Welcome to Colombia
I won the academic lottery and got an all expense paid trip to Bogota, Colombia. All I have to do is watch a series of parasitology lectures in Spanish and report back to home base. A great deal, yes?
This is my first trip to South America and really, outside of barrios in the US, my first trip to Latin America. How did I miss this?
Bogota is completely amazing. 7 million people packed in a valley 2600 meters above sea level. The air is so thin that I feel more like 82 than 42, particularly if I have to climb a flight of stairs.
Crime is rampant in this city and the resident are more vigilant than any I’ve seen in a while, though I wonder how much is real, and how much is hype. For all the warnings the locals give, it feels a lot like being in the South in the crack years of the 1980’s. There are still more people on the streets at night here than in Blantyre, Malawi. I guess it helps that the lights are one, thanks to the generous graces of neighboring Venezuela.
What I’ve learned so far:
1. Colombia is a booming economy (7% growth per year) in no small thanks to the US’s addictions to coffee, cocaine, petrochemicals and agriculture. In 30 years, as the economy diversifies, Bogota will have a standard of living on par with any large American city.
2. Colombians reacted to a ban on the import of vehicles by developing their own auto manufacturing sector. Buses are fabricated by hand out of recycled parts and hand hammered sheet metal. The final touch is attaching a brand name of some actual auto company. Today, I saw a Chevrolet bus (none exists), a Mazda bus (none exists), and a Ford LTD bus (the LTD was a car, the first I eve owned).
3. Coffee in a coffee producing country is beyond words.
4. Latin Americans have no reservations about physical contact in public.
5. Gold work in Colombia far surpassed any in Europe by at least 500 years.
6. Coca tea is truly a cure all, at least, it cures ones tongue of feeling.
7. Shakira has black hair and is actually 3 feet tall.
Food Week Post 2: How a Few Guys on Wall Street Control the Price of Food
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 through 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 seeing 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.
In fact, futures markets in commodities are exploding with the number of contracts rising to never before seen levels over the past decade as can be seen in the figure to the right.
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.
Food Week Post 1: The Price of Food Will Kill Us All
I’ve decided that this is food week on this blog and have prepared a series of posts regarding the very dire situation of increasing world food prices. According to the Food and Agriculture Organization of the United Nations, world food prices have hit an all time historical high in 2011, and the trend shows no signs of abating. The prices of cereals, sugars, meat and dairy continue to rise as a result of climate change, insufficient production methods and rising demand for biofuels. Protectionist schemes such as US and European agricultural subsidies discourage the importing of food to developed nations, inhibiting the capacity for developing countries to improve agricultural infrastructure. Speculation on African and South American crop land by China, Korea and Saudi Arabia for future sources of grains intended for biofuels drive prices up even further. The refusal of the United States to develop strategies to combat and respond to climate change, continued economic policy that favors developed nations at the expense of the poor and the global grab for arible land will only insure that the situation becomes even more dire in the future.
The wealthy have little to fear from rising food commodity prices. It has long been shown that the wealthy are immune to the effects of famine and food insecurity, for obvious reasons. The lives are the poor, however, are extremely sensitive to changes in food prices. Even a modest increase shift in world food commodity prices can spell death for an infant born into poverty. Food insecurity also creates social insecurity, which can then lead to riots, social violence and ultimately armed conflict.
To explore this relationship, I took data from the FAO website for food commodity prices from 1980 to the present and merged them with the Armed Conflict Data Base (that I have written on before) and asked the question, do rising food prices influence the liklihood of conflict events?
I merged the ACLED data base with the FAO’s monthly food price index data, which includes prices indices for food, cereals, dairy, oils and meats. I then compared the two in a regression model to determine if any relationship exists between the number of conflict events in a month and the monthly prices of food.
The results were interesting. Overall food prices were not correlated with conflict events. Meats, dairy and oils, however, were. In fact, meat prices had an inverse relationship with conflict events, indicating that when meat prices increase, conflict decreases (filet mignon can save the world!). Dairy and oils, however, are positively associated with conflict events. Increasing milk and oil prices coincide with a rise in the number of conflict events.
Does this prove that food prices predict conflict events? In and of itself, no, though evidence here suggests that exporing this relationship is worth undertaking. In the next post, I will move on to regional relationships, isolating effects of food prices and conflict events in the major conflicts of the past 20 years, namely those of Afghanistan and those in the region of the Democratic Republic of Congo.
Todd Park for President: Open Data for the Public Good
That is why I’d like to introduce my new government hero, Todd Park. Todd is Chief Technology Officer at the Department of Health and Human Services and should be our next head of state.
Todd, through funding under the Affordable Health Care Act, is responsible for helping the HHS leadership “harness the power of data, technology, and innovation to improve the health and welfare of the nation.” Todd vision is simple. Several departments at all levels of government routinely collect data. As an example, the National Oceanic and Atmospheric Administration (NOAA) collects weather data from around the world. This data is not only essential for determining whether you should carry an umbrella to work tomorrow, but also essential to local planners, disaster preparedness, aviation and military planning. NOAA took the extra step of not only making the data available internally, but also has posted all of it on their website for use by anyone at no cost. That’s right, NOAA data is completely free.
