Commodity Price Inflation—Posner

Becker’s focus is the impact of food price inflation on the poor, and I have no disagreement with his analysis. I want to discuss commodity price inflation in general, and its political consequences, but I want to begin my discussion with Becker’s point about the effect on food policy of the greater political clout of urban than of rural populations. That greater political clout has been a factor in government policies since Rome provided its citizens with free bread. The concentration of population in a city, especially in a nation’s capital, makes urban residents a potential threat to political stability. It does this by facilitating large-scale demonstrations, riots, and other mob action (not only because there are many people to fill the streets, but also because information spreads very rapidly in a city, facilitating the coordination of a large group of people), with consequences—which can include bringing down the government—that we are seeing in the Middle East and North Africa today. Hence it makes political sense for a government to provide more generous food subsidies to urban than to rural residents even though the latter are needier. 

It appears that rapidly rising food prices have been a major factor in the recent and continuing unrest in the Arab countries. As Becker emphasizes, food prices are a big part of the budget of families in poor countries, even of urban residents, with their higher incomes. In fact the demonstrators who brought down the Tunisian and Egyptian governments were complaining vociferously about surging food prices, though they had other serious complaints as well. During the Egyptian crisis Mubarak promised higher subsidies in an (unsuccessful) effort to quell unrest. Other governments in what used to be the Third World will doubtless take the hint, and increase food subsidies particularly for city people, who are far more likely to bring down a regime than rural people; and so the inefficiencies and hardships that Becker points to as consequences of economically unsound food policies are likely to become even greater. 

The broader point is that commodity price inflation has inescapable political consequences. A characteristic of commodity prices is that they can and often do change very rapidly and steeply, and if the commodities are consumer commodities these changes are quickly observed and cause alarm. A notable example is gasoline. Prices of gasoline change rapidly, and like other consumer commodities purchases are frequent, so that the consumer is kept continuously aware of price instability. Prices for food and fuel are excluded from the usual measures of inflation because of their instability, but they contribute to measured inflation (if they continue rising) indirectly because they are inputs into other goods and services, as are many other commodities whose prices have also been rising. The rise in these prices reflects worldwide increases in demand, especially in rapidly growing economies such as those of China, India, and Brazil, and concerns with inflation, against which investment in commodities is a hedge. 

If food prices keep rising, we can expect more unrest in the Third World and slower economic growth. The increased unrest, however, need not diminish long-run economic growth or long-run political stability, if it is the catalyst for the replacement of authoritarian regimes with more-democratic ones—though that can only be a hope, and not a prediction. Rising food prices thus may—or may not—have a silver lining.

Comments

[Gershon Aizikowich]

Sirs,

What do you think of some sort of real World Government?
What if UN/UNESCO or other international organization took over the oil resources found in the international waters instead of Russia and Norway having 'deal' last year? What if such body would take over the all world resources not located in any national boundaries like North Pole and Antarctica, international waters, fish and so on...
organize tenders for development and rule how much can be developed and what prices have to be (analogous to OPEC) and get part of the profit and direct it to poor countries and other World-important projects?

If you like this idea feel free to take/change/develop it and publish your new beautiful article.

Thank you,
Gershon

[Rosetta Stone]

The broader point is that commodity price inflation has inescapable political consequences

[nike lunarglide+2]

Forecasts of the world’s population only a few years in the future are generally quite accurate because the number of births and deaths during the next few years are largely determined by the existing distribution of the number of people at different ages.cxv

[shoes mbt]

A Healthy Way to Lose Weight

[منتدى]

very gooooooooooood

[Share Tips]

I read your post . it was amazing.Your thought process is wonderful.The way you tell about things is awesome. They are inspiring and helpful.Thanks for sharing your information and stories.
share tips

[John Covici]

As the British monetary empire dies, our food supply is in grave danger. Put price controls on food now, just as Franklin Roosevelt did in WWII.

http://www.larouchepac.com/node/18390

The approaching food crisis demands that the US government heed the warnings of Lyndon
LaRouche and follow in the steps of Franklin Roosevelt. Shut out the speculators
and fix food prices now.
http://www.larouchepac.com/node/18381

[MBT Sale]

Thanks for the cool badgees! When do we find out who the Petties nominees are???

[Commodity Prices]

This makes commodity prices far more subject to the destabilizing effects of speculation than most other investments.

