Tuesday, September 2, 2008

Dangerous Liberal Dogmatism [finished]

This is turning out to be a bigger entry than I thought it would be, but since I want to put something up today, I'll post it as is and finish it up tomorrow. (Which has since arrived.)

Stephen Gordon is a mainstream liberal economist who used to try to debate economic policy with the lefties on "babble" and "enmasse." I often disagreed with him, to the point of really not liking some of his positions, but on the whole I welcomed his contribution. I've even changed my thinking on a couple of issues due to his facts and analysis. I certainly didn't think he should have been dismissed as a cynical shill for capitalism or as someone motivated and informed by their self-interested position as a member of the ruling elite.

I was at his blog, "Worthwhile Canadian Initiative" recently though and I came across an older entry that I just had to take issue with. Entitled "Self-sufficiency in food: always and everywhere a bad, bad idea," it is just simply a dangerously dogmatic doggerel about the virtues of liberal international trade.

Basically, Gordon takes issue with a Globe & Mail editorial "Everything is Not Peachy" which actually refers to a subject I talked about in a blog-post "Another Case of Market Failure" about a peach canning facility in Niagara that closed down due to stagnant sales (although it was still profitable).

Most of the meat of the Globe & Mail editorial is in this paragraph about the dangers of specialization a-la "comparative advantage":

As we specialize, we become more dependent on other people, industries and regions in the global economy. That may be fine for non-essential goods such as children's toys and kitchen appliances, but should we depend on others for life's essentials such as food? Also, specialization at the global level tends to reduce the diversity of producers and products - a small number of large, highly efficient producers often comes to dominate the market for specific goods. In complex systems from economies to ecologies, however, lower diversity usually means lower ability to adapt to rapidly changing circumstances. And, finally, all that connectivity among specialized producers around the world makes everyone more vulnerable to cascading system failures: a shock or failure in one part of the global system can propagate through the rest of the system in the blink of an eye, like a row of falling dominoes.

To which Dr. Gordon replied:

This is exactly wrong. Specialisation and trade reduces exposure to catastrophic risk. In countries that insist on self-sufficiency, a bad harvest means starvation. In countries that participate in world markets, a bad harvest means a trade deficit in food.

Which is simply NOT "always and everywhere" true. First, a metaphor: Imagine that you're a poor person who grows their own food in their backyard. A businessman offers to employ you and to pay you enough to buy your food from the supermarket and still have more money left over than if you grew your own food. However, when pressed, the businessman cannot promise you that he'll always have paying work for you, nor can he promise you that the price of food will always stay affordable for you at your salary. On top of this, he offers you the possibility that he can loan you money or food in hard times, so long as you cede to him the deed to your house and any other possessions you own in return.

That's not that far off from what's actually happened to some poorer countries as we'll see. But first, I imagine that Dr. Gordon's reply would be: "Fine. But you're not guaranteed that you'll be successful in every attempt to grow your own food either." To which I can only say that then you'll be in the same supplicant's position as the one that the businessman offered you, except that given your experience, catastrophic results from your backyard farming seems slightly less likely than occasional bouts of unemployment and dependence.

And, the fact of the matter is that while we're having this debate, there's a food-crisis going on in the world, and the insecurity of countries that have abandoned their self-sufficiency in food are suffering greatly.

Let's take the example of Haiti for instance. As part of the package of neoliberal imperialist snakeoil that Aristide had to agree to the FIRST time he was overthrown by Western monsters, Aristide agreed to "open up" Haiti's markets to heavily-subsidized US agricultural imports, which devastated Haiti's agricultural sector.

By the1990s rice imports outpaced domestic rice production, displacing many Haitian farmers and secondary agricultural workers with few employment opportunities. Haiti's adoption of trade liberalization policies and its environmental problems have played significant roles in the collapse of domestic rice production. These trade liberalization policies at their center have involved the lowering Haiti's tariffs on rice imports. Currently the rice import tariff is 3%, which is much lower than rice import tariffs of all other nations in the Caribbean Community. The Haitian rice market is now flooded with "Miami rice" from the US and some have accused the US of dumping its rice in Haiti.

