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June 12, 2008

Exclusive: The Cure for Shortages is Growth

William R. Hawkins

UN Secretary-General Ban Ki-moon, addressing the High-Level Conference on World Food Security held in Rome on June 3rd, set a target for increasing world food production 50% by 2030. This is the proper response when faced with a shortage. People need more food, so they should have it. If someone were to tell those facing starvation or malnutrition that they should just tighten their belts and do without, maybe rest more to reduce their need for calories, they would be laughed at as fools, if not denounced as heartless monsters.

Price increases mean that supply has not kept up with demand. Yet, when we are confronted with a shortage of oil or other forms of energy, we are often told to do without rather than increase supplies. But the higher demand for food and energy has the same roots, the desire of people the world over to improve their standards of living. Unfortunately, in certain Left-wing intellectual and policy circles, there are those who do not feel the average person deserves to be better off.

Rising incomes enable more people to eat better. The World Bank estimates that by 2030 more than a billion consumers in the developing world will have sufficient income to eat a middle-class diet. China, for example, increased per capita meat consumption by 140% between 1990 and 2006, and individual milk consumption by 300%. To produce one pound of meat takes up to seven pounds of grain used as animal feed. So with developing countries' meat consumption expected to double in a generation, demand for grain will grow much faster than population. For African, Asian, and Latin American consumers, eating richer diets is one of the long-sought benefits of development. But so is having better housing, medical care, clothing, jobs, schools and cars - all of which will take more energy. Indeed, the higher price of oil is being driven largely by rapid economic growth in India and China. It is economic growth that provides the higher incomes to buy food and the other attributes of middle class life.

Higher fuel prices do complicate the ability to meet food needs. It requires about 42 gallons of oil to produce one ton of corn in the United States, where productivity is the highest. For farmers everywhere, higher energy prices have driven up the price of fertilizer, electricity for irrigation pumps, the running of farm equipment, and transporting products to market. Improving agricultural productivity, which is the key to increasing food production, depends on access to an abundant flow of energy.

Yet, opponents of growth abound. UCLA geography professor Jared Diamond wrote in a New York Times column last January, "We could have a stable outcome in which all countries converge on consumption rates considerably below the current highest levels. Americans might object: there is no way we would sacrifice our living standards for the benefit of people in the rest of the world. Nevertheless, whether we get there willingly or not, we shall soon have lower consumption rates, because our present rates are unsustainable." After all, he argued, "Much American consumption is wasteful and contributes little or nothing to quality of life." Having been a professor myself (of economics), I can say that the soft, decadent college life can only be enjoyed in a rich country like ours. I knew a number of faculty members like Diamond who always thought how other people spent their time and money was "wasteful" because it did not match their own lifestyle choices. But then I also know many NASCAR fans who think PBS television and opera houses are a waste of resources. The advantage of a well-developed society is that people are free to determine their own quality of life.

The anti-growth lobby has been disturbingly successful in blocking the development of new energy sources in the United States, whether it is drilling for oil or building nuclear power plants. The result has been to make Americans ever more dependent on oil imports subject to rapid changes in world market conditions.

Many of those countries suffering food crises are in a similar situation. Food production in many countries is stagnating. Developed nations have pushed developing countries to liberalize trade in agriculture, dismantle state-run institutions like marketing boards and specialize in exportable cash crops at the expense of staple foods. Developing countries were told they would always be able to buy their food from other countries that could produce more cheaply. This is the textbook global division of labor with which academic economists are so enthralled, as they build fanciful models of imaginary worlds.

There is an interesting irony here, in that the first major move towards "free trade" involved the same decision to forsake home production in favor of cheaper food imports. Richard Cobden led the successful Anti-Corn Law campaign that ended tariff protection for British farmers in 1846, only to find that a world based on international economic integration and interdependence increased the country's vulnerability. Cobden had to imagine a world at peace to make his theory work. He claimed commerce was "the grand panacea" and that under its influence "the motive for large and mighty empires, for gigantic armies and great fleets would die away" as countries became trade partners rather than rivals. But as historian Anthony Pagden noted in his insight book Peoples and Empires, "Like the not dissimilar modern belief that democracies never go to war with one another, this, in time, proved to be an illusion, since commerce could, and generally did, become as much a source for conflict as for peace." Rather than eliminating the motive for a "great fleet," interdependence required naval supremacy. As First Lord of the Admiralty George Goshen said in 1898, "we must have many more [battleships and cruisers] than our enemies if our trade routes and food supplies are to be protected." When a vital resource falls outside national control, power must be projected to regain control.

The idea in 19th century England, and also in many developing countries today, is that workers "released" from agriculture by the substitution of imports for domestic harvests could go to work in manufacturing or other more advanced sectors of the economy. The United States took a different approach. There was a major shift of labor from farms to factories in America, but that was due to the increase in farm productivity. The country did not have to give up its food security to enjoy industrial growth. Indeed, the U.S. became the world leader in both.

Soon after entering office, President George W. Bush made the argument for food security. He told the Future Farmers of America on July 27, 2001, "How do we make sure American agriculture thrives as we head into the 21st century? I mean, after all, we're talking about national security. It's important for our nation to grow foodstuffs, to feed our people. Can you imagine a country that was unable to grow enough food to feed the people? It would be a nation that would be subject to international pressure. It would be a nation at risk."

China has set "self-sufficiency" at the center of its agricultural policy. American farmers, who have longed for access to 1.3 billion Chinese consumers, have been disappointed as Beijing has not allowed imports to displace home grown supplies. India, the second most populous nation, is actually a net food exporter - though it has recently placed restrictions on exports to keep supplies at home and prices stable in its domestic markets.

For years the World Bank discouraged investment in agricultural development in the Third World. Then suddenly last year, it published the study "Down to Earth" by economists Luc Christiaensen and Lionel Demery that argued growth in the agriculture sector is at least twice as effective at reducing poverty as growth in any other sector. The United Nations has estimated that to create a Green Revolution in Africa $8 billion to $10 billion annually will need to be invested to boost productivity. This suggests that the overall price tag for national governments and international donors could exceed $15 billion to $20 billion a year, because of the need to expand supporting elements, such as roads, irrigation systems, education and research.

Yet, again, the anti-growth lobby is opposed to using modern science to boost food production. The "back to nature" environmentalists only want organic farming or other alternative approaches to agriculture that use minimal external inputs, especially fertilizer, pesticides, irrigation systems, road building and genetically modified seeds. It is the primitive state of African agriculture, however, that has kept it at one-tenth the productivity of American farms, which have pioneered scientific advances in high-yield crops.

One of the anti-growth movement's heroes is Tewolde Berhan, head of Ethiopia's Environment Protection Authority. In a June 28, 2005 profile on the Left-wing website CommonDreams.org, he was hailed as one who "speaks for a growing number who believe that Africa should return to natural, sustainable methods of agriculture better suited to its people and environment." Berhan is quoted as saying ""Organic farming disturbs nature as little as possible." Today, Ethiopia is in the midst of famine, with 6 million lives reported at risk from starvation.

It is by the disturbance of nature that civilization is created and people move beyond old limits. We should not return to the "malaise" of the 1970s when during the last great energy crisis, President Jimmy Carter told Americans to just put on a sweater if their homes got cold in the winter, and accept national decline. But if the effects of anti-growth policies in the U.S. are only "inconvenient" as Al Gore would say, for the rest of the world, failure to move forward is a leading cause of death.

William Hawkins is Senior Fellow for National Security Studies at the U.S. Business and Industry Council in Washington, DC. Feedback: HawkinsUSA@aol.com.