G20 roundup

The latest G20 summit seems to have gone off as well as could be expected – and perhaps a little better. Markets are up today.

It’s always hard to know how much was decided in advance, but damn near all of it would be a pretty good guess. The final communiqué is now available and it’s clear to see that the expanding role of the G20 itself is the most significant outcome, on the face of it, at least. More on that later. Interesting as well to see Nicholas Sarkozy continues to speak in quite progressive terms about banking reform and the decline of (what he would call) the Anglo-Saxon economic model (‘le laisser-faire, c’est fini’). Together with Angela Merkel, he’s been leading Europe’s push for firmer regulation and bonus caps. In comparison to these right-wing leaders, Gordon Brown (leading a social democratic party) has been dragging his feet somewhat on the caps, though seems to have relented in the end. However, The Economist believes that the outcome was a ‘fudge’:

Going into the summit they [France and Germany] had pushed hard for firm numerical limits on bonuses as a proportion of revenues or capital. The language of the communiqué, however, was closer to the Americans’ position.

Other key outcomes of the meeting included a declaration of intent to reform IMF voting structures by 2011. Any change will be at the expense of European board members, who will have to give up at least 5% of their voting weight, in part to China. Blake Hounshell is:

interested to see if Geithner’s ideas for reforming the IMF gain any traction. The micro story is a technocratic one, but the macro story could be yet another sign that China is being welcomed into the inner circles of global power. The scuttlebutt is that the Treasury secretary hopes to persuade China to sign on to his priorities on capital requirements and other reforms in exchange for getting a larger share of control of the fund. Anyone know the Chinese word for “bribery”?

The Fund is also getting another funding boost of $500bn. The IMF’s twin – the World Bank – was also discussed and noises (though no committments) have been made about small voting changes there too. More details will be available in the run-up to the Bank’s spring meeting next year.

Broader questions about banking regulations got a good deal of attention, though nothing firm came out of the meeting. However, it is important to note that since the London Summit, G20 leaders haven’t taken the easy route and gone quiet on the subject. This is presumably partly due to the domestic political benefits of looking tough on bankers. Somewhat surprisingly, though, the G20 does seem to be serious about real united reform and progress on tax havens has been substantive. The idea of ‘living wills’ for too-big-to-fail institutions has also been addressed in order to set up special regulatory regimes for systemically crucial firms.

On fiscal stimulus, politicians seem to be taking the necessity of working in concert more seriously. The EU fears that the US will ‘turn off’ its stimulus too early, perhaps fostering a much-feared ‘double-dip’ recession. However, the Group pledged not to pull pack on countercyclical policies just yet. The FT heralded ‘a striking area of consensus, given the arguments about stimulus that raged ahead of the previous G20 heads of government meeting in London in April.’

Outside, the protests apparently lacked focus, which is no real surprise. This is the danger of setting yourself up as ‘The Movement’. It’s not meant to be a secret society. On the other hand, Pittsburgh did witness what seems to be the first public use in a democratic country of the sonic blast cannon.

The really interesting point, as mentioned above, is the ascendance of the Group itself. Pittsburgh, in its own words, ‘designated the G-20 to be the premier forum for our international economic cooperation’. This is a body that theoretically represents 90% of world economy and 2/3 of its population. Summits will take place in Canada and South Korea next year and – in theory at least – annually thereafter. Brookings has a paper out on this (but I’d skip straight to the bottom of page four if I were you). Martin Wolf writes (FT leaflet) that ‘for the first time since the industrial revolution, economic power is no longer concentrated in western hands.’ One would have expected Wolf to be more sceptical of the idea that de jure power will translate to anything meaningful. Paul Collier certainly is:

In a world that needs collective action but is composed of 194 governments, the overarching problem is free-riding. The burden of global leadership inevitably will fall on those few governments that are manifestly too big to free-ride. There will be only five such governments: America, China, India, Japan and the 27-in-one European Union. Over the next decade each of these governments will realise that it can be a deal-breaker: if it tries to free-ride, the other four will refuse to step up to their responsibilities. These five will be the G5, the group that runs the world.

