Wednesday, May 21, 2008

Food Crisis: Root Causes and the Farm Bill

The food crisis is, if you will pardon the pun, providing "fertile ground" for development articles. I would like to take the opportunity to share three excellent, recent articles on the issue, and how it relates to development as a whole. Each article helps to draw out how and why market imperfections and the international economic structure have "sown the seeds" of this crisis and are now bearing fruit (or a lack thereof, for most of the world).

(1) Walden Bello, "Manufacturing a Food Crisis," The Nation, May 15, 2008.

(2) K. Subramanian, "The Fund, Fed, and Finance Feed the Famine," The Hindu Business Line, May 16, 2008.

Both of these articles are excellent. Bello's article focuses on the role of the IMF and WTO in setting the stage for the current situation, while Subramanian's article provides a more general economic overview of how current speculation builds on the groundwork provided by Bello's piece. I should note that Walden Bello is one of the most respected scholars and public activists in development today - a native and professor from the Philippines and former director of Focus on the Global South.

(3) Martin Khor, "New US Farm Bill Will Anger the World," Malaysia Star, May 19, 2008.

One would think that we'd started to learn from our mistakes - especially given that even World Bank President Robert Zoellick is calling for reduced US agricultural subsidies and increased market access for Southern countries. Apparently not, as Khor, a Malaysian journalist, economist, WTO expert, and director of the Third World Network, explains.

Last week, both chambers of Congress passed the 2008 Farm Bill with more than a 2/3 majority, enough to override the President's threatened veto. For once, Khor and I agree with something that President Bush is doing - and, when he finally acts intelligently, the US Congress decides to be stupid en masse. The bill has two parts - one that is good, and one that is bad. First, it proposes $200 billion in domestic food aid. That's OK, and probably a good idea, since it helps those having trouble with grocery bills. But the remaining $89 billion in the bill is an expansion of US farm subsidies - without a cap on earnings. President Bush's main problem: it undermines out diplomacy and efforts in the WTO and doesn't restrict the benefits to smaller farmers. A quote from the article: "Bush had proposed limiting farm subsidies to those earning less than US$200,000 (RM643,180) a year. However, under the Farm Bill, even millionaires can receive the handouts."

Given the massive food prices and profits being earned by corporate agriculture in the inflated speculative market - do they really deserve the subsidies? Also, there's the fact that subsidies lower food prices in times of short supply, allowing farmers to lower prices in tight times for their business - the problem right now isn't that of a supply crunch, its one of manic-period market speculation causing a largely artificial price spike. Subsidies under those conditions will have minimal impact on actual market conditions, because they don't address the root cause of the price spike. So, we have $90 billion dollars of useless spending that only serves to prop up US corporate agriculture and anger the world even more.

The one time President Bush is actually thinking diplomatically, Congress goes behind his back and listens to the agriculture lobby. Well done, ladies and gentlemen.

Monday, May 19, 2008

The "Moderate White Woman"

This is just a quick update regarding a post last week on VP speculation: Nick suggested in a comment that the "moderate white woman" could be Kathleen Sebelius, current Democratic Governor of Kansas in her second term. Two sources on her: Wikipedia page (includes some description of key decisions) and relevant articles from the Washington Post.

She looks to be a moderate, principled Democrat with midwestern appeal, and should represent a solid boost to Obama's campaign, particularly given 6 years experience as a state chief executive. Barring political necessities related to the nomination (e.g. Clinton, Edwards, or Richardson back-door deals regarding endorsements or superdelegate math), she would, as the Post argues, "further bolster Obama's strengths while not exacerbating his weaknesses."

World "Food" Crisis

On my way to the metro this morning, I picked up a bagel and a full copy of the Washington Post. Normally, I just read the "Express" edition and get additional news online, but I felt generous today. I'm glad I did - I just found the best article on the current food crisis that I've seen in the mainstream press. The full article can be found here.

Perhaps the most fascinating part of this piece is an admission and supposed pressure on the US government by World Bank president Robert Zoellick. The section is worth quoting at length:

Last year, the World Bank commissioned an internal review of its agricultural programs in Africa, concluding that "over time, the importance of agriculture in the Bank's rural strategy has declined." The bank's Independent Evaluation Group noted that total international agricultural aid fell from $1.9 billion in 1981 to less than $1 billion by 2001, and that the bank cut its number of agricultural specialists for Africa from 40 to 17 over the past decade.

