Ignoring The Age Of Scarcity

The title of this post comes from Charles Kenny's essay The Age Of Scarcity, which appeared in Bloomberg Business Week on July 26, 2012. Kenny is a senior fellow at the Center for Global Development. When we see articles like this, the first thing we must do is consider the source. It is not possible to admit that actual long-term, really scary scarcity is a likely future outcome in a publication like Bloomberg Business Week, so we already know roughly what the article will contain before we read it.

1. The first half of the essay will enumerate humanity's mounting problems, extrapolating current problems associated with growth into the future, and mentioning the mounting "challenges" we face if we are to solve these problems.


2. The second half of the essay will show that easy solutions exist which solve those problems, if only we humans would get our act together to implement them. Thus in the second half we get the obligatory hope. Those easy solutions, along with our limitless confidence in human ingenuity, ensures that population and economic growth can continue basically ... forever.

Kenny's essay doesn't disappoint. As an aside, I fear that there are still readers of this blog who think I'm voicing mere opinions about humankind's fate. I might respond by saying that humans are so goddamned predictable to me after half a lifetime spent observing them that it is easy to know in advance (leaving out inconsequential details) what they are going to say and what they are going to try to do (if anything).

And since we can easily see that what they will try to do—pursue endless growth, and exploit the Earth further to support it—can only fail catastrophically on a finite planet, it is only a short leap to the conclusion that humanity is pretty much doomed. Certainly they are well on the way.

Let's start with the mounting problems part of the essay. To wit—

This has been a brutal summer. Record drought across the Midwest has forced the U.S. Department of Agriculture to slash its forecast for 2012 corn production by 12 percent.

Corn prices are already 90 percent higher than in July 2010. They’ve gone above 2007-08 levels, when soaring food prices sparked riots in more than 30 countries. On July 25 the U.S. government reported that corn prices may push the cost of meat 4 percent to 5 percent higher next year. And there’s good reason to believe that the upward trend is a taste of worse things to come—in particular, for the world’s poorest people, who spend 60 percent to 80 percent of their limited incomes on food.

This latest peak in corn prices is the fourth since 2006. For people in the developing world, rising food costs increase the risk of malnutrition, which reduces cognitive abilities and can have a lifelong impact on both health and earnings. World Bank researchers estimate that food-price changes between June and December 2010—including a 73 percent rise in corn prices—pushed 44 million people back below the $1.25-per-day extreme poverty line. If recent volatility is the start of a long-term pattern, it could significantly slow global progress against poverty over the next 50 years.

Did you catch that? These huge spikes in food (corn) prices, if they presage a longer-term trend, could significantly slow global progress against poverty over the next 50 years. Sure could! The biosphere will likely be toast in 50 years. But not to worry. Such progress will only be slowed, not reversed.

The food crisis is the product of a convergence of trends. Nine of the 10 hottest years on record for the planet have occurred since 2000... Making that problem worse will be constraints on irrigation posed by water shortages. Already, a third of the world’s population lives in regions facing water shortages; by 2030 global water requirements could be as much as 40 percent higher than the currently accessible supply, according to a study by McKinsey.

Factors other than weather, of course, also play a role in food-price spikes. In both 2008 and 2011, agricultural prices rose in tandem with energy prices, just as they did in the 1970s. That’s in part because it takes 160 liters of oil to produce a metric ton of corn in the U.S., and the cost of natural gas accounts for three-quarters of the cost of nitrogen fertilizer.

Growing demand for crops—from more people, more farm animals, and more use of biofuels—has also raised pressure on prices. Between 1990 and 2010, total global per capita consumption of beef, pork, and poultry increased by 1.2 percent annually. Over the next 50 years food output will have to rise 50 percent to cater to 2 billion extra people and their growing appetite for meat. Meanwhile, growth in global biofuel production rose 30 percent per year from 2006 to 2008. The Food and Agriculture Organization of the United Nations [FAO] predicts that biofuel production will double by 2018, causing an estimated 14 percent rise in grain prices.

Finally, volatility itself makes gambling on commodity futures more attractive for speculators. Commodity futures funds in 2008 invested as much as $250 billion to $300 billion. During the 2008 crisis, fear of domestic food shortages led governments to aggressively purchase on international markets and to curb exports—Russia banned wheat sales, for example—raising global prices even more.

Reading this litany of unsolvable problems—global warming, the fresh water shortages, crude oil prices, the biofuels, the gambling—a sane, sensible person might have thoughts of suicide. Why wait if you're totally fucked anyway? Better to choose the way you go instead of waiting for Mother Nature and other humans to do you in. (I'm just kidding—don't kill yourself )

But suicidal thoughts don't occur to Center for Global Development analyst Charles Kenny. We now get the second, hopeful part of his utterly predictable essay.

So, what does past experience suggest about the future? ...Helping markets work better could take us a long way toward greater global food security.

Of course. Markets and technology solve all problems, right?

First, we know how to deal with climate change: Stop subsidizing pollution and put a price on CO₂.

Among all the other clueless statements I've read about mitigating global warming, this one stands out. For example, CO₂ we don't emit now will ameliorate the greenhouse problem in 40 years. Approximately 1.4°centigrade of warming is already in the pipeline (will occur in future no matter what we do.) If you know anything about the science, anything at all, you will find this statement laughable.

Cut off the fossil subsidies and put a small tax on carbon, and you’ll make some progress toward keeping the planet cool. In 2008 economist Nicholas Stern estimated that the cost to the global economy of avoiding significant climate change was only about 2 percent of the world’s output, or less than one average year of economic growth. Given how rapidly alternative energy prices have fallen, it might be more of a bargain than that today.

I know this sounds quite unbelievable, but the further we read, the deeper Kenny's delusions run.

With a little policy intervention, input prices can be lowered, as well. The combination of cheaper renewable power and abundant natural gas should keep down the energy costs associated with agriculture...

In the search for yield gains to help meet growing demand, we know that we can significantly improve farm productivity, because we’ve done it before. The green revolution in India doubled wheat production between 1964 and 1970; at the height of the food spike of 2008 the price of rice was still only one-half to one-third its level 40 years earlier...

Seed industry projections suggest that, due to improved breeding and biotechnology, U.S. corn yields could double between 2005 and 2030. And there are large parts of the world that could grow significantly more food per acre through modest investments in irrigation, fertilizer, and existing crop varieties. Yields in Indonesia, for instance, doubled over the period from 1970 to 2000 largely thanks to more widespread irrigation...

This year’s price spike probably won’t be a disaster of Biblical proportion. If global leaders don’t act, however, it’s likely to be a sign of things to come: permanent volatility in prices that are trending upward, putting at risk some of the world’s most vulnerable people.

At their recent meeting in Los Cabos, Mexico, leaders of the Group of 20 nations agreed to phase out fossil fuel subsidies and focus attention on increasing agricultural productivity in developing countries. To avert recurring and increasingly damaging food crises, that talk needs to be put into action. For all the problems facing the world, this [spike in food prices] is one we know how to fix.

All of the current evidence, every single bit of it, is screaming out at people with a single seemingly un-ignorable message—Humans! Stop what you're doing! You're fucking up big time! Big Fail coming!

But they can't stop.

Bonus Video — the "Rational Optimist" Matt Ridley on whether we can feed 9 billion people by 2050

 

Comments

[T E CHo]

And ... and ... just think of the new investment opportunities brought on by these new crises ! Yes siree, lots of new ways to make more money on these problems...

Of course, this is what interests the subscribers the most of this publication.