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One Nation, Underfed

By Raj on 01/23/2012 in Uncategorized, featured with 1 Comment

This morning on DemocracyNow!, I got to talk a little about Newt Gingrich’s poisonous comments on Obama being the food stamp president. First, the facts. Under George Bush, the number of people on the Supplemental Nutrition Assistance Program (what food stamps are more properly called in the US) rose by 14.7 million. Under Obama, the number rose by 14.2 million. It’s true, however, that much more money is being spent by Obama. As part of the stimulus bill, entitlements rose to a whopping average of $134.
The entitlements help, to some extent, to dampen in the impact of poverty. And in the teeth of the recession, it’s hard to argue against strengthening the safety net when so many Americans were falling into it.

Which brings us to Gingrich’s racial coding of ‘food stamp president’. Larry Wilmore deconstructs this nicely on The Daily Show.

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Newt Gingrich’s Poverty Code
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While Gingrich’s comments are vile and reprehensible, the abandonment of the poor is wholly bipartisan. The fiasco over last year’s Child Nutrition Reauthorization Act demonstrates this amply. I wrote about this in 2010, arguing that, given the 100+billion dollar annual cost of hunger, a watered down $8 billion-dollar-over-ten-years bill to feed children was a bargain. The total amount that the government authorized: $4.5 billion, paid for by raiding the SNAP entitlement funds. Taking money from adults to feed their children is craven, but as Gingrich’s comments, and the rhetoric of deserving and undeserving poor suggests, our politicians are becoming increasingly Victorian.

Beneath this, the conversation that isn’t happening is, of course, about why poverty flourishes, and how to end it. As the documentary ‘Finding North’ – slug line: One Nation, Underfed – points out, that many hundreds of thousands more people want to be on assistance but can’t qualify. One in four children are food insecure in the US, and – I was shocked to learn – half of children in the US will be on assistance at some point in their lives. Hence the documentary’s title. The beautiful title track, written by The Civil Wars tells of a country that has lost its compass, and is having trouble finding north.

On Feeding 10 Billion

By Raj on 01/20/2012 in featured with 3 Comments

I’ve been working away on a big academic article on the “Green Revolution”, which I hope will be finished soon. Meantime, here’s a lecture based on the research so far, courtesy of the good folk at the Canadian Broadcasting Corporation. Listen here.

Ghana Has Something To Say To Us

By Raj on 01/16/2012 in Uncategorized, featured with 1 Comment

It’s Martin Luther King day in the US today, and I managed to catch King’s “Birth of A New Nation” speech on KPFA’s Africa Today show this evening. The full speech is here but if you’ve a few minutes, it’s always heartstopping to hear Dr King preach.

Africa Today – January 16, 2012 at 7:00pm

Click to listen (or download)

[Click herefor the KPFA player's own page]

It’ll give you goosebumps no matter how much you hear but, for the rushed, jump on in at 39:30, which is where he says:

Ghana has something to say to us. It says to us first that the oppressor never voluntarily gives freedom to the oppressed. You have to work for it….If there had not been an Nkrumah and his followers in Ghana, Ghana would still be a British colony. If there had not been abolitionists in America, both Negro and white, we might still stand today in the dungeons of slavery. And then because there have been, in every period, there are always those people in every period of human history who don’t mind getting their necks cut off, who don’t mind being persecuted and discriminated and kicked about, because they know that freedom is never given out, but it comes through the persistent and the continual agitation and revolt on the part of those who are caught in the system. Ghana teaches us that.

Nanny State vs Daddy Market

By Raj on 09/22/2011 in featured with 1 Comment

(A shorter version of this piece appeared on Marketplace today)

Bigger isn’t always better. By 2030, half of Americans won’t just be overweight, but obese. By then, nearly a fifth of our healthcare dollars will be spent treating the diseases that come with being bigger. Our lifestyles, rich in fat, sugar and inactivity, are creating a debt that’ll become the planet’s most expensive public health issue.

So what to do? One battle centers on how to make us better eaters and, especially, drinkers. Half of the sugar in US diets comes from sweetened beverages. Advocates of what gets called a soda-tax look like they’ve a strong case. Tax the sugar in the drink and the consumption goes down, right? Well yes, but a study from Northwestern University recently found that overweight people prefer diet drinks. You can almost hear the soda industry snickering.

But this oughtn’t to make us give up on the idea of taxation in the name of public health. Think about tobacco. A dollar tax on a pack of cigarettes makes some people smoke less, but that’s not the only thing we’ve done to curb smoking. We have changed regulation to target not just cigarettes but anything containing tobacco. We limited marketing to children. We’ve confronted the companies who profit from tobacco with a coherent public health push, and made them pay for their ill-gotten profits.

So why can’t taxes together with other ideas work with sugar? One in three kids born in America today will develop some form of diabetes, one in two kids of color. A meaningful soda tax – say a penny per ounce on sugary drinks – is an important part of a bigger policy strategy. We can, for example, take back the billions we spend subsidizing commodity and processed food production, and gives it to those most harmed by these products.

The food industry has responded by trundling out its experts – most notably Derek Yach, formerly an anti-tobacco hero at the World Health Organization, now a pro-Pepsi pundit at Pepsi – but also running adverts castigating soda taxes as a toll on the poor. “I can choose what to buy without help from the government”, offers TVs hapless and put-upon mother. That obesity is the result exclusively of a personal failing is a perception widely shared. As I argued in Stuffed and Starved, if the perception were true, you’d have a hard time explaining why Mexican teens are more overweight the closer you get to the US border.