This case demonstrates how often trade liberalization can have devastating consequences for the rural populations of the developing world. Haiti is now the least trade restrictive country in the Caribbean, but in spite of this openness to trade, Haiti remains the poorest country in the Caribbean. While those in the pro-liberalization camp believe these policies are more helpful than hurtful to Haiti because they have lead to a decrease in the price of rice, this decrease in the price of rice has benefited mostly the relatively wealthy, urban population of the country. Liberalization has been very hurtful to the rural poor who are finding it impossible to earn a decent living in rice production.

"All well and good" would be the reply of a liberal economist. "While subsidies are bad, at least the people of Haiti have cheaper food and can turn their energies to more profitable pursuits." But what, pray tell, would these pursuits be? Cheap labour in Port-au-Prince sweatshops? Are there even enough sweatshop jobs to go around? Obviously not. So, formerly self-reliant Haitian peasants are forced to rely on food imports as many of them languish in unemployment.

Another example of this blindness is in the comments section of this CommonDreams article: "The Food Crisis and Global Institutions."

This one from commentator "Jay P":

I have a small, 100 acre farm in the midwest that has been in the family for 150 years. Although, because of scale factors, I have a professional sharecropper do the farming because he has the equipment to farm over a thousand acres. Better for him, better for me. We grow soybeans, corn, wheat, millet, and clover on rotation.
With regards to food production, we need to be more consistent with our message, or at least prioritize conflicting agendas.
Start with a universally held idea: The world's population is growing, therefore, food production must increase.There are only two ways to increase production: Increase productivity and/or increase land used for agriculture.
Here is the problem. At the same time we recognize the need to increase production, some are trying to deny the tools to do so, and are actively removing crops from the food chain, diverting it to fuel. These actions will result in famine. We must decide which is more important, feeding people, non-disturbance of nature, or biofuel. Any one to benefit must necessarily negatively impact the other two.
To increase productivity, we need insecticides, herbicides, large farms, high production seed, and irrigation. At the same time, we are demanding organically grown crops, genetically unmodified foods (actually a false claim since all domesticated foods have been modified through selective breeding), [what drivel. as if gene-splicing is the same thing as cross-breeding!!...thwap] break up of large farms to be given to peasants, and we protest against construction of dams and for keeping unused land to stay untouched. We are highly subsidizing corn to ethanol to burn in our cars, which in net result produces a marginal amount of energy and would be uneconomical without the subsidies (plus many vehicles get as much as 15% less mpg with a 10% ethanol blend!).

These artificially imposed constraints are in direct conflict with the need to feed the world. In an exaggerated example, suppose all oil were replaced with biofuel. We would then be facing a choice: Do we fill our gas tanks or do we allow someone to eat for the week. If we fill the tank, someone

Whenever prices of something are not what consumers, producers, or governments desire, they try to correct the perceived inadequacy by taking money from one group and giving it to another. This is a seriously flawed approach because it distorts the supply-demand curves and always makes the prices worse, whether worse is considered higher or lower.

Handing money out to poor people does not get around the constraints we are imposing on ourselves. It raises prices, requiring more money to be handed out to those who were just priced out by the action of handing out money. The only answers are to increase supply or decrease demand. The only way to decrease demand is to decrease population. If we are not going to do that, then we must increase supply.
Let's not over constrain ourselves. I believe that people are more important than any fish in a stream or any weed in a valley. Improper use of chemicals may slightly increase lifetime risks of some kinds of diseases, but that is irrelevant to someone who is going to die of starvation by the end of the week. For those concerned, increase variety. At my farm, corn yield per acre has increased over 60% since 1970 using these tools.

Some believe peasants should be given control of the land they work, but I have seen these results first hand in a developing country. Sure, it buys votes, but it decreases production. Give the peasant a job, an education, and something to eat instead of reducing economic scale. And for the sake of everyone, let's stop this corn to ethanol madness. It does not work.

An no, we cannot have our cake and eat it

And this bit of self-congratulatory nonsense from one "marc melchiori":

Jay P. Fellow farmer here in Mt. Olivet KY. Don't sharecrop, do most of it myself. Third generation strong and hope to pass everything I know to my boy and girl. You hit it dead on brother. Dead on. I could not have said it better myself. except, you forget one thing. A lota folks in this forum who would not know the ass end of a steer like to give a lota advice and directions withou knowing a GD thing. Reminds me of my 7 year old. Most of these folks outa but out of the picture and leave feeding the world to folks who know how to do it.Hope the rains are frequent, the sun is shining and the spirit is strong. God bless

That's all I have time for today. I'll finish it tomorrow.