The private sector, not willing to let an opportunity to make a buck pass, has siezed the opportunity to capitalize on this tax payer funded system to produce such heavyweights as The Weather Channel, weather.com, AccuWeather and your local news station.
Todd believes that the same model can be applied to the wealth of public health and medical data that the government collects anyway. He, while protecting the privacy of individuals, approaches businesses to develop ways to create new and innovative ways to create profitable opportunities for the private sector, putting people to work AND improving the public health in the process.
He doesn’t just want to offer it to them, he also wants to offer it to the rest of us as well, and wants to make sure that the data is absolutely free. This strategy not only benefits nerdy researchers like myself, but also creates entrepreneurial opportunities for anybody with a good, moneymaking idea.
Todd believes in what he does, and his successes have already been documented. On top of that, he’s an amazing speaker, perpperiong his impassioned sell of government public health data with a litany of Star Wars references. America needs to hear people like Todd Park speak, if only to get them excited about the things that government does right.
I was in New York City on September 10th, 2011. We had played a show in Williamsburg that evening, had ended late and considered staying in Brooklyn that evening. I had to work the next day, so I decided to make the two hour drive, sleep for 20 minutes and then go to work in the morning. When I got there (late, I slept more than 20 minutes), the office was in a panic and in my hazy, sleep deprived state, I could only make out the words “attack.” I poured a cup of coffee and sat down to read the morning news. I then figured out finally what had happened.
9/11 was an awful event, many people died, families were broken, New York City was in chaos, and the overall health of the American economy, which had been so strong previously, took a turn for the worse, in part leading to the terrible financial crash of 2007. Worse yet, 9/11 would usher in one of the worst political eras of American history, strengthening a cabal of right wing lunatics who lead us into two wars, curtailed civil liberties and turned America and sent American politics so far to the right, that we may never return even to the center. It was said that Osama bin Laden stated that one of his goals was to send the United States into a cultural and economic freefall and to militarily engage the US in the middle east. In that, the 9/11 attacks were incredibly successful.
The events of 9/11 were not surprising. The bombing of the USS Cole while docked at a port in Yemen occurred not even a year previous. 1998 saw the attacks on US embassies in Nairobi and Dar es Salaam. More salient, Khaled Sheikh Mohammed, one of the masterminds of 9/11, had personally funded an unsuccessful attempt at toppling the World Trade Center in 1993. These events, however, were quickly forgotten shortly after they occurred, the American attention span short, particularly when the body count is small.
Today the news is covered with impassioned and heartfelt stories of victims and their families, no doubt the echoes of 9/11 nearly 10 years after ring as loud as ever for them. The stories, however, of Americans who believe that 9/11 was an incredible “tragedy” (a gross misuse of the word, though I shan’t expect that CNN read Shakespeare) make me feel saddened for the living, certainly, though a little perspective is in order.
Nearly 3,000 people died in the attacks on September 11. More than 120,000 people have died in Iraq since 2003, due to conflict related events. Due to its non-existent data recording infrastructure, the number of civilian dead in Afghanistan will never be known but it must be well over 100,000. Memorials of 9.11 today, conspicuously leave out the incredible human losses that the world has experienced since the Iraq and Afghanistan invasions. At this moment, the names of the domstic victims of 9/11 are being read publicly, one by one. To read the names of the other victims of 9/11 all around the world would take nearly a week.
To leave these people out of discussions of 9/11 is to assume that domestic lives are more important and valuable than the lives of hundreds of thousands of men, women, children and elderly around the world whose only crime was to be born in a country which housed the enemies of the United States, or, in the case of Iraq, housed one enemy of the United States. 9/11 was not an attack on the United States. It was an attack on humanity. It was a continuation of a history of political bloodshed that takes it’s victims from those who are merely in the wrong place at the wrong time. The difference, unfortunately, was that it occurred here.
Happy Labor Day: Thank a Union
On this Labor Day, I would like everyone, in this climate of union villification and increasing deregulation, to stop and think about what unions have done for this country and why they are still relevant. To remind everyone as to the extent of union membership in the United States, I have created the two maps below that show 1) The total number of union members per state, and 2) the percentage of workers that are represented by a union. California, Michigan, New York, Washington State and Alaska (!) top the list in percentages. Nearly a quarter of all workers in those state are represented by unions. Arkansas and Mississippi… not so much.
Our unions are something to be proud of. Problems may be easier to report on than successes, but that doesn’t mean that the successes aren’t there. The power of collective action and worker representation is essential to a healthy democracy. Without it, business runs wild, eroding working conditions, fair wages and insured employment, but mostly taking advantage of a climate where individual workers have no represenation when things go wrong (and they do).
Back to School Sale
The University of Michigan is officially starting the school year tomorrow, though on this Labor Day holiday, the cafe where I do most of my work is filled with students and academics. I spend most of my life in an isolated bubble, plodding through books, working on data projects, occasionally writing on this blog and, when time permits, slogging through the mass of trash and nonsense left to me by four generations of relatives, a endless, massive burden that crushes ever fiber of my soul.
When people die, they should take all their crap with them.