As Wolf acknowledges:

The whole point of the G20 is to allow the world’s most important leaders to have a proper discussion about the world’s most difficult problems. But with 29 people, plus support staff, in the conference room, it will be very difficult to break through the formalities. One diplomat involved in the planning for Pittsburgh points out that if everybody around the table insisted on making a three-minute opening statement, it would take an hour and a half before the discussion could even begin.

Marc Weisbrot has suggested that the move from the G8 to the G20 is not as significant as has been made out, since the G20 lacks any (formal) power of enforcement. For Weisbrot, the G20 issue distracts from the structural iniquities of power at the IMF, World Bank and WTO.

The G20 is not a permanent body, nor does it have a headquarters or secretariat. This might help it in terms of flexibility – in global governance, there’s actually something to be said for ad hoc decision making (what wonks call variable geometry – but it won’t do much for equality between rich and poor countries. There’s also a danger that as ‘the premier forum’, the G20 starts to feel entitled to make decisions affecting non-members without consultation. Before this becomes too gloomy, though, it’s worth saying that 20 voices are better than 8  in democratic terms, so at least this is a move in the right direction, more or less.

From the scene, Paul Mason wrote that ‘bit by bit the world is moving from an order based on treaty and formal sanction to one based on consensus, horse-trading and the diffusion of power’, adding that ‘here inside the Pittsburgh G20 Summit it feels like being there at the birth of a postmodernist medieval empire.’ Has Mason been reading Hedley Bull? Either way, I suspect he’s right.

Media and the World Economic Forum on the Middle East 2009 in Jordan

This is a guest post by Kyle Christie, a blogger, political analyst and student of journalism. He writes at The Christie Communiqués and Through the Middle East.

Yesterday saw the end of the World Economic Forum’s meeting on the Middle East, held on the banks of the dead sea in Jordan. A range of panel discussions took place, and you can find reports on ‘Sustainability in the Middle East, Middle East E-Living‘ and ‘Closing the food gap among them.

If you really want, you can also see photos from Flickr of the conference.

There was also a panel discussion on ‘Race for an Audience: Media in the Middle East‘, the (hour and a half long) video of which can be seen here (sorry, embedding didn’t work).

By the end of the forum, the participants challenged themselves in two areas, as the Dubai Chronicle reports:

Energy – increase conservation; develop alternative energies; and utilize smart grids.

Youth – with 65% of the Arab world’s population under the age of 25, the region must develop this bulge by “providing them with education and developing, retaining and attracting talent,” said Samir Brikho, Chief Executive Officer, Amec, United Kingdom, and Co-Chair of the meeting.

For a critical opinon of the World Economic Forum, see ‘Leftist Youth’ writing at 7iber.com, a Jordanian website for young citizen journalists.

Unfortunately, there was little talk of micro-payment projects or, beyond the above discussion which is well worth watching, much discussion of the role of the media in the Middle East. Obviously the World Economic Forum can be expected to have other things on it’s mind – petrodollars and the wider recession – but press freedom and a focus on developing the Middle East (where there is still widespread poverty) are issues worthy of greater, more expansive debate.

Leopards and spots

Marc Weisbrot of the Center for Economic and Policy Research has written an op-ed on the IMF’s increased funding and possibilities of reform. At the core of his argument is the belief that the Fund simply hasn’t changed since the bad old days so excoriated by the likes of Stiglitz and Sachs:

in spite of the depth of the world recession, the Fund is too willing to sacrifice employment, and increase poverty, in pursuit of other goals. A country can always reduce a trade deficit by shrinking its economy, since that causes households and businesses to import less. The main purpose of IMF lending in the current crisis should be to enable low- and middle-income countries to do more of what the rich countries are doing: adopt stimulus packages that counter the downturn.

It’s not often that an article comes along with that you can agree with without reservation or qualification, but I think that this might be one of them. In the meantime, The Economist worries that all the attention the IMF is getting runs the risk of sidelining the World Bank. Over at the Bank, Shanta Devarajan insists that ‘even though it is the least integrated with the global economy, Africa may be the worst hit region by the global economic crisis’, due to falling private capital investment inflows, falling remittances, falling commodity prices and falling foreign aid. Owen Barder addresses this last point when he notes that while Wednesday’s Budget didn’t cut aid, it didn’t raise it either. Duncan Green is right to suggest that with Britain’s fiscal condition the way it is, this demonstrates the Prime Minister’s genuine (and somewhat exceptional) commitment to international development.