And, here I is.

I take issue with both Jay P. and marc melchiori because their arguments, while internally consistent, fail totally to address the reality that it is precisely those arguments (become policy) that have failed the people of the impoverished countries. Some of them have become dependent on subsidized Western farmers, either as importers of their products, or through being made reliant on US government controlled "food aid," which as this NY Times op-ed states , is deliberately used as a political weapon:

The Sudan aid authorization, which was included in Congress's final budget bill at the urging of the State Department and National Security Council officials, is an open acknowledgment of what has long been a hidden truth behind food aid. From the beginnings of the federal Food for Peace program in the late 1950's, food aid has been viewed in Washington as a political weapon, a stick disguised as a carrot. South Vietnam was one of the first beneficiaries of the program.
So there's that to worry about as a country allows it's self-sufficiency in food to wind down in the expectation that foreign sources will always be a dependable, unproblematic food alternative. A genuine loss in political autonomy.

A healthy agricultural sector is vital for any developing country. Opening up one's agricultural sector to heavily-subsidized developed-countries' products tends to devastate the rural population.

In the European industrial revolution, innovations in agriculture preceded industrialization. Furthermore, industrial jobs became available because Europe had (by fair means and foul) come to dominate international trade in manufactures. What we're asking the poor countries to do is to allow their agricultural sector to be destroyed, pushing farmers off of the land and into the cities, where, as opposed to the European case, there are no dependable, domestic world-leading mass-production industries to absorb the redundant peasantry.

If we don't do that, we foist "green revolutions" on these countries, which means expensive petro-chemicals, machinery, and large-scale irrigation and other corporate farming techniques. These programs do raise productivity, but it only benefits the wealthiest, most politically-connected farmers. The result is the same as before; the redundancy of the peasantry. Whether in Mexico or India, the social damage is severe.

Jay P. stated above:

Some believe peasants should be given control of the land they work, but I have seen these results first hand in a developing country. Sure, it buys votes, but it decreases production. Give the peasant a job, an education, and something to eat instead of reducing economic scale.
This is true if only one ignores the fact that generally, when peasants are finally given any access to land, they are not given the financial assistance necessary to do anything with it. Contrary to "green revolution" evangelists, the diversity and organic independence of peasant agriculture has untapped potential.

Regardless, Jay P.'s petro-agricultural model is rapidly coming to the end of the line.

That's all that I've got time for today.


JimBobby said...

Whooee! Good boogin', Thwapper. I look forward to tomorrow's post.


Beijing York said...

Very informative post thwap. The issues of food scarcity, self-sufficiency and security are poorly explained and understood. The media tends to focus on one crisis after another without giving much analysis to the underlying economics that influence/cause them.

Boris said...

Oh man, why do all these neoliberal economists think globalisation happened in a vacuum? Just about every country now doing well in the global trade game, subsidies or no, went through an earlier phase of self-sufficiency. An obvious example are the big Asian states that adopted import substitution strategies to build domestic capacity BEFORE they joined the global trade game.

And you're bang on about self-sufficiency.

thwap said...

Thanks for the encouragement people. It boggles the mind that in this context of petro-agriculture becoming unaffordable to millions of people, that so many are still advocating more of the same.

Stephen Gordon said...

I'm pretty sure I posted a reply here yesterday. At least I tried to. Did it get lost?

Anyway, it went along these lines:

I'm pleading not guilty. If we're going to talk about Haiti, several things must be kept in mind:

1) Haiti's population has increased by about 50% - around 3 million people - since the restrictions on imports were lifted.

2) Haiti's agricultural output is constrained by generations of environmental degradation and piratical governments.

3) In order to increase yields, a massive program of reforestation, irrigation and capital investment is required.

4) The probability of 3) happening anytime soon is vanishingly small. And the odds looked worse back in the mid-80s.

So I conclude that if the import ban had not been lifted, things would be catastrophically worse than they are now.

Criticisms along these lines have to come up with a convincing story of just where the food those three million extra people would have come from if food could not be imported.

thwap said...


