The Washington Post noticed the Niger famine and in the opinion of one aid bureaucrat (currently on sabbatical) were completely wrong in almost every detail. An article in Thursday’s Washington Post by Craig Timberg claimed that “the rise of…

Owen, have you read Peter Griffiths “The Economist’s Tale”? There are two crucial points he makes here:

1. The *expectation* of rising prices creates an incentive to hoard, taking food off the market just when it is most needed.

2. The production period for food is the growing season. You can have all the incentives you want, but food can’t be produced faster than it takes to grow, and it can’t be produced at any speed in a drought. Given this, the price signal needs to be incentivising traders to *import* food, which is not the same as producing it, and which they will only do if there is a well-ordered market to sell it in plus the expectation that they won’t be lynched as profiteers.

Deregulating food markets is the correct thing to do, but shock-therapy deregulation will reliably cause famines because of the hoarding incentive. You can’t make the simple price-signal argument without very detailed knowledge of the financial and industrial structure of Niger’s food industry – this is Peter Griffith’s whole subject. You also appear to be assuming the existence of “stockpiled food” to be released; as far as I understand it, the non-existence of this stockpile is a large part of the problem because usually shock-treatment liberalisation programs demand that governments stop interfering in the market by maintaining these stockpiles (I don’t know whether this was part of the story in Niger, but the IMF created an unnecessary famine in Malawi once by this means).

La hambruna que está asolando Níger y otros países africanos, además de constituir una enorme catástrofe, está poniendo a prueba la capacidad de respuesta de los gobiernos, organizaciones internacionales y ONGs y las soluciones teóricas que div…

The amount of money spent in the EU on agricultural subsidies is larger than the GDP of sub-Saharan Africa. Each French cow earns more per year than a random Niger farmers does. These subsidies put African farmers at risk when EU farmers dump their artificially cheap goods onto the world market. If the EU and US were to eliminate their agricultural subsidies, the agrarian economies of Africa would be better off.

Niger is also rich in uranium, coal, iron ore, tin, phosphates, gold, molybdenum, gypsum, salt, and petroleum. The CBR index demonstrates a recent world trend of increasing commodities prices. This should have been a boon for resource rich third world countries like Niger. With a little foreign capital and a lot of domestic labor, Niger could be considerably wealthier than it is and a lot less unemployed. At a foreign direct investment level of 0.8% of GDP, however, Niger is a poster boy for anti-globalization.

The most famous example, analysed by Amartya Sen, is the famine in Ethiopia in 1973.

The “Hidden Famine” of Ethiopia in 1973 was not caused by a free market. The market in Ethiopia under Haile Selassie was far from a free. In The Emperor, Ryszard Kapuscinski describes in considerable detail the crushing feudal taxes imposed on enserfed peasants farmers.

Like many other African countries, the Ethiopian state stands between the farmer-producer and the food-buyer. All farmers must submit their crops to the agricultural board and sell at a price dictated by the state. In theory, this is to protect the farmers from the hazards of an unbrideled market. In practice, the board is a tax and an opportunity for graft. This is not free trade.

As I explained before, in this case the failure of the harvest in one region, Northern Wollo, meant that those communities could not afford to buy food which was being produced elsewhere in the country – not because there was not enough food, but because the incomes of that group had fallen too low for them to buy it.

Incomes in Wollo were low because the Emperor was using extortionate taxes to subdue an insufficiently cooperative province filled with people who were of an inconvenient ethnicity.

Another example is Bengal in 1943.

Here again, Bengal was not an example of a free market: salt taxes. And the hedge of thorns on the border of Bengal gave physical expression to Her Majesty’s mercantile hostility to free trade.

‘43 was also a war year.

From an economist’s point of view this is significant because it is not, strictly speaking, a “market failure” if a person cannot buy a good because they are too poor to afford it. The inability of those people to buy food is what you would expect in a free market. A community has a whole might produce enough food, but there might be people whose initial endowment is so low that, in the face of a negative economic shock, they do not have economic entitlements that enable them to eat the food that is being produced.

Compared to Wollo, Djibouti had a freer market. During the ‘73 drought in nearby Wollo, there was no famine in Djibouti.

Owen replies: Lucas: thanks. I actually don’t think we disagree much. I agree with you that Wollo in 1973 was not a free market; and that with different government policies, the people there would have been less poor. I think you agree with me that famines are not necessarily caused by underproduction of food – they are sometimes (possibly often) caused by a failure on the demand side, in which the starving are too poor to buy food. That demand side problem may be caused by a natural catastrophe (eg harvest failure) or by government policies, or some combination of the two. (We might disagree about whether it could ever be caused by natural catastrophe alone. I think in principle it could.) But if and when such a failure occurs, the result that some people are then too poor to eat is not, in itself, a market failure. (Markets do not supply goods to people who do not have sufficient economic entitlements to consume them.)

Clearly, if governments pursued policies more generally over the longer term which created the conditions for economic growth, then the chance of anyone falling into this position would be much smaller, so in that sense you could argue that all poverty and hunger is the result of governments failing to do what they should (and I think this is basically true, as I suspect you do too.) But on that view, it is almost a tautology that all hunger (and all poverty and all disease) is caused by government policies; but that analysis doesn’t offer any very interesting insights into the particular circumstances of a particular food shortage. Leaving aside the more general point that nobody would be poor if governments did a better job, my point was about the specific circumstances of this food shortage. Is it necessarily the case that food is being under-produced? No. Is it necessarily the case that the poor do not have access to food because the government is interfering in the market? No. It is possible that sufficient food is being produced, and that well-functioning food markets would nonetheless not supply food to the very poor? Yes. Is this what is happening? I don’t know.

The Washington Post article, The Rise of a Market Mentality Means Many Go Hungry in Niger, has generated a lot of heat in the blogosphere. Here’s an extract:In a country adopting free market policies, the suffering caused by a poor harvest has been dr…

Actually Anthony does no such thing. He merely says that price controls would make matters worse.

Owen replies: My comment was intended to summarize the arguments made by all the free-market bloggers taken together, not to claim that each blogger had made each of the points. I can see that you could, in principle, interpret the sentence as meaning that each blogger had made all of those points, but I don’t think that is the most natural reading. Nonetheless, I am happy to make it clear that I am not saying that Anthony Batty necessarily agrees with all of the points made by other bloggers, and I am sorry if anyone read it otherwise. Actually, as you say, Anthony Batty’s article is not too bad; and the Globalization Institute has called for donations to be given to DEC for Niger.