At the Becker-Posner Blog, the authors tackle rising food prices and the latest Neo-Malthusians concerns that the world is reaching the limits of the earth to produce food. Curiously, both cite the thoroughly flogged old Neo-Malthusian book, Paul Ehrlich’s The Population Bomb, but no current examples.
Gary Becker writes to claim the Neo-Malthusians are wrong, again, and besides, the current high prices, “has nothing to do with population growth, and is only a little related to the rapid expansion in world incomes in recent years.” Instead, he said:
Rather, the boom in petroleum prices and subsidies to ethanol and other biofuels are the most important forces explaining the recent increase in food prices. Both the sharp run up in oil prices, and the continuing subsides to ethanol production in the United States, and to a lesser extent Europe, induced an increasing diversion of corn from feed and human consumption to the production of biofuels. The main goal of the diversion has been to produce more ethanol as a substitute for gasoline. During the past year, one quarter of American corn production, and 11 percent of global production, was devoted to biofuels, and the US contributes a lot to the world corn market.
The huge increase in petroleum prices also pushed up the cost of producing foods, and hence food prices, since energy is an important input in the production of fertilizers and agricultural chemicals.
Richard Posner asserts that Malthus’s analysis is sound, given his assumptions, but his frightening forecast — and that of the Neos — failed to result because of technological and social progress.
Posner also links higher food prices to biofuels and economic growth in China and India. The supply response to that increased demand for food has been constrained by the high cost of fuel. We may be seeing the beginnings of an “attenuated Malthusian response”, Posner said, in countries where food riots lead to increasing subsidies for urban consumers and export restrictions on domestically-produced food, which limit rural income and dampen the domestic supply response.
Both Becker and Posner trace poor policies to the political clout of urban consumers in developing countries and rural agricultural interests in among developed countries, and neither shows much cause for optimism.