The comment of yours that I posted this morning was the first thing from you that showed up in my holding-pen.

I don't so much hold you guilty of having the facts wrong in one particular case, but on the dogmatic nature of your Friedmanesque "always and everywhere" statement.

I'm aware the logic and occasional happy practice of comparative advantage and the gains from trade.

I wasn't able to find anything quickly on the internet, but in the 1950s, following independence, the Malaysian ruling class forbid the peasantry from growing rubber-trees to pursue food self-sufficiency in rice.

I was given to understand that the opportunity costs of food self-sufficiency in this case were very high and that if farmers had been allowed to pursue this option the benefits from rubber sales would have been huge.

On the other hand, the case of Haiti shows the dangers of relying on foreign sources to feed one's population (at least for very poor countries).

The link I provided does acknowledge the environmental causes of Haiti's 1980s food crisis:

"Peasant farming contributed significantly to soil erosion and the loss of soil fertility in Haiti.[20]. The political and economic isolation of the nation after its independence and the poverty that persisted pushed the peasantry into more and more marginal land as they tried to produce enough crops to meet their subsistence needs as for export. Large chunks of marginal land were cleared to make way for peasant agriculture which has contributed substantially to the soil erosion problem in Haiti. In addition bauxite was mined in Haiti. The exploitation of this non-renewable mineral caused more deforestation and land clearing than any other natural resource based activity in in second half of the 20th century.[21] The land is now largely deforested and has suffered a decline in annual rainfall."

As you said, Haiti needs massive reinvestment in its ecological health to address this problem. One wonders why the IMF and World Bank have only told Haiti to open itself up and lie prostate before the flood of imports that destroyed what still remained of its agricultural sector. (Western forces might have done better than to constantly destabilize the only non-kleptocratic government Haiti ever had, but that's another story.)

Because of the international institutions' lazy adherence to dogmatic liberal theory, recent price increases have reduced Haitians to eating dirt:

"Food prices around the world have spiked because of higher oil prices, needed for fertilizer, irrigation, and transportation. Prices for basic ingredients such as corn and wheat are also up sharply, and the increasing global demand for biofuels is pressuring food markets as well.

The problem is particularly dire in the Caribbean, where island nations depend on imports and food prices are up 40 percent in places.

But this isn't only a problem in Haiti. I've posted often about the dislocation of Mexico's peasantry from increasing US-food imports under NAFTA. You've replied (at least on EnMasse) that the results are mixed, and economically neutral over all. But the fact that millions of Mexicans have been forced to run the gauntlet of the USA's racist (and hypocritical) border control in order to find work and keep themselves and their families alive is pretty significant evidence of economic failure. What if that "safety-valve" of forced emigration didn't exist? What would happen to those millions of redundant peasants then?

This is also a problem in Africa as well:

"What support the government was allowed to muster was channeled by the Bank to export agriculture – to generate the foreign exchange earnings that the state needed to service its debt to the Bank and the Fund. But, as in Ethiopia during the famine of the early 1980s, this led to the dedication of good land to export crops, with food crops forced into more and more unsuitable soil, thus exacerbating food insecurity. Moreover, the Bank’s encouraging several economies undergoing adjustment to focus on export production of the same crops simultaneously often led to overproduction that then triggered a price collapse in international markets. For instance, the very success of Ghana’s program to expand cocoa production triggered a 48% drop in the international price of cocoa between 1986 and 1989, threatening, as one account put it, “to increase the vulnerability of the entire economy to the vagaries of the cocoa market.” 1 In 2002-2003, a collapse in coffee prices contributed to another food emergency in Ethiopia.

(That whole article is pretty important.)

Finally, Boris at the galloping beaver has the film "Life and Debt" about the devastation done to Jamaica's rural economy as a result of IMF-mandated liberalization. It's exactly what we're talking about. Yes, there's cheaper food for the urban poor, and poor people tend to pick the cheaper alternative, but the devastation of relatively large rural economies in less-developed countries doesn't mean industrialization and better jobs in manufacturing. It tends to mean non-union sweatshop work, desperate and usually wasteful government make-work projects, and for millions of people the world over, enforced emigration to cold, racist, northern countries, where you're cleaning the toilets of people who look down on you.

