6 Jun 2008

Sachs is Batshit Crazy

As some of you may know, I am not a fan of Jeffrey Sachs and his top-down, Bono-happy, ideas of how to save the world, but this one surprised me with it's bold idiocy:
The world should set as a practical goal of doubling grain yields in low-income Africa and similar regions (such as Haiti) during the next five years.
So, Jeffrey, who is the "world" you seem to talk to? Is there some "world" person out there who can solve this problem? I'd be happier if you were asking for divine intervention. Now, without help from "world", we're going to have some problems, as you admit:
Of course, there were abuses, such as the allocation of public credits to richer farmers rather than to needy ones, or the prolonged subsidization of inputs even after farmers became creditworthy. And in many cases, government agricultural banks went bankrupt.
I am glad that you have learned from these mistakes. Whoops, maybe not:
History has shown that government action is required to help the poorest farmers escape the low-yield poverty trap. If farmers can be helped to obtain simple technologies, income can rise, and they can accumulate bank balances and collateral. With a bit of temporary help, perhaps lasting around five years, farmers can build up enough wealth to obtain inputs on a market basis, either through direct purchases from savings or through bank loans.
First of all, the greatest leap in agricultural productivity (and wealth) occurred when the Chinese government stopped interfering in farmers' decisions. Second, "five years" will not work -- "temporary" international aid has not worked for 60 years.* Third, getting the [World] Bank involved only promises to distribute a lot of money (Bank staffers keep their jobs) that will be stolen by corrupt governments (grants to poor countries will NOT make it to poor farmers; see Collier's Bottom Billion and how 99% of the medical budget was stolen before it reached local clinics).

Jeffrey has his heart in the right place, a great job, and a $2 million condo in NYC, but he clearly has failed to consider the microeconomics of aid, farming, finance, corruption, etc. It's sad that he may actually get people to contribute to his program -- and make things worse. [Sachs has a macro background -- and you can tell.]

Bottom Line: Agricultural productivity and food supplies will ONLY expand when markets are allowed to function. Remove price ceilings on food, allow free trade in food (including exports to the US!), and make poverty history.

* International Aid: Transferring money from poor people in rich countries to rich people in poor countries for over 60 years.

6 comments:

  1. And, it is going to take some acceptance by the recreational eater crowd that inorganic sources of N, and GMO crops are essential for the survival of billions of people. Even if they'd prefer not to have those people alive, the starving little brown folks won't just curl up and die, they'll raise a ruckus first, and probably trash all their farmland. Eco types are all hot for efficiency when it's a Prius or a fluorescent light bulb, but they seem to think it's OK for bugs to eat half our food.

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  2. Food production isn't simply a response to markets, it's also a response to the natural environment (e.g. weather, disease) and the supply of resources often controlled by governments (e.g. land, water abstraction rights).

    If farmers are to significantly increase productivity then they're surely going to need more than access to markets. They going to need things like the right to irrigate their land, better weather forecasts (e.g. District-Level Agro-Meteorological Advisory Service in India http://pib.nic.in/release/release.asp?relid=39377),
    and investment (for machinery, chemicals, new varieties, training, etc).

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  3. Michael, we agree on this. I am making the point that functioning markets are a necessary (but not sufficient) condition for production to expand. Farmers who cannot make any money will not grow more food -- no matter how good the weather, forecasts or fertilizers. Take a look at how Mugabe has destroyed Zimbabwean agriculture through his fascism for a recent example.

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  4. David, I suppose I was a bit too defensive of the role of governments, but then I do work for one.

    Farmers grow things, not just food, they grow drugs, tobacco, flowers, stock to sell to other farmers. I'm not suggesting you don't know this, but I'm curious as non-economist as to how markets ensure a generous supply of food, rather than maximum profits for producers. Particularly given that food can perish quickly.

    As an aside, as an engineer I'd argue that the single biggest contribution to food supply was the invention of agriculture, the second biggest the invention of the mouldboard plough, still to reach some parts of Africa after 2,000 years! Most other major contributions were probably technological too. Maybe the cell phone will bring the next major advance in
    agriculture.

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  5. "how markets ensure a generous supply of food, rather than maximum profits for producers. Particularly given that food can perish quickly."

    Markets with competition (and the textbook examples are ag markets) provide food as a result of the profit motive, i.e., farmers want to make a profit and the best way to do so is to provide food that people want to buy. It's not through altruism or engineering.

    "single biggest contribution to food supply was the invention of agriculture,"

    Agreed -- and that invention was what gave some groups an advantage over other groups (hunter gatherers) such that the ag people could reproduce more and take over more area, i.e., be reproductively successful. This, again, makes sense in economic terms. Ag was not "invented" to provide more food for fun, it was about making life better for self and tribe.

    good point on the cell phone. It's done a lot for farmers whoa re seeking the best price for their food (and fishermen for their fish), e.g., http://www.economist.com/business/displaystory.cfm?story_id=E1_QTVSGTR

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  6. bad link. try this:
    http://tinyurl.com/yqotn9

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