Across the pond, Simon Johnson argues that the current financial crisis is a similar one to those that plagued middle-income countries in the 1990s:

In each of those cases, global investors, afraid that the country or its financial sector wouldn’t be able to pay off mountainous debt, suddenly stopped lending. And in each case, that fear became self-fulfilling, as banks that couldn’t roll over their debt did, in fact, become unable to pay. Just as in emerging-market crises, the weakness in the [U.S.] banking system has quickly rippled out into the rest of the economy, causing a severe economic contraction and hardship for millions of people.

It’s been widely observed that the US (and other western countries) are now engaging in the very economic recovery strategies denied to the likes of Argentina, Malaysia, Thailand and South Korea. (See Marc Weisbrot’s article for more on this – even now, El Salvador’s agreement with the IMF prevents it from using expansionary fiscal policy.) But for Johnson the financial sector has learnt little from the crisis:

there’s a deeper and more disturbing similarity: elite business interests—financiers, in the case of the U.S.—played a central role in creating the crisis, making ever-larger gambles, with the implicit backing of the government, until the inevitable collapse. More alarming, they are now using their influence to prevent precisely the sorts of reforms that are needed, and fast, to pull the economy out of its nosedive.

Plus ça change, plus c’est la même chose.

Taking the concept of diversification a little too far

According to FP Passport (via Bloomberg), Lehman Brothers’ liquidators are holding onto the firm’s stock of uranium (yes uranium), in the hope that prices will rise soon. Apparently they have ‘enough for a bomb, if you knew how to do it’.

That’s what I’d call a toxic asset.

(I’ll be here all week. And beyond, lucky for you.)

A G20 roundup

The London Summit

Alex Evans at Global Dashboard is reporting on the current state of negotiations at the summit and all-round good egg Adam Groves interviews Mr Billy Bragg in the City of London. While just about every respectable politician in the world is sounding off about the importance of avoiding protectionism (with their fingers crossed), a contrarian Noreena Hertz in The Times calls for protectionism. Though, on that note, prospects for Doha are predictably bleak.

The crisis and the developing world

Jeremy Seabrook thinks Gandhi had the right idea (he really didn’t).The FT has a nice supplement on the the financial crisis in Africa and the UK is boosting foreign aid (a bit).

Global governance

There’s some big academic thinking from Saskia Sassen at oD about a world economy powered by finance. Stiglitz et al. at the UN are arguing for the G20 to be replaced by a Global Economic Council, while the Sec-Gen is afraid of total meltdown. On the subject of disaster, we should apparently be expecting a ‘”perfect storm” of food energy and water shortages’ sometime before 2030. More broadly, Timothy Garton Ash highlights the G2 (US and China) in the light of the EU’s failure to work cohesively. The New Statesman, on similar lines, believes that ‘no-one rules the world’ and CEPR welcomes us to a truly multi-polar state of affairs.

Stories from recent American trade history

2001: Developing countries agree to a new trade round. The Doha Round was to be a ‘development round’. These countries agreed on the condition that the round would work towards significantly reducing agricultural subsidies in industrialised countries.

2002: George W. Bush signs into law the Farm Security and Rural Investment Act, increasing agricultural subsidies by 80%.

***

Another story from 2002: A proposal was made to loosen WTO intellectual property (TRIPS) rules in order to allow countries to use generic drugs instead of their more expensive (read: unaffordable) patented versions without fear of being punished for copyright violation. This would apply only during a public health emergencies such as the AIDS/HIV pandemic. American pharmaceutical companies subsequently donated $50 million to Republican Congressional candidates. Representative Nancy Johnson ($204,817 donation), Senator Orrin Hatch ($387,824 donation) and Senator Charles Grassley ($100,000 donation) were amongst the Republicans who opposed the plan. The US vetoed the proposal at the WTO. Of the 144 members, it was the only one in opposition.