World Bank President Robert B. Zoellick has vowed to reverse the slide, proposing to boost annual lending for African agriculture from $450 million to $800 million. He has also pressed the United States, Japan and European governments to end agricultural subsidies that make it difficult for poor farmers to compete in global markets. "The world's agricultural trading system is stuck in the past," he said. "If ever there is a time to cut distorting agricultural subsidies and open markets for food imports, it must be now."

Zoellick has also called for reducing the sort of food donations favored by the United States. The World Food Program, which was established in the 1950s to distribute surplus U.S. and European food stocks, concedes that shipping too much food aid into poor countries can hurt local farmers, said Nancy Roman, the food program's director of policy planning. But the U.S. farmers and shipping companies that supply the WFP have resisted the change.

The WFP has already reduced its share of food donations -- known as "in-kind" aid -- to 50 percent of its overall giving, Roman said. In addition, the program has increased the portion of food it purchases in the developing world and is pressing states to give more cash than food.

These two measures, reducing US food subsidies and scaling back "in-kind" aid, are two of the three largest hurdles to working agricultural markets in the Global South. The reduction of subsidies, preferably codified and enforced by the WTO (although unilateral measures would be an OK second-best) provides needed market access to the agricultural sector in the South, and prevents cheap US and EU exports from crowding out small farmers in these countries. Reductions in in-kind aid, likewise, prevent massive food shipments from disrupting local food markets, allowing for a steadier, more predictable income stream to local, especially smaller, farmers. That is not to say that in-kind aid does not have a use, but it should be carefully targeted and managed to countries where agricultural markets are not working at all, and is perhaps best used in work-for-food programs - allowing for infrastructure development and cleanup efforts while helping mitigate the food crisis.

The final major hurdle is closely tied to these as well - it involves the reduction of monocropping and single-crop export strategies. In this context, the article makes one slight error in how it presents statistics relevant to World Bank lending. This erroris in not explaining the dates for the reduction in World Bank agricultural aid. The dates given are 1981-2001, and are significant for two reasons:

(1) 1981 marked a recognition by the Bank that its traditional agricultural extension programs and lending in the South had failed, largely because the Bank was promoting single-crop programs based on short-term market signals. The net result was that each program promoted a new "magic bullet" crop to local farmers, ended up flooding the market, and then depressed the price of the good to the extent that farmers were back in there original position - only, rather than growing foodstuffs, they now received a piddling income from non-edible/low food-value commercial exports (groundnuts, cotton, cut flowers, etc.). While the Bank has scaled back activities, it has also shifted its focus to diversification and agroprocessing initiatives. While I, along with many working in development, have gripes with Bank operations, these initiatives are aimed at reducing market volatility and adding value to current agricultural products, and represent a welcome phase-shift from the Bank.

(2) 1981 also represents the beginnings of the debt crisis in Latin America, which saw a shift in World Bank lending to backstop IMF structural adjustment policies. Such policies forced sudden, mass liberalization and scaling back of government spending on social programs, in order to bring macroeconomic stability. Leaving aside why structural adjustment's execution was (and remains) abysmal, the key notion here is that the shift was a necessary one (though the execution of that shift caused more harm than good) in the context of the fundamental shift in the global economic regime that occurred in the 1970s (removal of the gold standard, spiking oil prices, etc.).

The combination of these two factors explains why the Bank, an organization with substantial but nonetheless finite resources, underwent a phase shift in the amount and type of aid they give. The debt crisis of the 1980s and financial crises in the 1990s maintained impetus for structural adjustment through 1998, and the recent shift in more inclusive development mentality didn't really gain steam until 1999. Coupled with organizational inertia, the Bank is in the middle of a shift in mindset to approach new challenges caused by shifting international market structures.

Thursday, May 15, 2008

Edwards for Obama : Time to Look for a VP?

Now that I've given the bad news about Burma and how to help (see the post below), some good news is in order: John Edwards has endorsed Barack Obama. This is not entirely surprising, given the combination of Obama's delegate lead, Hillary's poor performance in Indiana, and pressure from the DNC for remaining superdelegates to choose sides.

However, it does mean that Obama has gained the support of three former rivals: Chris Dodd (senator from Connecticut), Bill Richardson (the Hispanic Governor of New Mexico), and John Edwards (former Senator from North Carolina and John Kerry's running-mate in 2004). Other than the two front-runners, Edwards and Richardson were the largest vote-getters (indeed, Edwards still managed to get 7% of the vote in West Virginia, even though he has dropped out of the race). It is also worth noting that Governor Richardson is a longtime Clinton supporter, yet endorsed Obama a while ago for ideological reasons.