So let’s just say that the individual interpretation of obesity is only part of the story. Advocates of a comprehensive public health strategy around obesity have to answer another charge -that they’re mongers of class war. This looks harder to evade – taxing food is always going to affect the poor disproportionately because poor people spend a greater proportion of household budgets on food than the rich. With poverty, energy dense foods become a rational way to “provide daily calories at an affordable cost”. As one researcher argues, “obesity is the toxic consequence of economic insecurity and a failing economic environment.”

But if that’s true, a soda tax sounds like it’s blaming the victim, part of a culture war between the rich who can afford not to drink Coke, and the poor who can’t afford anything else. And, certainly, if the move to tax soft drinks were an end in itself, then I’d want nothing to do with it. There’s far too long a history of culture war around food, with everything from white bread to Coca-Cola conscripted into a great battle over class and identity.

That said, if a soda tax can work as part of a bigger programme to rein in food companies and provide real choices to everyone across the food system, I’m all for it. That a tax falls disproportionately on the poor is reason to worry, of course. But tobacco taxes are like that too. What’ll make the difference is whether the tax is part of a bigger project to make the food industry pay for the health costs that will fall disproportionately on poor people. Ultimately, what we need an end to is not soda, but poverty. That’s a conversation long overdue.

In the meantime, though, don’t hate the soda tax. Local and regional governments are already experimenting with it, and the sky has yet to fall. This isn’t the nanny state as much as it is a response to the wild excess of Daddy Market. It’s just leveling the playing field back away from big food, so we’ll have fewer big people.

Glencore’s Economics Lessons

By Raj on 05/5/2011 in Uncategorized, featured with 2 Comments

Reposted from The Guardian.

What does it take to make the food speculators at Goldman Sachs look like they’re playing for lunch money? A secretive Swiss-based company, and one of the world’s largest commodity trading firms, knows. With its initial public offering announced on Thursday, Glencore – a multibillion-dollar mining, energy and food trader that will soon list in London and Hong Kong – is the envy of Wall Street. When Goldman Sachs was floated, the then CEO Hank Paulson made off with $219m. Glencore’s chief executive, Ivan Glasenberg, has already earned the moniker “The Ten Billion Dollar Man” for his share of the bonanza.

Glencore will be the first company in 25 years to make the FTSE 100 on its first day of trading, with an estimated valuation of about $60bn. The company has had an average return on equity of 38% (compared to Goldman Sachs’s 12%). Its base in the Swiss town of Baar has freed it of even the minimal regulation US-based companies entertain. Not by accident does Glencore find itself in Switzerland. Like the mining and oil trading company Trafigura, Glencore is a descendant of the Marc Rich group. Rich fled the US in 1983 after being indicted by a federal prosecutor, Rudolph Giuliani, for tax evasion and trading with Iran (though he was pardoned by Bill Clinton). As Marcia Vickers reported in a Businessweek exposé: “Rich’s philosophy is that no law applies to him.”

In exchange for going public and raising money for further acquisitions, Glencore will now have to submit to the bared gums of UK regulators – whose rules are far less onerous than their US counterparts. With the funds from its flotation, the company looks set to dominate the fields in which it chooses to operate. Although primarily a mining and energy company, it has substantial interests in food – controlling around a quarter of the global market for barley, sunflower and rape seed, and 10% of the world’s wheat market.

In the weeks before flotation, Glencore allowed us a glimpse of the kind of power it wields. Last year Russia, the world’s third largest wheat exporter, experienced a drought the like of which had never been recorded; fires damaged tens of thousands of acres of cereal.

Glencore has now revealed its traders placed bets that the price of wheat would go up. On 2 August Glencore’s head of Russian grain trading called on Russia’s government to ban wheat exports. Three days later, that’s what it did. The price of wheat went up by 15% in two days. Of course, just because a senior executive at one of the world’s most powerful companies suggested a course of action that a country chose to follow doesn’t mean Glencore made it happen. But happen it did, and the consequences rippled round the world.

At the time, Mozambique experienced a massive uprising in response to increased food and fuel prices. Protests were organised via text messages and, in actions that foreshadowed those of governments in the Arab spring, the Mozambican state responded by shutting down text capability for pre-paid phones and sweeping up hundreds of protesters. Over a dozen people died, many were injured, and millions of dollars of damage was caused. It’s safe to say that tens of thousands were pushed further towards hunger as a result of the higher wheat prices.

According to the Financial Times, Glencore’s speculation didn’t necessarily bring riches to the company. Although the bets on the future price of wheat paid off, Glencore is so big that other parts of the company were tripped up. Its wheat customers in the Middle East had contracts that needed to be fulfilled, and the company was left scrambling after its Russian supplies were walled away.

But Glencore itself admits to prodding the boundaries of how markets ought to work – its flotation prospectus reveals that its Belgian agricultural subsidiary is embroiled in charges of corruption, allegedly involving inside information on European export subsidies.

This story may help economists who are having a hard time understanding how speculation works. In its recent thoughts on the global food market, the Economist defended speculators because “trading cannot drive prices up in the long term since for every buy, there is a sell”. By definition, for every smart or lucky trader who comes out with a yacht, some other trader loses their shirt. It’s all very nicely confined to the paddling pool of the futures exchange, and the yellow water needn’t taint the rest of the market, where the real demand is.

While the economic world ought to work this way in theory, it doesn’t in practice. Goldman Sachs has an investment structure that is only about buying food futures. Despite what the theorists say, speculators have profited from hunger. And there’s now mounting evidence from some economists that the rush of money into commodity funds is indeed driving prices higher.

But even these kinds of analysis assume that there are rational moves made by actors within the market’s confines. When financial powerhouses like Glencore are able to control and engineer the terms on which they are governed, economics has painfully little to say. Rather than being “price takers”, today’s financial behemoths are price makers. To understand the power at play, we’re better served by the insight of the French historian Fernand Braudel – that capitalism is, at its pinnacle, not about the facilitation of free exchange, but about its destruction.