[oakley sunglass]

We are how proud how enviable! But we, if only spends freely the time, is only enjoys, does not struggle to strive for success, then we really calculated that has the youth?

[Discount Herve Leger]

Perhaps because they pay into it. I would imagine that those of us who are required by law to pay into Medicare or Social Security despite having a preference for providing for their own retirement would not take kindly to in addition get nothing in return.

[SEO Deeplinks]

Rob attended Santa Monica High School along with fellow actors Emilio Estevez, Charlie Sheen, Sean Penn, Chris Penn and Robert Downey Jr. As a small town boy, it took a while for Rob to adjust to the big city and for a number of reasons, including his good looks, he was teased mercilessly at school for being a "sissy." Rob Lowe Official Fansite

He married make-up artist Sheryl Berkoff on July 22, 1991 and the couple has two sons, Matthew Edward Lowe (b. Sept 24, 1993), and John Owen Lowe (b. Nov 6, 1995).

BB Code: [URL =http://www.yoursite.com]YourSite[/URL]

[URL =http://www.mymasonicsupplies.com]Masonic Supplies[/URL]
Masonic Supplies
http://www.mymasonicsupplies.com

[Share Market]

It was a awe-inspiring post and it has a significant meaning and thanks for sharing the information.Would love to read your next post too......

Thanks

Regards:
Share Market

[Share Market]

It was a awe-inspiring post and it has a significant meaning and thanks for sharing the information.Would love to read your next post too......

Thanks

Regards:
Share Market

[mbt online]

well this blog is great i love reading your articles.

[mbt online]

well this blog is great i love reading your articles.

[Commodity Trading Tips]

You are very welcome. Great post!!!Really i got informative post about the Commodity Price Inflation as you define.You can also check the Commodity Trading Tips trends on.

[jordan cool grey]

Thanks for sharing. This website is to I too have to help. Very good.

[günstige ugg]

Navy SEALs Anfang Mai möglicherweise durch die Mülleimer Stuffed rühmt seine / ihre Praxis nie machen uns Truppen "werden in deinen Augen groß." [url=http://www.uggkaufen.net/]günstige ugg[/url] , Well uns auf ihren Reihen in der "Inspire" news flash kubische, ing stärken Qaida am Ende in der Zeitschrift enthalten eine Art von Werbung für Mitwirkende in der Publikation "mit fast jedem Kompetenzen:. sei es Verlagswesen, Untersuchung, Bearbeitung, sowie von der Beratung", [url=http://www.uggkaufen.net/damen-stiefel-wholesale-34.html]Damen Stiefel[/url] bietet, Ahmadinejad consistantly die Tatsache, dass OUGHOUT beworben . Azine. schien, dass 9 / 11 Terror Gewalt, vor nicht langer Zeit in die düsteren Beachtung in der zehnten Hochzeitstag dieser Episoden danach können Sie noch einmal in seinem oder ihrem Vortrag in die OUGHOUT werden Führung. N. Allgemeine Richten Sie den zweiten Tag. Welche Gesprächspartner aufgefordert jede walk-out, weil der U. Azine. und viele weitere Delegationen.

[muska supra]

Now we have a great walkway that goes to the beach and to the canals that came from the partnership of community with government

[Timberland Boot Shop]

I'm interested in such offer,The sound quality in these podcasts is really poor. I feel bad about complaining about something that is free, but I think it is important.

[Cheap Moncler Sale]

Having higher numbers of occupants per existing structure doesn't bode well for selling off the homes having fallen or about to fall into the laps of bankers.All of the sci-fi stories pointed to a shorter work week, more leisure time and industries developing around increased leisure time coupled with the income to enjoy it. We have nothing like that in place or even in mind. Instead those desperate for any kind of job are to work longer hours for less pay and be appreciative for their opportunity.

[Cheap Air Max]

All of the sci-fi stories pointed to a shorter work week, more leisure time and industries developing around increased leisure time coupled with the income to enjoy it.

[Air Force One]

We have nothing like that in place or even in mind. Instead those desperate for any kind of job are to work longer hours for less pay and be appreciative for their opportunity.

[Christian Louboutin UK]

The bitter truth is that the employment prospects for a recent college grad are far more grim, especially full-time employment in their field of study.