Stephen, once again, I can appreciate the theory and the occasional happy practice of liberal trade theory. But for you, I can only ask: "i beseech you in the bowels of christ think it possible you may be mistaken.

Stephen Gordon said...

I think I may have forgotten to type in the word verification thingy the second time. Do you *really* get that much spam?

I'll admit "always and everywhere" was a bit of rhetorical overkill - if you'll admit that "dangerous dogmatism" was as well. :)

And I don't see why cheap food is a bad thing - or at least, something so easily dismissed. Especially in countries where standards of living are measured in terms of calories consumed per day.

Even Dani Rodrik - who is by no means a knee-jerk supporter of liberalisation - can't see how the recent rise in food prices advances the case for self-sufficiency. Even with 20:20 hindsight.

Boris said...

Something is missing here. The argument that domestic food self-sufficiency risks exposure to drought etc ignores the notion that a well planned and diversified domestic agriculture can mitigate the impacts of these events.

Right now the emphasis is on globalised food production and distribution which de-stress the local. Compare the amount of farmers' markets selling local food in your town or city with the amount of supermarkets selling globally sourced food. Flip the paradigm so local farms provide most of the local food, and the regional and global markets are only accessed to pick up the slack, and you maintain the security argument of having access to multiple sources of food, but also stress self-sufficiency. Other steps toward self-sufficiency include maintaining food reserves from crop surplus as many communities have done before being driven into globalisation. Davis' Late Victorian Holocausts, which Thwap discussed on this blog, details the catastrophe that happened in colonial India when the Brits forced the Indians to sell their drought reserves.

thwap said...


It wasn't so much spam as it was little puerile remarks from right-wing trolls. I didn't want to give them the satisfaction of their comments seeing the light of day.

If you'll retract your "always and everywhere" remark, then you're not guilty of being dogmatic.

I don't profess to know what (if any) answer there is that can solve all the problems of feeding humanity.

Boris mentioned Late Victorian Holocausts and I'm glad he did. Pay attention:

Argument 1: There's a food shortage

by is a+ttack6in8g my2 keeyboard. I'll pic this.0
0up 0l0.ater..0


thwap said...

Very quickly, on your Dani Rodrik link. I think you should read the comments to his rather arid and shallow conclusions.

Stephen Gordon said...

I'm sorry that you think that Dani Rodrick's point was arid and shallow. FWIW, he's responsible for a major revision (yes, I do think it's possible that I may be mistaken) in my way of thinking about rich-country agricultural subsidies. I used to be resolutely opposed to them, but one of his blog posts made the point along the line of 'if the EU wants to flood the world with cheap food, how bad can that be for poor countries?'

So that's where I am now. If someone has a mind to send a shipload of free rice to Port-au-Prince, I don't see why the smart move for the Haitian authorities would be to refuse permission to unload its cargo.

thwap said...

Well, you must have been high or something when your read that, because it sounds like the most simplistic drivel to me.

As I've tried to make clear, the problem isn't cheap food per se, it's the destruction of a large section of the economy of a poor country while failing to provide the victims with any alternative means of survival (beyond food aid, or subsidized imports which are just as unreliable as Rodrick is now aware).

And it's no good saying that the IMF tried to sponsor alternative cash crops, because we've seen that was a failure. The IMF sponsored increases in coffee production everywhere, forgetting that massive increases in supply constitute a "glut" that reduces the price received. In Africa, public funding for independent farmers went into buying food imports after the price of coffee went down the toilet.

What does Rodrick imagine? That Europe will feed the world free of charge and that the poor of the world will sit in cafes taking online courses in personal development?

Boris said...

Speaking of coffee, here's another globalisation documentary...on coffee:


Stephen Gordon said...

it's the destruction of a large section of the economy of a poor country while failing to provide the victims with any alternative means of survival

What would have been the means of survival if import controls had not been lifted?

I don't understand the logic behind the claim "If desperately poor countries refuse to accept low-price imports of food, then food will become cheap and plentiful." You're going to have to walk me through the steps of how that would work.

thwap said...


Sorry for the late reply. I'll do that over the next few days. But only if you promise to walk us through how the policy that you're advocating has already turned into a disaster.

Sound fair?