Rising fuel prices increase the price of delivery. Rising demand for food from an increasing world population, and demand for protein rich foods from a rapidly urbanizing world, specifically from the emerging economies of China, India and Brazil increase demand for grains. A turn toward using biofuels increases competition for grains that would normally go to feed humans and livestock. Climate change and extreme weather events create a volatile agricultural market.
However, despite all these very obvious players, the amount of volatility seen in the food commodity markets is unprecedented. Agricultural production, though regionally volatile, has not experienced the same level of fluctuation as that of prices in the food commodities markets. Energy demand and production, though increasing, also do not exhibit the same behavior. Conflicts have negatively affected market prices in certain commodities, most notably that of cocoa due to recent political conflict in the Ivory Coast, but, the large ag-producing countries of the United States, China, India and Brazil have experienced no such disruptions. In fact, China and Brazil, despite a growing population and experiencing an expansion of the middle class, are still largely able to maintain food security.
In short, demand is rising, though not volatile. Supply also, is rising, though not volatile. One can make the argument that volatility in the oil markets is spilling over into grain commodity markets, but biofuels still only account for a small percentage of energy use. These factors do little to explain the large fluctation of the of the food commodity markets that we are experiencing today.
According to a UN Conference on Trade and Development report
• “these factors (rising food demand, biofuels, climate change) alone are not sufficient to explain recent commodity price developments; another major factor is the financialization of commodity markets. Its importance has increased significantly since about 2004, as reflected in rising volumes of financial investments in commodity derivatives markets – both at exchanges and over the counter (OTC). This phenomenon is a serious concern, because the activities of financial participants tend to drive commodity prices away from levels justified by market fundamentals, with negative effects both on producers and consumers.”-UNCTAD, 2011
I am not an economist. Through my limited understanding of futures markets, I think that what I understand is this: Prices of commodities are usually set on a supply and demand basis, with considerable elasticity. If one wants to buy gold, for example, demand and supply work to set prices. If one wants to take advantage of cheap gold now, all one has to do is buy and store to sell it later. The storage costs must be rolled into the final resale price. With oil and agriculture, the model is similar, but these commodities can only be stored temporarily, before they are unsalable (rot). Thus, as there is little to hedge against future risk, speculators will buy contracts for future, as yet unproduced, goods at set prices. This practice is not uncommon and was originally conceived to protect American and European farmers from risk and to insure consistent supply and price in the market.
What is different now is that interest prices are rolled in based on the length of contract, linking worldwide financial markets with the prices of commodities and distorting the true supply and demand relationship. As futures, by definition, are conceived to protect investors from risk, they are a perfect target for large hedge funds, which protect large investors from long term risk. The tying of interest rates into commodity prices means that end prices will fluctuate wildly with the market, while protecting investors from losing their shirts.
One important way that hedge funds minimize long term risk, is thorugh machine trading. Computers and mathematical models available market information, predict future fluctuations and sell when necessary. What this does is insert an even greater level of volatility into the market. Sudden sales of commodity futures will induce other funds to sell as well, creating a herd effect of commodity sales that has little to do with true supply and demand models. Imagine how flocks of birds or schools of fish move in response to one change in direction by a member of the group and you can get an appreciation for how machine trading works.
We are already see the effects of the financialization of food commodities. There was an unprecedented rise in food prices during the period of 2000-2007. The financial crash of 2007, brought in part by the activities of the very same financial players that are driving food prices up, saw a drop in prices, but as the market rebounds, prices are increasing once again, now higher on average than they were in 2007.
Der Spiegel recently penned an excellent article on the rising price of food. In it, they spotlighted scumbag of the week, Alan Knuckman. Mr. Knuckman and a host of other US and worldwide speculators are unconcerned as long as the money is flowing to them. To Mr. Knuckman, he could be investing in GM, a new chain of box hardware stores, big pharma, copper, oil or food for kids, it’s all the same as long as it brings him a profit. In fact, he is quoted as saying, without a hint of irony, “the age of cheap food is over. Most Americans eat too much, anyway.” Yep, these dirtbags are just like the rest of America, blind to whatever happens outside their own gated communities.
Rising food prices are not a problem for Americans. In fact, we only use, on average, 13% of our income on food. In places like Kenya, however, food can consume nearly 100% of a household’s monthly income. In Kenya, food must be imported to account for shortages due to underdeveloped ag and transportation infrastructure, which prevents Kenyans from protecting themselves against extreme weather events and disruptions in supply. Even a 1% shift in the worldwide price of food can spell death for an Kenyan infant. What we have seen, however, is not a 1% shift, but rather a 71% increase in the worldwide price of grains since 2007. In Kenya, the price of corn meal has shot up 100% in the past five months. To Knuckman, this is just “an undesirable side effect of the market,” kind of like having to drink coffee that sat in the pot too long and turned bitter.
