Aperfect storm of global circumstances has formed to create disastrous spikes in food prices. Numerous variables affect the equation: high demand in China, persistent drought in Australia, resurgent protectionism in Kazakhstan, capital flight from the housing sector to commodities markets, and more.
In response, President Bush has proposed another $770 million in global food aid for the next fiscal year -- which, combined with other increases the administration has proposed, would bring the total to nearly $5 billion for 2008 and 2009. Democrats predictably carp that it's far too little.
They're wrong. It's far too much.
Don't misunderstand: The desire to alleviate current pain caused by world food price hikes is commendable. But there is a smart way and a dumb way to go about it. Federal food aid is the dumb way.
Those who want to help in a smart way should take out the family checkbook and send a healthy sum to one of the many non-governmental organizations devoted to such worthy causes. Contributors might want to start with CARE, one of the largest charitable organizations -- which last year turned down $45 million in federal financing.
CARE did so because, it said, such aid is woefully inefficient -- and winds up hurting some of the very people it is meant to help. How? By dumping heavily subsidized U.S. commodities on poor nations such as Kenya. The result: Farmers in those countries cannot earn a living. Without a self-sustaining agricultural sector, poor nations end up with their hands perpetually outstretched, trapped in a vicious cycle of dependence on charity.
KENYAN economist James Shikwati warned the world about that problem three years before global food prices began rising: Under the current system, he told Der Speigel, "Several thousand tons of corn are shipped to Africa, and at some point this corn ends up in the harbor of Mombasa. A portion of the corn often goes directly into the hands of unscrupulous politicians who then pass it on to their own tribe to boost their next election campaign. Another portion of the shipment ends up on the black market where the corn is dumped at extremely low prices. Local farmers may as well put down their hoes right away; no one can compete with the U.N.'s World Food Program. And because the farmers go under in the face of this pressure, Kenya would have no reserves to draw on if there actually were a famine next year. It's a simple but fatal cycle."
"Africans," Shikwati said, "are taught to be beggars and not to be independent. In addition, development aid weakens the local markets everywhere and dampens the spirit of entrepreneurship that we so desperately need." In short, Shikwati said, developing nations must move from welfare to work.
When they do, good things happen. Consider Walter Otieno, a Kenyan farmer. Four of his children died from measles before he began growing sunflowers and selling them to a company that processes them for their oil. But income from those sales enabled him to lift his family out of poverty and open a small general store. He probably could have lifted it higher if soybean oil were not dumped onto the market.
But for African nations to move from welfare to work, American farm interests will have to do so as well. That's a tall order. Federal farm and energy policy create their own per fect storm for taxpayers and consumers: Americans alone paid a hidden "food tax" of $5 billion in 2006 through farm price supports, for instance. The federal Conservation Reserve Program artificially increases scarcity (thereby hiking prices) by paying farmers to let land lie fallow. So Americans end up paying twice -- once through taxes that fund direct payments to farmers, and a second time at the checkout line.
THEN THERE is the great ethanol debacle: The federal farm bill lowers the federal subsidy for ethanol by a nickel, from 51 cents per gallon to 46. That's not likely to make much of a dent in the problem. As Washington has realized too late, the subsidy -- along with federal mandates that require increasing percentages of ethanol in the U.S. fuel mix -- have created a huge incentive for farmers to stop feeding people and start selling corn for ethanol. (They're also shifting acreage from rice, cotton, and soybeans to grow more corn for cars.)
Talk about a perfect storm: Taxpayers shell out big bucks for ethanol subsidies that drive up world food prices, and Washington then taxes Americans again to fund food aid that ruins farmers who could feed their countrymen if given half a chance.
Washington doesn't need to soak the American public to help out the foreign poor. It just needs to take Shikwati's advice: "For God's sake, please just stop."
My thoughts do not aim for your assent -- just place them alongside your own reflections for a while.
--Robert Nozick.
Contact A. Barton Hinkle at (804) 649-6627 or bhinkle@timesdispatch.com.