Given Edwards and Richardson's expertise (trial lawyer and former diplomat, respectively), it seems likely that Edwards may be Attorney General and Richardson Secretary of State, should Obama be elected and they desire the positions. I know there has been a lot of speculation about whether either of these candidates should be VP - but my gut feeling is that they won't be. Here's why:

(1) Edwards has been the VP candidate before, and my guess is that he has some inkling how informal a role the VP plays. His skills point to AG, and there was some discussion right after he dropped out that Obama offered the AG position to him. Plus, while Edwards definitely wants change and appeals to blue-collar whites, he's also a very liberal candidate and may be less willing to compromise with business than Obama. Remember that his specialty as a trial lawyer is labor rights. One other issue to consider, though it may be seen as a minor factor, is that selecting a southern white male could increase the chances that Obama is the target of an assassination plot - after all, the VP succeeds him. We have come far since the 1960s in terms of racism - but there are still a lot of crazies out there. The assassination thing is probably an issue no matter who Obama picks as VP, so this may be minor, but it's still a factor to consider.

(2) Richardson, aside from being a skilled diplomat (was ambassador to the UN) and former cabinet official (he was Secretary of Energy), might be a slightly better option - in part because he could help Latino turnout for the Democrats, and prevent Republican inroads on "values" issues. However, he may also serve to alienate the voters Obama has trouble with - blue-collar whites, especially in swing states like PA, OH, and IN. Combine immigration attacks with the still-present misunderstandings about Obama's religion (many think he's a Muslim, despite the well-publicized scandals from Rev. Wright at Trinity) and racism... many voters might not be ready for that much "change".

My guess is that the best pick for him would be a moderate white woman, if one exists, whose name is not Hillary Clinton (can you say intra-administration stress?). Interesting note on that: such a choice, assuming Richardson is Secretary of State, would mean that the top four constitutional officials would all NOT be white men:
Obama - President
Moderate White Woman - VP
Nancy Pelosi - Speaker
Richardson - Sec. of State

Wouldn't that be something!

Myanmar: The Ongoing Fiasco

Once again, I seem to be the harbinger of bad news - but one of the key reasons why aid workers, especially US aid workers, remain barred from Burma is that the junta is currently holding a "constitutional referendum" in "response" to the protests in September. The good news: Elections scheduled for 2010. The bad news: the document "guarantees a quarter of parliamentary seats to the military and bars from public office the detained leader of the country's pro-democracy movement, Aung San Suu Kyi" (see this article in the Guardian, and a second article in the UK Telegraph).

Oh, and did I forget to mention? Over 100,000 could be dead and 2.5 million remain without aid - according to the Red Cross and UN. Just as disturbing is the fact that, due to the Cyclone's timing, farmers in the Irrawaddy Delta may have missed the harvest and require aid to replenish seed, fish, and livestock destroyed by Nargis (see this article in the NY Times).

As devastating as this immediate situation is, let me make a suggestion: The Telegraph article above suggests a few large organizations to donate to (Oxfam, Save the Children, Christian Aid, etc.). These are all organizations that do good work, but they also have a large funding stream from major foundations and don't focus on Burma. If you really want to help this country, which is one of the saddest cases in development - a closed-off country in a region that has performed very well and seen significant improvement in the past twenty years - go to the US Campaign for Burma. They're a relatively small but effective NGO, and the main organization fighting for international action against the junta. I also know a number of people who have worked with them, and their founder is an American University alum.

Tuesday, May 13, 2008

Myanmar Mutilates Maverick McCain

John McCain is the maverick of Washington! Indeed... apparently he's so much of a maverick that he hires lobbyists who support the Burmese military junta - a "government" soundly condemned by even the our own "selectively pro-democracy" foreign policy (in fact, the US is the #1 opponent of the Myanmar/Burmese junta). So, our favorite POW "war hero", the straight-shooter of the Republican party and supposed opponent of torture, hired advisers who actively lobby for governments with documented, atrocious human rights records.

