By Stephan Zimmermann, on August 6th, 2008
Since food, together with air and water, is one of the three basic items which all living things require without question, it is an ideal subject for economic discussion. Unfortunately, it is also almost ideal for normative economic judgments. “We should” or “they should” abound from intellectual forums to universities to television shows, often without regard to the potential consequences of any one or a series of actions taken.
Economics has neatly quantified the question of supply and demand. On a factual basis, we can reasonably predict the growth of world population, ceteris paribus. Other sciences have determined a general level of nutrients, usually measured in calories, required for the average human being to exist. Still others can show how much food we can produce, given acreage, climate, and the potential for inclement weather conditions.
The sum of independent, impartial analysis shows clearly that much of the world’s population is more likely to die from disease or war, including nuclear, than from long-term starvation.
Debates ranging from global warming to energy, biotech, poverty, hunger, disease, and education, among others, are too often described as “crises.” This is certainly true of the current recognition that oil is a reasonably predictable finite supply, while existing and future demand can increase or decrease, depending on individual people’s choices.
In the short run, of course, the oil “crisis” will no doubt have a substantial impact on world agriculture. Economics can measure (or predict) what is likely to occur as prices rise or fall, as crops are switched, or as government policies change.
As farmers opt to change to corn production to feed the biofuel craze to help offset global warming, certain other crops usually grown on the same acreage are likely to increase in price. In Germany, for example, the price of barley doubled from 2005 to 2007. Further increases and switches out of barley and hops can be anticipated. Beer in Germany is as much a staple as tortillas are in Mexico. Economic impacts can be easily measured and calculated, down to such items as beer or tortillas.
Grain production, including corn, soybeans, and other cereal grains, have reached record prices and are expected to continue at least through 2009, according to USDA estimates.
The good news for American consumers: the same report indicates that retail prices are likely to be affected with an increase of less than ten percent of the change in corn prices. While there will be an obvious price impact, it is clear that the United States does not face an imminent “food crisis” as so many would-be pundits like to predict.
The same cannot be said for various consumers around the world. Since conventional economic wisdom measures prices in terms of American dollars, it is clear that certain segments of the world’s population, especially farmers in Third World countries, will suffer. Grain prices that might have been marginal before adding the costs of the current crude oil spike are likely to be unsustainable.
It is not the agricultural output of the world that may cause starvation but the simple acceptance of modern economic theories, such as the use of “free enterprise” as a world standard and goal.
Government policy controls fare little better. China’s economic policies during Chairman Mao’s “Great Leap Forward” and “Cultural Revolution” resulted in some twenty to thirty million deaths from starvation. They were largely unreported at the time.
In July, Argentina, one of the world’s top suppliers of soybeans, defeated by one vote a government proposal by President Cristina Fernandez-Kirchner to impose a proposed increase on the tax on its nations’ farmers to 44.1%. That proposal led to a nationwide farm strike in Argentina.
According to RIA Novosti political commentator Andrei Fedyashin, “It became clear in early April that the farmers’ strike in Argentina – soy, maize, and wheat producers – was creating a threat to the world economy. … By the end of March, bread, pasta, poultry, and milk started disappearing from shops in many cities, including Buenos Aires. Beef was almost gone. For a country where more beef is consumed than anywhere else – 74 kg per capita in one year (compared to about 46 kg in the United States and a little over 16 kg in Russia) – this was quite an ordeal.”
Whether individual nations choose to adopt a free enterprise approach or one of government control, it again sheds light on the nature of mankind and its perception.
Economics may quantify certain effects in the private market or government-regulated or dictated policies.
It cannot help to end regional hunger or starvation.
Stephan is a former department chair for economics and taught at various colleges and universities at both graduate and undergraduate levels. Read his full bio at and submit your economics-related questions to his post “Got an Economics Question?”
By R. C. Anderson, on August 6th, 2008
One of the most difficult things for many people today is exercise. Everyone may know that it provides multiple benefits, but often these are simply not tangible enough to provide the motivation needed to get out of the house. Many people hope instead for a pill that will eventually be able to provide them the benefits of exercise while allowing them to go about their busy lives. Scientists may soon be able to grant this wish. On July 31, Cell published an online article by Dr. Vihang Narkar and other scientists regarding the very real possibility of such a pill.
For thousands of years, the only way to become fit and healthy was to eat properly and exercise regularly. Now, however, Narkar and his associates have pin-pointed the proteins and genes triggered through exercise. The main protein involved, PPARδ, acts as a trigger which turns on genes that control fat burning and endurance.
In 2007, Ronald Evans of the Salk Institute for Biological Studies and his team engineered mice that naturally produced more of this PPARδ protein, hoping to see a difference in their endurance. Interestingly, they found the engineered mice were indeed able to run almost twice as long as mice with normal levels of this protein. This, however, required genetic manipulation of the mice on a cellular level at conception. For people, a pill would be ideal. Therefore, Evans and his team created a pill for their mice which would increase production of PPARδ. When this pill and exercise were combined for four weeks, mice taking the pill were able to run 68% longer and 70% farther than mice without the pill. By five weeks, endurance had increased by 100% when compared to levels prior to taking the pill. For this pill to offer any benefits, however, the mice were required to exercise.
