According to the New England Complex Systems Institute, high food prices triggered rioting around the world in 2008 and 2011 and we are due for another wave of global social unrest this summer.
“Increased vulnerability is being triggered by an apparent increase in extreme weather events and a dependence on new exporting zones, where harvest outcomes are prone to weather vagaries; a greater reliance on international trade to meet food needs at the expense of stock holding; a growing demand for food commodities from other sectors, especially energy; and a faster transmission of macroeconomic factors onto commodity markets, including exchange rate volatility and monetary policy shifts, such as changing interest rate regimes.
What is more, financial firms are progressively investing in commodity derivatives as a portfolio hedge since returns in the commodity sector seem uncorrelated with returns to other assets. While this ‘financialisation of commodities’ is generally not viewed as the source of price turbulence, evidence suggests that trading in futures markets may have amplified volatility in the short term.”Plain English translation:
- global warming: climate change from using fossil fuels
- deregulation: special export zones
- globalization: loss of national self-reliance
- peak oil: growing cash crops and biofuel instead of food
- capitalism: using food production as a bank
In other words the hippies are right. Allowing wealthy people and corporations to accumulate and trade control of land, industry and infrastructure gave us a cycle of reinvestment in technology and resource extraction, leading ultimately to a world with many more, healthier, wealthier, better-educated people. But this is also an volatile and expensive world, and at the peak of our prosperity we have decided to stop controlling the volatility and ignore the hidden costs.