It would be unconscionable to the US government to allow China to build a military base in British Columbia or Mexico, let alone in Southern California, yet our largest deployments of military might sandwich China between Japan/Korea and Afghanistan. In fact, besides the smallest of states, there are very few countries where we haven’t yet set up shop, which of course include North Korea and Iran**.
Americans love to talk of freedom, but largely (in my opinion) have little clue as to what the word means. Yet, while we proclaim to cherish the often ambiguous concept of “freedom” for ourselves, we deny it to much of the rest of the world by posting weaponry wherever we see fit. Politically, guns in the backyard of a sovereign state castrates that state on the world stage, not to mention creating an environment of dependence on the US to assist in time of military need. The US attitude toward the rest of the world is akin to a mafia led extortion racket, of which Tony Soprano would be proud.
Clearly, though, my opinions on military deployments are not so simplistic, but I felt this an appropriate post for a day which, ironically, celebrates independence from a colonial master. It is a deep and complex issue and I am certainly not going to suggest otherwise. One can argue that some deployments are necessary and do, in fact, contribute to the greater good. However, we, as Americans, must remain aware of the great potential for harm in spreading our influence around the world and continue to question the motivations and aims of the powers that be.
** The data I used to create the map on the left was from 2010, before our incursion into Libya.
The 2011 Department of Justice Human Trafficking Report has recently been released. It provides country by country profiles of human trafficking and slavery for every country on the planet, and ranks them according to the level of effort given by governments to control the problem of human trafficking and slavery. There are four levels, Tier 1 being the highest (proactive effort) and Tier 3 being the lowest (no effort at all). Naturally, the United States, the author of the report and the creator of the ranking system, ranks at Tier 1.
The report, though, bluntly describes the situation of human trafficking and slavery in the US:
“The United States is a source, transit, and destination country for men, women, and children subjected to forced labor, debt bondage, document servitude, and sex trafficking. Trafficking occurs for commercial sexual exploitation in street prostitution, massage parlors, and brothels, and for labor in domestic service, agriculture, manufacturing, janitorial services, hotel services, hospitality industries, construction, health and elder care, and strip club dancing. Vulnerabilities are increasingly found in visa programs for legally documented students and temporary workers who typically fill labor needs in the hospitality, landscaping, construction, food service, and agricultural industries. There are allegations of domestic workers, foreign nationals on A-3 and G-5 visas, subjected to forced labor by foreign diplomatic or consular personnel posted to the United States. Combined federal and state human trafficking information indicates more sex trafficking than labor trafficking investigations and prosecutions, but law enforcement identified a comparatively higher number of labor trafficking victims as such cases uncovered recently have involved more victims. U.S. citizen victims, both adults and children, are predominantly found in sex trafficking; U.S. citizen child victims are often runaways, troubled, and homeless youth. Foreign victims are more often found in labor trafficking than sex trafficking. In 2010, the number of female foreign victims of labor trafficking served through victim services programs increased compared with 2009. The top countries of origin for foreign victims in FY 2010 were Thailand, India, Mexico, Philippines, Haiti, Honduras, El Salvador, and the Dominican Republic.”
Human trafficking is a global market. Some countries supply modern day slaves and some countries demand their services and profit off the buying and selling of human beings. Clearly, developed countries with their vast financial resources and demand for cheap labor facilitate human trafficking by expanding markets for sex work, domestic servants, construction and agriculture. Until the US is willing to drop conversations on “illegal immigrants” and start facing the real questions of wage slavery and human exploitation, the situation will never change.
Included is a map of country rankings worldwide, which I have posted up to the left. It would have been helpful to include a map of estimated numbers of people enslaved in each country as well, but this obviously would not bode well for developed nations nor for the citizens which are complicit in insuring that more people are enslaved in the 21st century than in any other time in human history.
Numbers of confirmed dead continue to increase. Numbers of reported missing have been decreasing in Iwate and Fukushima prefectures but are steadily increasing in Miyagi. For the first time since the event, the ratio of missing to dead has dropped below one. It is disturbing, however, that reports of missing friends and family continue to pour in even though more than 6 weeks have passed since the first earthquake.
Refugees continue to be concentrated in the three hardest hit prefectures. While overall numbers have dropped significantly, a constant flow of refugees being shuffled from one center to another keep refugee numbers in some areas constant.
UPDATE: News just came that a magnitude 7.4 earthquake just hit Miyagi Prefecture at 10:32 EST.