Instead of this, Evans wanted to create a pill that would offer benefits without any exercise at all. To do this, he and his team gave the mice a different drug, AICAR, which increased the levels of a specific enzyme used during exercise. The increased levels of this enzyme fooled the body into believing it was exercising even though it was not. The combination of these two drugs allowed the mice to be sedentary, yet run 44% farther and 23% longer than before they took the pills. After four weeks on these drugs, the mice acted as if they had been exercising every day.
Fighting Obesity and Cardiovascular Diseases
Drugs such as these could offer more than simply allowing people to run farther; they could significantly help those with diseases that prevent them from exercising. For those with diabetes or obesity, these drugs could offer hope. Although these drugs won’t mysteriously melt unwanted fat or shrink one’s waistline overnight, they do offer the ability for someone to do these things much easier. Rather than walking or running a short distance and becoming overcome by exhaustion, someone on these pills could go farther with less stress and burn an increased amount of fat while they do it.
With obesity and cardiovascular diseases on the rise, a pill such as this could allow someone to increase the benefits they obtain from only a minimum amount of exercise. Narkar says this could help those with “respiratory disorders, cardiovascular abnormalities, type 2 diabetes and cancer…muscle diseases such as wasting and frailty as well as obesity…” This comprises a large group of people. According to the American Health Association, American adults stricken with cardiovascular disease (CVD) reached 79.4 million in 2004. Of those, 871,500 died. It is also estimated that 140 million, 66% of the population, is overweight and 66 million are obese, costing $117 billion in 2001 and $3.9 billion in lost productivity. Furthermore, 78.2 million either have diabetes or are on the verge, with 72,800 dying from it in 2004. One in three people now have at least one type of CVD. If all CVDs were eliminated, the life expectancy would increase by seven years. Not only that, but we could have saved the $431.8 billion in direct and indirect costs associated with cardiovascular diseases in 2007.
With a pill that could help people gain more from exercise and increase the body’s ability to burn fat even without exercising, these groups of people could gain more than simple satisfaction at having done something good for their body; they could increase the quality and length of their life. The Journal of the American Medical Association in 2004 published a study that showed people aged 70-90 who ate a Mediterranean diet and exercised decreased their risk of death from CVD, coronary heart disease and cancer by 65%-73%. If just a portion of these results could be gained by simply taking a pill, millions of lives could be improved and possibly saved every year.
By G.L.C., on August 6th, 2008
Fannie Mae and Freddie Mac together own or guarantee almost half of the $12 trillion home mortgage debt. In an attempt to rein in Fannie Mae and Freddie Mac, President Bush, on July 30, signed into law a package to resurrect the mortgage industry by pumping in $300 billion to help distressed homeowners get more affordable, government-backed mortgages and get out from under risky mortgages they cannot afford. The new law creates a stronger regulator for the two companies and gives the government the option to take equity stakes if the two companies run into trouble. In order to spur home buying, it offers tax breaks, sets up the first national licensing system for mortgage brokers and loan officers, and raises the limit on the size of mortgages that Fannie Mae and Freddie Mac can guarantee. The markets welcomed the new law and the shares of the two companies initially rose.
But whether the new law will succeed in reining them in is doubtful. The main reason the law might fail is the immense lobbying clout of Fannie Mae and Freddie Mac, which is imminent from the fact that a proposal to eliminate their lobbying budgets was not even put to a vote on the Senate floor. Majority Leader Harry Reid refused to allow a vote on Republican Jim Reid’s amendment to bar political donations and lobbying by the two companies.
Lobbying by Fannie Mae and Freddie Mac is nothing new. According to an editorial in The Wall Street Journal, the political action committees of the two companies have already distributed roughly $800,000 to U.S House and Senate members this election cycle.
According to the Fannie Mae Foundation website, Jesse Jackson’s Citizenship Education Fund has received $660,000 from Fannie Mae alone since 1996. In the 1990’s Jesse Jackson accused these companies of discriminatory lending practices, but the allegations disappeared once the money started flowing.
On the positive side, the law aims to alleviate home foreclosures via a government guarantee that both penalizes the lenders and gives the government a share of the upside if prices recover. But this provision is voluntary and is likely to have only a few takers. Throwing government cash at a market that is already heavily distorted by tax breaks and subsidies is certainly not a good idea, especially at a time when house sales, if not prices, look at last to be bottoming.
There is virtually no protection for the American taxpayer. It imposes no changes in management or approach on the companies and no penalties on shareholders. The current arrangement allows managers and shareholders to take all the profits and leave the losses to the taxpayer. Under the pretext of protection, the new law gives the treasury secretary the right to dictate terms if the government does have to stump up equity capital and create a new regulator.
The new law might not succeed in reining in the two companies. It has too many loopholes. Loopholes apart, unless lobbying by the two companies is barred, the taxpayer might end up paying a heavy price to save these companies. There is no reason to permit these two companies to lobby Congress when government departments are not allowed to do so.
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