This Thursday, Shapiro Visiting Professor of International Affairs, Dr. Nora Lustig delivered an insightful and detailed analysis of the recent surge in food commodities prices, but unfortunately little concerning recent declines.
Dr. Lustig made several interesting points, including a defense of the targeted removal of tariffs and price controls, a not-exactly bold move in front of an audience of mostly World Bank officials. Yet she managed to extricate herself from pseudo-embarrassment with the standard series of caveats: not all countries are the position to remove trade barriers, free markets should only last as long as the bubble, etc. Later she went so far as to emphasize the need for domestic social protection nets.
Libertarians, bear down your arms. In an audacious move to neutrality, Lustig amended even these amendments with concerns about the efficiency of cash transfer systems and the existence of practicable fiscal space.
In fact, the most controversial aspect of her talk seemed to be her reference to a study designed by Ivanic and Martin, two World Bankers who suggested rising food prices meant increased poverty in poorer nations. (Remember College Dems: the poor are both net producers and net consumers of food.) Thus some poor do get poorer, but most of the poor get less so.
As a member of the audience pointed out, the Ivanic and Martin study only accounts for staple foods, which means that some commodities surpluses aren’t included – for instance surpluses from coffee beans in Nicaragua. Apparently, small omissions can have a big impact on international monetary policy.
Does a net gain really win the day? General consensus at the event seemed to agree that we should be worried about those pushed even further into poverty by the crisis, regardless of any silver linings we might see (e.g. surprising Afghani counter-narcotic gains.) Those who have escaped from shortage do not absolve us of responsibility.