Financial crisis, macro-adjustment and poverty workshop: a few thoughts

Yesterday I attended the ESRC World Economy & Finance Research Programme workshop on the financial crisis, macro-adjustment and poverty. This was the first time I’ve attended an academic conflagration of this kind and  I enjoyed it greatly, especially the free food.

The best thing about an event like this is the interdisciplinary nature of the discussion – the event was attended by economists, ‘politics people’ (as they called themselves), development professionals and lawyers. (For interdisciplinary, read political scientists scholars like myself laughing at economists with all their silly models…) It’s also a bit embarrassing to hear middle aged academics refer to ‘the poor people’. Something about that turn of phrase just makes me cringe.

I was particularly interested to hear from a member of IMF staff in attendance. I should make it very clear that he was speaking in a personal capacity and was not representing IMF views or policy. Once he got into algebraic equations I became a bit lost. I could understand what he was trying to do – to explain the rationale behind conditionality decisions – but surely this kind of methodology, which included an attempt to operationalise the degree to which governments care about the views of their citizens on a scale of one-to-ten is going to yield a  somewhat rigid and reductionist explanation (see comment above re. silly models). Over the course of the day I came to the opinion that the role of the politics department is to constantly remind the economics department than life just isn’t that simple. Of course, there’s a place for both approaches. However, when the speaker began to invoke pi I could no longer cope. How could pi possibly have a bearing on this? It’s beyond me. I’m trying to find out from a mathematician friend, who may be able to shed some light.

Another point that bothered me – and which I was going to chase up, but was beaten to it – was the suggestion that special interest groups ‘distort’ governments’ economic policies. This is a perfect example of what’s wrong with the IMF’s mindset – the assumption that there exists some kind of ideal, neutral, objectively correct policy positon, from which everything else is a deviation.

Anyway, despite calls – which even I considered somewhat alarming – for the nationalisation of the entire financial sector, I had a very informative and thought provoking day.

Ayn Rand rides again

(Well, if she ever really went away.) Yes, sales of the book once reported to be second only to The Bible in Americans’ reading habits is once again in the news. Ayn Rand’s Atlas Shrugged is a fictionalised defence of free market (fundamentalist) capitalism. I’ve heard rumours that the book’s Amazon sales ranking correlates very well to the peaks and troughs of the Dow Jones in recent months… It has also been noticed that as the financial crisis grows, the pattern of banking bailouts of increased calls for protectionism and regulation strongly reflect the plot of Rand’s book. They have a point, and in the novel, things didn’t end well – society largely collapsed, except for the select few market ideologues who – as I recall – set up some kind of capitalist utopia out in the mountains. It’s  a thought-provoking book and well worth a read (if you can get through the 100 page philosophical monologue ¾ of the way through. Just try not to take it too seriously and become some kind of zealot objectivist emotionless automaton. It does happen to people.

Davos roundup

I’m currently mired in an attempt to reconcile postcolonialism and (neo)Gramscianism, so there will be no in-depth post-game analysis of the WEF, I’m afraid.

Here are a few links though:

• Davos finds no answers to crisis
• Lack of inspiration unites Davos delegates
• Acrimony dashes Doha hopes
• Brown: World Bank, IMF ‘out of date
• Elvis Has Left the Mountain

Photo by World Economic Forum, via Flickr (Creative Commons).

Kristof on sweatshops

Food for thought:

Davos: a primer by links

The World Economic Forum begins tomorrow.  I think this is a pretty good summary of what you need to know…

The FT has a preview here, while Nouriel Roubini sets the scene. There are some interesting non-attendees this year. On the other hand, the BBC has a ‘beginners’ guide’ for hypothetical new invitees, including such useful tips as ’some people swap their mountain boots for fancy shoes at the entrance, but most people don’t bother with carrying the extra luggage.’ (Barack Obama won’t be among the neophytes, as he is apparently somewhat busy at the moment.)

In terms of social media, excluding anything I mentioned in my WEF preview, the BBC has a dedicated Davos Twitter feed. Once it all gets rolling, check out the WEF’s own webcasts.