As of today, April 7, 2011, the numbers of confirmed dead continue to gradually rise though the number of people reported missing have begun to flatten. New reports of missing individuals continue to be reported to Japanese police, though the ratio of dead to missing has been decreasing.
In total, as of today, 12,608 people are confirmed dead and 15,073 individuals are still missing.
Reporting of number of refugees by prefecture has become spotty, but the worst appears to be over. As of today, Miyagi Prefecture only reported 58,000 refugees, as opposed to a high of 320,000 just two weeks ago. The numbers of refugees in Iwate and Fukushima have remained unchanged for the past two weeks.
Finally though, the ratio of dead to missing has begun to decrease, indicating that confirmations of the dead may slowly be trickling in, while reports of missing loved ones have finally abated.
The refugee situation, however, is still dire. Nearly 200,000 people have yet to return to any type of home, and continue to languish in public shelters under what must be incredibly challenging conditions. Reports indicate that the delivery of supplies has improved in recent days, but Japan’s refugees still suffer under a blanket of government and bureaucratic inefficiency. It has been said that medical supplies brought in on helicopter were refused in the North East because landing the craft at a local airport would violate established buraucratic rules.
Gasoline reserves have only until recently been loosened, because rules state that Japan must keep a 70 day supply. Using the gas reserves given the present demand in the north east would decrease the supply to only 45 days. This, of course, causes one to wonder why Japan keeps reserves to begin with.
Despite Japan’s predilectin toward major disasters, the weakness and unneccesary rigidity of the central government of Japan has become painfully obvious to all. A government which feeds off keep the statu quo at all times is ill equipped to deal with sudden catastrophic events.
Despite government inefficiencies, the people of Japan deserve credit for coming together and providing relief where it can be provided in a civil and orderly manner. While this phenomenon of cooperation and civility is certainly not restricted to Japan, everyone is to be commended. However, the affected residents of the northeast will face incredible challenges for years to come.
I would like to turn something like this into a publishable paper. If there is anyone who would wish to collaborate, please feel free to write me.
In 1959, the renowned American anthropologist, George Murdock, published “Africa: Its peoples and their culture history.” Despite having little experience in Africa, Murdock used available resources to create a comprehensive picture of the distribution of ethnic groups throughout Africa.
The study of ethnicity in any context is fraught with inherent difficulties. Ethnicity is fluid, with members of ethnic groups defining and redefining their respective ethnic groups in response to personal, economic and cultural changes. Marriages can change ethnic definitions, the attraction of certain social services can induce changes, and the need to band together against common enemies can prompt the formation of new, unseen ethnic groups.
The American model is a prime example. Whereas 70 years ago, the United States provided home to a number of ethnic subgroups such as Poles, Ukrainians, Irish and Germans, we have boiled down our ethnic definitions to create a comprehensive group of white Americans, largely defined in contrast to that of marginalized minority groups. Similarly, people of Asia, Africa and worse yet, “Muslims”, seen through the lens of European societies, are often classed into the same ethnic group, despite having little relation to one another historically.
To top this off, any geographic assessment of ethnic boundaries can only be viewed cross-sectionally, spatial boundaries of ethnic groups subject to adjustment in response to temporal factors such as migrations, warfare, weather events and economic opportunity.
Despite these limitations, Murdock’s perhaps naive map remains an important and unique resource for Africanists. Assessments of spatial distribution of events within Africa are plagued by difficulties presented by the present political boundaries. These boundaries often inefficiently reflect the distribution of ethnic and social groups, and more reflect the exploitative priorities of colonial powers and, to a lesser extent, obstacles of topography such as rivers and impassible mountain ranges.
Murdock lists no less than 835 ethnic regions, likely largely characterizing distinct linguistic groups. He likely overlooks linguistic and cultural variation within these defined groups, and, of course, lacking the benefit of large scale surveys, partitions groups with little regard for the myriad ways in which humans identify themselves. I can safely say that he gets it wrong in Malawi, listing only three ethnic boundaries in a country that lays claim to at least 20 self-identifying groups.
Incredible. For a continent that houses less than one sixth of the world’s population, the level of human variation is staggering. If Africa were to establish it’s national borders based on ethnic or linguistic identification as Europe has, the number of resultant countries would dwarf that of the number of countries of the present world combined.
Murdock and Modern African Conflict
Using the ACLED database, I counted conflict events within each of Murdock’s spatial designations. I did this to obtain a finer level of the distribution of conflict, and to likely obtain a more realistic picture of the extent of conflicts, which are sometimes (but certainly not always) waged along ethnic lines. What we get is the two maps below, one being conflict events based on present state borders, and the other on Murdock’s map. Blue indicates low numbers of conflict events, red indicates high numbers.