Here's a little context: Perhaps the least of the Junta's sins is the continued detainment of Aung San Su Kyi - Burma's elected prime minister and Nobel Peace-Prize Laureate. The junta, in power for the past forty-six years (under multiple names - the most current is the "State Peace and Development Council"), has a long and colored history of violently oppressing the Burmese people. In just the past twelve months, two events are of note: The massacre of hundreds of Buddhist monks and thousands of pro-democracy demonstrators in the end of September, and the ongoing refusal to allow humanitarian aid workers to provide relief to its people in the aftermath of Cyclone Nargis (which has left over 60,000 dead - a total that continues to mount).

Of course, we have no way of knowing if Senator McCain was consciously aware of the less-than-savory ties among his advisers - but this incident, among some of McCain's more recent position "modifications", only serves to solidify the feeling that the good Senator may not be the straight-shooter he has worked so hard to be portrayed. Facing political reality is one thing, allowing pro-dictator lobbyists into your inner circle is quite another!

Monday, May 12, 2008

Hillary: Out for the Count

It's not over until the fat lady sings - well, ladies and gentlemen, the fat lady has finally sung. In this case, the fat lady has a name: superdelegates.

That's right, as of earlier today, Barack Obama now leads Hillary Clinton in every category relevant to the democratic nomination: he has won more states, more delegates determined by the vote, a greater percentage of the popular vote, and now has gained even more superdelegates than the former first lady. Hillary's last hope - that of convincing enough superdelegates to her cause - appears to have abandoned her. For the full details of this latest development, see CNN.

This is not quite the landmark that the media makes it out to be, but it does represent the final nail in Hillary's electoral coffin. After being soundly defeated in North Carolina and barely squeaking by with an Indiana victory (demographics favored her, Chicago suburbs favored Obama), most papers were willing to ask Mrs. Clinton to take a reality check. Indeed, even the Economist, normally a paper to hedge its bets on political calculus, has called on Mrs. Clinton to give way to Obamamania.

The real question here is this: should any of us, after the first few contests following Super Tuesday, have been surprised? Of course not. The states have split almost exactly as they should have following Super Tuesday. Perhaps the only surprise has been that Obama performed as well as he did in large, white, working-class states (PA, OH, IN) while Clinton seemed unable to close within a 15-20% margin in most of Obama's states. Media commentary aside, any cold look at the numbers revealed this picture at the end of February - especially to those who watched John Fox's touch-screen presentations. The only thing that could have changed this picture would have been a major scandal and, contrary to what the media seems to think, one bombastic preacher does not a scandal make.

There are probably multiple reasons for Obama's victories - his obvious charisma and speaking ability; the fact that, by and large, he has remained graceful even under extreme pressure; and the "Clinton Dynasty" effect - most 18-30s are sick of having presidents in the same two families. I, for one, was born during Regan - but cannot remember a president not named Bush or Clinton. Lastly, and this may be contentious although the numbers support it, many Democrats are keenly aware that Mrs. Clinton probably would not carry the independent vote, especially against Mr. McCain. Indeed, Clinton might do the one thing McCain has trouble with: force the Republican base to vote in November. The name Clinton is still a loaded and often divisive one for the majority of Americans.

Obama, by contrast, is fresh and new - and also relatively young. He smacks of a cross between JFK and Woodrow Wilson, with an important caveat. While the idealism of JFK and Wilson led them to be a bit uncompromising (less noticeable for JFK, because LBJ was wheeling and dealing for him), Obama genuinely speaks of compromise and healing the rift in American politics. He wants us to talk to each other in a civilized fashion - and he leads by example. He is not only the best chance the Democrat's have of regaining the White House, but I - for one - will be glad to see him do it.

Thursday, May 1, 2008

DC Public Transit: The Silver Line

So - remember how I complained about the funding for a line to Dulles Airport being held up by the FTA? Apparently, they've finally seen good sense, and approved funding for the Silver Line to Tyson's Corner. For more on this one, I actually found an excellent blog called "Track Twenty-Nine" focusing on urban planning and public transit - run by a gentleman named Matt at U of Maryland. check it out here:

The first three posts for April 30th are all worth a read - one is on Obama's stand on the new "repeal the gas tax for the summer" craze coming from McCain and Clinton. The other two are on the Silver Line.

I happen to agree with the general thrust behind his posts - although one of the serious problems for longer-distance transportation in the US is the lack of evenly distributed, high population density areas. Just look at a population map of the US and compare it to Europe. Of course, that doesn't mean we couldn't be doing much better than we are now...

Well, one change is better than none. I'd still really like to see the purple line.