World Economic Forum preview

The name of this blog comes from a quote by John J. Sweeney (see the ‘about‘ page). ‘Davos’ is in fact nothing to do with the eminent Dalek Davros (unless there’s something we’re not being told about Rupert Murdoch – compare here and here). It’s actually shorthand for the World Economic Forum (WEF), which takes place annually in Davos, Switzerland. This year’s meeting is due to begin on 28 January and given that I’m name checking it on my masthead, I think the gathering deserves some coverage.

The WEF is, depending on your point of view, a highly important summit which brings together the most powerful and brilliant minds today to discuss matters of global import, or alternatively a cliquey and incestuous get-together/vacation for businessmen and a few politicians. Of course, in reality it’s both.

At any rate, the following is how the WEF sees itself:

Exciting, no? This year, Davos is getting down with the kids and aboard the social networking/Web 2.0 bandwagon. They’ve even got Netvibes and Twitter accounts. I guess the business elites of the world are aware that they need to work on their PR, this year especially. Did I go too far in calling it bandwaggoning? Am I too cynical? I’m in two minds. On the on hand, more input and public voice is always good. On the other hand, the people who go to the WEF really aren’t going to be influenced by YouTube videos.

At the same time as this is all happening in Swiss ski resorts, the World Social Forum (WSF) is meeting in Belem, Brazil. Now, at the end of the day, I’m no more a fan of the WSF than I am of the WEF, but I feel like giving the underdog some props.

As you can see from the photo, the WSF is a somewhat different (and more modest) affair. (Though it looks like a lot more fun.) In its own words:

The World Social Forum is an open meeting place where social movements, networks, NGOs and other civil society organizations opposed to neo-liberalism and a world dominated by capital or by any form of imperialism come together to pursue their thinking, to debate ideas democratically, for formulate proposals, share their experiences freely and network for effective action.

It is from the WSF that the famous anti-/alter-globalization slogan ‘another world is possible’ hails. Of course, the way that Davos Man – a term purportedly coined by the late Samuel Huntington – claims to be all in favour of  social justice a la the WSF. But it doesn’t really wash. The WEF and the WSF are not at all about the same things. Presumably, the Davos attendees find this kind of talk a necessity of legitimation. Or to put it more cynically, a cloaking device.

All the same, I feel impelled to ask – it’s becoming a recurring theme – where is the middle ground between the market fundamentalists and the Marxists? It has been tried, to a degree, with little success. Both WEF and WSF are essential to global public debate. (See a debate between them here.) I like it that they exist. But why must we choose between the Davos branch of the Mont Pelerin Society and a bunch of crusties on holiday? (Too harsh?)

This is a big event, despite it all, if only because nothing else brings together these people like this. Last year the highlight seems to have been Bill Gates speaking on ‘creative capitalism’ (see the subsequent online conversation). Obviously the ‘frightening’ global financial crisis will be centre stage now. No doubt the environment will be discussed, though one expects it to get short shrift/lip service. The provisional programme can be downloaded here.

Photos by World Economic Forum and skasuga, via Flickr (Creative Commons).

P.S. As an ‘influential blogger’ (shome mishtake surely?), I’ve been asked by a digital media firm (on behalf on CNN) to submit a question to the participants at the WEF. I’m going to throw it open to you, dear readers – if anyone has any ideas, please post them in the comments.

Liberté, égalité, fraternité… et moralité?

According to the FT a few days ago:

France is to step up efforts to instil moral values in the global market economy by urging policymakers to consider fresh ways of combating financial short-termism.

So far so unrealistic. Don’t get me wrong, I very much like the idea of a self-regulating, morally upstanding and responsible financial sector.

I am particularly enamoured of President Sarkozy’s call ‘for a capitalism for entrepreneurs rather than speculators’. The utopian side of me rejoices. But the sceptical-realist in me (which seems to be growing stonger by the day) laughs aloud. France is going to teach the world to forsake short-term thinking for profit? To quote Joe Strummer:

Greed… it ain’t going anywhere! They should have that on a big billboard across Times Square.

Actually, that might be an idea… They can get the Élysée Palace to fund it.