The difference is striking. Looking closely at the map, one can see that conflicts events largely occur within Murdock’s ethnic boundaries. Now, before one jumps to the conclusion that all conflict in Africa is ethnically motivated, conflict events often occur near rivers or state boundaries that are set by rivers so it is no surprise that these maps might match up. Also, generating any type of higher level partitioning of geographic areas will result in a more informative map. However, these results should at least inform future analytic methods, based not on existing political boundaries, but rather on unseen local delineations, some of which may or may not be readily apparent nor accessible.
Performing a hot spot analysis on the data to find areas of clusters of magnitude, in this case event counts, that would be higher or lower than expected, given the counts of a region’s neighbors. I also included a count rendering of the respective counts of each area. I was able to produce the following:
Conflict events are largely concentrated along a swath that spans the southern region of Sub-Saharan Africa, with spatially sparse events occurring in the west. The largest number of events occurs within the borders of Zimbabwe, nearly all of which have been violent actions against civilians by a repressive and brutal government.
Thanks to Prof. Nathan Nunn at Harvard for providing a shape file of the Murdock map.
High res versions of the graphics on this page:
It what was a landmark triumph of science over warfare, Dr. Louise Reiss single-handedly put an end to nuclear testing in the United States in 1959. Collecting more than 300,000 baby teeth from the St. Louis, Reiss was able to demonstrate that the levels of radioactive agents in teeth post nuclear testing were significantly higher than before. The implication was that fallout from nuclear testing was entering the food supply and placing the American population at elevated risk for a host of negative health outcomes. President Kennedy, recognized the results of the study and successfully worked in a worldwide ban on atmospheric nuclear testing with the cooperation of the Soviet Union.
One can only assume that Reiss’ study, had it been performed in 2011, would have been widely discredited and decried as fabricated science and a threat to national security. Thankfully, the powers on both sides of the Cold War saw fit to put human health above the ability to wipe out all life on earth. The data and samples collected from her study, continue to this day.
As if to say that race doesn’t matter in the US, the New York Times, using block level Census data, has come up with a sweet online app to explore the distribution of racial groups in the United States.
Still waiting for the huge block level data dump for the rest of us data nerds.
Thankfully, our elected representatives have saved the day. They have said NO to asking that the wealthy pay their fair share for government services. They have said NO to government enslavement of the American people and YES to letting the free market continue enslaving the American people. The private sector does a better job of controlling people’s lives anyway. Good work.
Income inequality in the US is at an all time high. The average American worker, assuming he has a job, makes less than he did a decade ago, despite Mr. Bush’s sacred tax cuts for the wealthy. The wealthy, on the other hand, have made some of the biggest gains in history indicating that tax cuts for wealthy people do, in fact, work. We have lost more jobs under Bush’s tax cuts than at any single time since the Great Depression. And somehow, this is all OK and we’re supposed to believe that keeping disastrous economic policies in place that even a tax hound like Reagan would balk at, is somehow going to make the world a better place.
The Famous Gini Coefficient
The Gini Coefficient is a measure of income inequality. The larger the coeffiecient (closer to 1), the greater the inequality. Below is a map of the Gini coefficient for all counties in the Continental United States (thanks to data compiled by this man). Remember, high==bad, low==good. In this picture, red mean high levels of inequality and blue means low levels of inequality. The Gini coefficient is highest in largely African-American counties in the Southern United States and throughout Appalachia. It is appalling that there are counties in the United States that have a level of income inequality that’s seen over the poorest countries of Africa and Central America. In fact, the United States as a whole is only a step above the Ivory Coast, one of the poorest countries on the planet.
Perhaps, not coincidentally, the South, while not only a bastion of economic segregation, is also an area of low taxes on the wealthy (some areas have no property tax) and high sales tax. I don’t know whether there is a causal link between low taxes on wealthy people and inequality, but it’s worth exploring. I bet it’s true. If it’s true that all politics are local, then this preferential treatment given to the wealthy that exists throughout the South should be a broad indicator of the success or failure of tax policy countrywide.
At the very least, low taxes on wealthy persons means underfunded schools, exacerbating a cycle of low education, low skills and poverty which continues for generations. Low taxes on the wealthy mean low accountability on a class of people that, worldwide, routinely operate in their own interests, seeing the masses as nothing more than a means of fattening their stock divideds. Low taxes on the wealthy means poor health infrastructure. People who are not healthy cannot work to their full potential, creating a cycle of subsistence and dependence on government services, imprisonment and a state of poverty than’s handed down from generation to generation.
So thanks, Mr and Ms. Senators. Thanks for acting in our interests.