Until he invited Dylan Ratigan on to muddy the waters, this segment on the Ed Show last night was a rare and extremely edifying look at the role that commodity speculation played in driving up food prices, and helping to spark the unrest that eventually toppled the regime in Tunisia, and appears to be on the verge of doing the same in Egypt. It's actually not that strong on the immediate specifics--its strength lies more in the fact that it tells the longer story--of how FDR set up a system that limited speculation, and how that system was taken apart, beginning in 1991, under the lead of Goldman Sachs. Take a look:
Instead of Dylan Ratigan's Ron Paul-style paranoia about quantitive easing, Ed's reporting would have been better supplemented by stressing how IMF neoliberal policies have helped contribute to this situation in at least three major ways. Starting around 1980, the IMF began conditioning loans on the adoption of "structural adjustment policies" (SAPs). Guiding principles involved in this strategy included:
(1) Cutting public subsidies for food, along with other basics, such as public education, thus making food prices more volatile.
(2) In addition to weakening farm sectors by reducing subsides, the IMF required weakening, if not complete abolition of protective tariffs, which had the effect of destroying most country's ability to feed themselves.
(3) The IMF's focus on loan repayment and "economic development" as the IMF defined it put a high priority on replacing food staples with cash crop production--crops which were, by their very nature, particularly vulnerable to price fluctuations, and thus to speculative manipulation.
Ironally, the reality is that countries like Tunisia and Egypt actually beat the bad odds of the IMF's neoliberal game in one particularly noteworthy way: Despite the incentive structure imposed by neoliberal policies, both countries managed to continue educating a significant fraction of their youth--educating them for jobs that the IMF's neoliberal prescriptions prevented those economies from ever creating in substantial numbers.
It was the enormous gap between youth's work capacity and the lack of suitable employment that created a chronic and widespread social problem that no neoliberal regime could possibly solve. This was the pervasive background settin g the stage for the acute problem of food price spikes. The latter was indeed the detonator. But the former was the bomb.