Beginning to sink in?

The Financial Times made me laugh this morning as it mourned the real impact of the financial crisis/recession with the following headline:

New Year honours short on bankers

The crisis in quotes (part one)

A couple of thoughts:

“Capitalism without financial failure is not capitalism at all, but a kind of socialism for the rich.”
– James Grant

“Economists are pessimists: they’ve predicted 8 of the last 3 depressions” — Barry Asmus

(HT: financial-crisis-blog.com)

Taking on Tesco

ActionAid has a new campaign against Britain’s biggest supermarket. Tesco is famous for cutting prices (great for us shoppers) but then demanding that the costs of those cuts are borne by its suppliers, who are often dependent on serving the supermarket and must agree to any and all conditons Tesco chooses. More on Tesco’s supply line practices from ActionAid and at Wikipedia. Personal testimony here.

Essentially, ActionAid is putting pressure on Tesco to pay its suppliers more. Simple as that. And they have a cool video.

This is part of the ongoing Who Pays? campaign.

Expert financial crisis analysis from Bird and Fortune

Because these two always know what’s going on.

The internet as the perfect market

I was reading Thomas Friedman yesterday and one line in particular caught my eye:

“… the Internet offers the closest thing to a perfectly competitive market in the world today”

Now there’s a thought.

Of course, the internet still has problems with asymmetries of information, language barriers, risk of fraud and of course the “digital divide”.

Above all, what prevents the internet becoming a perfect market is its lack of tangibility. That is, if I want to buy a product online, I am unable to feel it, smell it or taste it. I cannot try on a shirt online. So in the end, buying physical goods on the internet will always be a little bit of a gamble. But for intangibles and services, the internet is quite unique. And with a little know how (and that must be the crucial part), one can compare the prices of stocks, insurance, commodities or holidays accurately in real time.

The theoretical potential of the internet as a marketplace is massive – a revolution in competitive advantage. In a borderless virtual world, innovation must be king. No-one will be able to rely on having a prominent outlet on the high street. Not to mention the range of services possible. No longer will we have to rely on the limited choice offered locally or nationally. There can literally be a world of choice out there.

This reminds me of a separate but germane story about the power of the internet for commerce and free choice, also from Friedman’s book. In 1999, Germans found they could get around government prohibition of the sale of Mein Kampf by simply ordering it from Amazon.com. The proscribed text would arrive in the post in an anonymous brown parcel. National laws were evaded and eventually the book reached Amazon’s bestseller list for Germany (which would seem to show that banning it hadn’t been very productive).

Friedman would seem to see these events as demonstrating the power of the internet as a symbol of globalisation. He seems to believe that capitalism + technology + ingenuity = freedom. Now, I hardly need to say that I’m a fan of the internet. It’s much like saying I’m a fan of breathing. (The new Facebook excluded, of course.) And this conception is perhaps broadly correct. But it should be clear that there’s a counterpoint to this triumphalism – just as there is a dark side to globalisation, there’s also a dark side to the internet. I’m thinking of things other than the new Facebook now. Is it a good thing or a bad thing that more Germans are reading Hitler? For their freedom of thought, yes. For Germany as a whole? Perhaps not. Nonetheless my tendency is, in this case at least, to support the freedom of the individual over the good of the community. I say again, there can be literally a world of choice out there. That’s a very exciting prospect, but also one pregnant with challenges.

Kiva.org: bringing microfinance to the masses

Recently I was doing some research on microfinance and discovered Kiva.org. It may or may not be new to the reader, as it’s been going since 2005, but for me it was a fascinating find. Kiva is a nonprofit organisation which combines the internet, individual philanthropy and microfinance. It’s backed by the Clinton Global Initiative, the Rockefeller Foundation and a host of corporate partners.

Ordinary citizens (usually in the developed world) make a small loan to one of Kiva’s vetted entrepreneurs (usually also ordinary people, this time in the developing world). We’re talking about as little as $25, a similar amount to an average charitable donation. The transaction is facilitated by PayPal, which forgoes its usual fees.

