised wages in the city, and therefore purchasing power, but wage increases did not reach rural areas. In effect, the rural poor were priced out of the market by the newly richer urban population.
His point cannot be made often enough: food scarcity has a number of causes, some of them out of our control. But, and this is another central thesis of Dr. Sen's work, where there are accountable systems of government, famines do not occur, because governments intervene to make food available to all, if only to avoid riots. Governments will introduce rations or welfare payments or otherwise ensure at least a minimum amount of food reaches everyone, overriding the market's rather rougher system of justice: to the highest bidder the food.
One factor left out of his op-ed (700 words only takes you so far) is oil. Oil speculation is a significant new supply issue that has a profound effect on agriculture. The widely anticipated continued increase in oil prices will leave food prices permanently higher, and more volatile. Oil is a fundamental ingredient in the global food supply, both as an input and as the principle means of powering distribution, storage and processing. A recent Wall St. Journal article highlights the dramatic increase of fertilizer costs (a 65 percent rise for American farmers in the past year), linked to the rising price of oil, as well as the cartels that are common in the industry (and apparently protected by century-old exemptions to anti-trust laws).
Whether or not current prices are justified, we have known for a long time that oil is in finite supply and that we do not yet have technologies to replicate the energy yields from other sources. All of us face big adjustments in the way we live and work. Agriculture is no exception - the premise of the Green Revolution was based on oil to increase yields. That approach, with all the controversy that surrounded it, has run its course. The world urgently needs the new investments described by the IAASTD. Biofuels to meet a European or U.S. mandate might indeed exacerbate all that plagues global agriculture. But creating local energy sources from biomass in developing countries should be a top priority for building resilience in the face of the food crisis. The World Bank has announced a new $1.2 billion program for food and agriculture in the neediest developing countries. If only we could have more confidence it will be spent where it is needed, making the transition to agriculture that is less dependent on water, fertilizers and oil. As Dr. Sen says, first we need to "understand the nature of the problem." As far as World Bank President Bob Zoellick goes, I have my doubts.
