Complications in globalized food supply
Scholars of the global food system unravel a vast web linking trade policy, public health, economic development, labor issues, supply chain logistics, and so on. The pandemic has already prompted states to break with the implicit rules underpinning global food governance, and changes in supply and prices have the potential to trigger a long term food-born crisis.
It wouldn't be the first of its kind. Less known than the 1973 oil crisis, but perhaps equally important, is the 1972 food price shock which fundamentally altered the structure of global markets. In a fantastically detailed 1995 article, HARRIET FRIEDMANN recounts the origins of the post-war "surplus food regime," and its disintegration in the early 70s.
From the article:
"As the dominant economic power after World War II, the United States insisted on international rules consistent with its own national farm support programs. New Deal farm programs of the 1930s were retained despite widespread awareness that they generated chronic surpluses. U.S. commitment to mercantile agricultural trade practices led to the sacrifice of multilateral institutions which were central to the larger U.S. agenda for liberal trade: the World Food Board Proposal, which provided for global supply management and food aid through the Food and Agriculture Organization, was rejected by the U.S. in 1947; the Havana Treaty creating an International Trade Organization was never formally submitted to Congress because it contradicted mercantile clauses in U.S. domestic farm laws; even the GATT excluded agriculture from its ban on import controls and export subsidies. Postwar rules did not liberalize national agricultural policy, but created a new pattern of intensely national regulation.
After two decades, the replication of surpluses led to competitive dumping and potential trade wars, particularly between the European Economic Community and the United States. But the real catalyst of the 1973-74 food crisis was the massive Soviet-American grain deals of 1972 and 1973, which permanently broke the dam separating the capitalist and socialist blocs which had contained the 'surplus food regime.'"
Link to the piece.
- "The sharp rise in prices of agricultural commodities in 1972-73 traces to five principal causes: a decline in world production of grains; rapid growth in the demand for meats in all developed countries; U.S. farm policies that discouraged expansion of soybean production; administrative lags and errors regarding export subsidies; and devaluation of the dollar." Another look at the 1972-73 Food Price Spiral, by John A. Schnittker. Link. For greater context: Alan Blinder catalogues the food price spiral alongside energy and decontrol as the sources of '70s inflation. Link.
- An FAO report on global food price inflation from 2006-2008. Link. And another FAO report on the causes and prevention of food waste. Link.
- "This article explores how the far-reaching plans of a World Food Board, advocated by the UN Food and Agriculture Organization under John Boyd Orr, were abandoned and supplanted by a new approach that focused on technical aid and the distribution of surpluses." Ruth Jachertz and Alexander Nützenadel on the multiple "visions of a global food system" developed between 1930-60. Link.
- Forthcoming from the University of Washington Press, Thomas Fleischman's Communist Pigs analyzes the trajectory of East German agricultural policy through the lens of the country's pork industry. Link.
Wealth taxes, savings, and labor supply
Northwestern PhD candidate MARIUS RING's job market paper analyzes the impacts of wealth taxation, exploiting uneven household exposure to wealth taxes after the introduction of a new wealth assessment tool in Norway in 2010.
"I find that exposure to wealth taxes has a positive effect on saving as well as a positive effect on labor earnings. For each additional NOK (Norwegian krone) subject to a 1 percent wealth tax, households increase their yearly financial saving by 0.04 NOK. This increase in saving is largely financed by increased labor earnings. My results imply that income effects may dominate substitution effects in household responses to (net-of-tax) rate-of-return shocks, which has important implications for both optimal capital taxation and monetary policy."
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- In the Boston Review, JFI's Paul Katz and our partner Leandro Ferreira write on Maríca, Brazil, where a "set of initiatives represents the most ambitious city-level response to COVID-19 in Brazil, and one of the most notable in the world." Link to the article. See also: Dylan Matthews' coverage of Maríca's basic income program and JFI's research on the program, with comment from Katz and our director of research Sidhya Balakrishnan. Link.
- A new paper on public debt and growth, by Michael Ash, Deepankar Basu, and Arindrajit Dube. Link.
- "Thirty-three percent of voters have already lost their job, been furloughed, placed on temporary leave, or had hours reduced. Black Americans are feeling the worst of the financial crisis with almost half (45 percent) reporting they’ve lost jobs, hours, or been put on leave." New report from Data for Progress. Link.
- How the Fed Managed the Treasury Yield Curve in the 1940s, by Kenneth Garbade. Link.
- Adam Tooze in the London Review of Books: "This is a global crisis, which affects virtually every community on the planet. And it has exposed stark differences between the major economic blocs, such that it is now more difficult than ever to understand how the thing we call the world economy actually fits together." Link. (See also: Tooze in Foreign Policy, and on his blog.)
- A report looks at Department of Commerce data to reveal import/export trends in masks and ventilators. "In February 2020, the value of U.S. mask exports to China was 1094.0% higher than the 2019 monthly average. In February 2020, the value of U.S ventilator exports to China was 292.2% higher than the 2019 monthly average." Link.
- From Abhijit Banerjee, Nils T. Enevoldsen, Rohini Pande, and Michael Walton: "In 2010, we informed a random set of Delhi councilors that a newspaper would report on their performance prior to the next elections. Using slum dwellers' spending preferences, we created a councilor-specific index of pro-poor spending. Treated councilors increased pro-poor spending in high-slum wards." Link. h/t Halah
- A new CEPR paper by Hye Jin Rho, Hayley Brown, and Shawn Fremstad provides a demographic profile of workers in frontline industries. Link. (See also: a similar project in the UK context, from Autonomy. Link.)
- "Using regional variation in bond payments to samurai and the introduction of railways in nineteenth century Japan, we find that together they are associated with persistent redistributive effects between regions and sectors." Sergi Basco and John Tang on credit supply and market access in pre-war Japan. Link.
- Suresh Naidu, Adam Reich, and Alex Hertel-Fernandez on the public opinion effects of the recent wave of teacher strikes. Link. See also their recent op-ed in the Washington Post about COVID-19 labor unrest, and Hertel-Fernandez's post for Phenomenal World.
- New article by Price V Fishback examines the history of social insurance and public assistance in the twentieth-century. Link.
- "Specific combinations of energy flows, material flows and stocks are responsible for services that support societal function and development. We provide a material service case study, which identifies the level of lighting experienced by urban Ancient Romans relative to that enjoyed by inhabitants of 1820s London (the Georgians). Our results show that the average Roman experienced 41,102 lm-hour/year, which is more lighting than the Georgian value per capita (at 35,698 lm-hour/year). In terms of fuel consumption, Georgians were four times more efficient than their Roman counterparts, but there was a trade-off between materials and energy, given that stock efficiency was 53 times lower than that of the Romans. This trend of improving fuel efficiency at the expense of materials appears to have continued into the 21st century, which holds important implications for sustainable development." Link. (See also: Brad DeLong on Thomas Jefferson's candle expenditures. Link.)