Those individual $25 loans are combined into a larger sum (as of 31 August, the average loan made is $469.95) and that sum sent to a microfinance institution “on the ground”, who pass on the money and general help and advice to the entrepreneur.

Vahobjon, a Kiva entrepreneur in Tajikistan. Photo by juxtapose^esopatxuj.

The loans made through Kiva now exceed $41 million, from 331,372 lenders. Oh, and the repayment rate is an impressive 98.48%. The only catch is that you don’t get interest, at present, anyway.

It should be borne in mind that microfinance is not perfect – see the work of Milford Bateman, among others – but there can be little doubt that it is often has a highly positive impact, on the individual level at least. Kiva.org is a very exciting project and makes for a more tangible, targeted and perhaps more useful way for concerned citizens in the West to help encourage international development. It will appeal especially to those who prefer the “bootstraps” approach to poverty-alleviation.

Food security round-up

An article by Alexandra Spieldoch at Foreign Policy in Focus criticises liberalisation of trade and investment, as well as many national governments and accuses them of worsening the food crisis.

She believes that:

“the failed [Doha] talks signal a growing understanding that trade liberalization has destabilized local food systems and hurt farmers, contributing to both the long-term and short-causes of today’s food crisis.”

Doubtless trade liberalisation has hurt some farmers. But it has helped others. It has both hurt and helped others. It’s partly a judgment call, really, to say whether liberalisation has been beneficial or not on balance. I find I must disagree with Spieldoch. There is no question that farmers’ livelihoods are being harmed under current trade arrangements, but I would suggest that liberalisation, if properly enacted, would greatly help the farmers the author refers to. Her implicit claim that such policies aid agribusiness concerns me. In the US and EU agribusiness is a great – perhaps the greatest – beneficiary of protectionism!

Spieldoch goes on to compare recent reports of the World Bank and the UN Interagency Task Force on the Global Food Crisis.

The World Bank’s “New Deal on Global Food Policy” is attacked for its focus on expanding trade rather than helping farmers. It seems too much for Spieldoch to suppose that the World Bank might think that the two are intimately related.

Subsequently, the UN’s framework is accused of paving the way for agribusinesses to dominate, at the expense of smaller-scale farming – due to its support for World Bank loans to public-private partnerships. It is worth remembering, that the UN is generally considered to be a far less economically liberal organisation than most international economic institutions. At any rate, Spieldoch is begging the question. The UN draft document she refers to explicitly and openly states that “supporting smallholder farming is not enough”. Indeed, I find it hard to argue with that. Of course, the devil is in the detail, something that this draft offers little of. Nonetheless, it seems perverse to reject out of hand any attempt to engage with private large-scale industry.

The article asserts that intergovernmental “institutions are still focused on investment and growth in agriculture based on privatization schemes, deregulation, and trade facilitation” and that “this is exactly the approach that has contributed to many of the problems we are seeing today in the food system”. I find it hard to accept that the heavy regulation and widespread nationalisation of agriculture would have resulted in a better situation in “the food system” than we see today. Indeed, it seems likely that such a state of affairs would lead to a far worse crisis.

Meanwhile, Lord Haskins argues the case for free trade as a superior guarantor of food security. I was surprised to read that “today Britain is about 60 per cent self-sufficient in food production.” Haskins believes that the EU should encourage greater food output:

“All restraints on production should be abandoned. Plans to switch land from food to biofuels should be urgently reviewed. Finally, the downward trend in expenditure on food research should be reversed.”

Whilst he does not see the short-term crisis as too severe, he warns that “in the medium term there may well be a global food crisis of Malthusian proportions if current demographic and climate trends continue.”

In the FT, it is reported that the Director-General of the UN’s Food and Agriculture Organisation has criticised the “neo-colonial” plans of countries (such as China and Saudi Arabia), as well as western corporations and investors to buy up agricultural land in Africa to grow food for domestic markets. Apparently, “countries such as Sudan, Ethiopia and Ukraine are opening their doors.” One is unsure whether to condemn the gall of the investors, or to commend their imagination. Of course, if Ethiopia is “very eager” to rent out her land, who am I to criticise? But at the same time, one can’t help feel an almost instinctual sense of concern and alarm.