However, this closed and silent world I live in often keeps me from remembering that humans do exist in a non-virtual world, sometimes they connect with one another, sometimes they even have conversations, some of which I happen to overhear from the neighboring tables.
These kids at this University are incredible. Their English is characterized by a total lack of regional character, the spaces between the words punctuated to crush ambiguity, and to project an image of standardization that allows them to safely maneuver a maze of job and business prospects, waving a bleached white flag that says “I will not embarrass you when I have dinner with your colleagues/parents/friends/whatever.”
It’s an English I have yet to master. In 42 years I still haven’t managed to expel the wash of obscenity and regional taint that occupy the vast battery of cultural symbols that betray any attempts to conceal my low-class upbringing.
Mostly, what impresses me about students here is their incredible ability to project an image of themselves. What they lack in worldly awareness they make up for in the power of self-definition. They sell and market themselves unabashedly, dressing themselves as a commodity, though a self=-interested one, on the open market, available to the highest bidder. Though the University of Michigan flows deep in my blood, I am constantly amazed of people who possess this skill of the defining, packaging and selling of the self, simple because I don’t possess it. I live and have always lived an ambiguous existence, never sure quite who I am and what I’m supposed to project, in character, language, academics and expression.
The defining of the self always seemed overly restrictive to me. Once one labels something as what it “is,” then, by definition, one also isolates it from what is “is not.” To me, this seems a waste of possibilities, though the precise definition of what one “is” is absolutely necessary for success in today’s com-modified, consumerist culture.
What strikes me, though, is the sincerity to which these people sell themselves. They play the parts without question, as if it never occurs to them that these motions which they go through are defined and standardized by an even more self-interested set of social actors, those who define the nature of language, dress and social codes. In this case, they are akin to Sarte’s waiter who acts in bad faith, but who’s motions insure his success in maintaining his function in society.
I must, however, get back to work.
RED: Save Dying Africans by Consuming More Useless Crap
The (RED) website explains their goals:
“(RED) is a simple idea that transforms our incredible collective power as consumers into a financial force to help others in need.
(RED) works with the world’s most iconic brands – including American Express, Apple, Bugaboo, Dell, Emporio Armani, Gap, Hallmark, Nike, Penfolds, Penguin and Starbucks – to make unique (PRODUCT) RED items, giving up to 50 percent of their profits to the Global Fund to invest in HIV and AIDS programs. Every dollar goes straight to people who need it, helping them stay alive so that they can go on taking care of their families and contributing to their communities.
Since it’s launch in 2006, (RED) has generated over $170 million for the Global Fund and over 7.5 million people have been impacted by HIV and AIDS programs supported by you (RED) purchases.
Buy (RED), save lives. It’s as simple as that.”
Free marketing rightists will rejoice, considering this a market based solution to the vast problems and criticisms of development aid. Proponents argue that (RED) is a simple consumer based effort that relies on the good will and charity of happy (and often liberal) shoppers on the prowl for Armani shoes, Starbucks coffee and (RED) themed iPods, all paid for with signature (RED) American Express cards.
In the development aid world, though, $170 million dollars is a pittance. To date, the Global Fund has disbursed more than 14 billion dollars, the largest recipients of which included the emerging economies of China and India. To put this in perspective, Dell, a (RED) participant, claimed sales of more than $15 billion, just last year. $170 million dollars is probably less than the coffee fund of Dell.
The trouble, of course, is that fashions come and go, and (RED) is only as successful as long as the fashion lasts. I shudder to think that people dying in the open of full blown AIDS have to rely on the charity and goodwill of credit card wielding teenagers.
(RED) is no clearly no charity, but rather a clever marketing ploy being appropriated by some of the largest corporate entities in the world. It is doubtful that these entities, who work day and night concocting new and innovative ways of reducing (and ultimately eliminating) corporate taxation could have any credible level of social commitment. Rather (RED) is a nuanced way of manipulating the heartstrings of “concerned” consumers and thereby maximizing profits.
Money raised through the sale of (RED) products is contributed to the Global Fund, an organization not without its controversies and criticisms, one of which is the phenomena of “governance at a distance,” or the intentional manipulation of developing world governments to satisfy the aims of contributor countries, which, unsurprisingly, are the massive economies of the G8. The level and amount each company contributes to (RED) varies. There is no set percentage or method of giving. Not surprisingly, there is also little transparency.
To add insult to injury, (RED)’s focus is on purchasing pharmaceuticals for AIDS patients, leading one to wonder how much connection the landscape of stock profiles in companies which produce consumer goods cross over into those of big pharma companies.
Certainly, there is a urgent need to provide financial assistance to ameliorate health problems worldwide. The crass marketing of “African” suffering (where is Latin America in this? Southeast Asia? Afghanistan??) as a means of selling useless consumer goods is, however, beyond the pale of insulting. This phenomena, though, in a new world that replaces the old deities with the Gods of Corporate Greed is hardly unusual.
Update: We got added to the Brand Aid Blog, where you can find more information about the book.
Richey LA, Ponte S: Brand aid: shopping well to save the world. Minneapolis: University of Minnesota Press; 2011.