So what is really driving up the cost of food? For one, some of the world’s poor are not as poor as they once were. People in India and China, for example, have more money to buy more and better food. But that change has been relatively gradual. What’s sudden is the sharp spike in oil prices -- 40 percent this year alone, with oil now priced at well over $100 a barrel.
That makes it expensive to operate a tractor, expensive to get crops from farms to factories, expensive for workers to get to the factories, expensive to transport the products to the stores.
Oil does not operate within a free market. Saudi Arabia, Iran and other members of the OPEC oil cartel can -- and do – manipulate supply in order to maximize their revenues. And our transportation system has been constructed so that oil has a virtual monopoly as a transportation fuel.
These challenges will not be solved by declaring a “new economics.” What is needed is to get back to basics: Increase supplies of food and fuels and prices will come down.
By all means, send food aid to those who are starving. But over the longer run, Third World farmers need to be helped to grow more of their own food -- not rely on charity from overseas. (Outlining the obstacles to achieving that requires more space than I have here. But the task is essential: Farming is how most people in the Third World will earn their livings over the decades ahead. Silicon Valley is not coming to the Rift Valley any time soon.)
As for transportation fuel, of course drill more oil (e.g. in Alaska and offshore) but also give petroleum competition by manufacturing cars that can use a variety of fuels. The technology for flexible-fuel vehicles already exists, and the added cost is hardly more than it takes to fill the tank of an SUV with $4 per gallon gasoline.
Do that, and an array of alcohol-based fuels soon will be available. They will be made not just from domestic corn and imported sugar cane but also from weeds and crop residues, biomass, coal and even urban trash.
Some of these fuels would be made in the U.S. Others could be produced by those poor Third World farmers. With increased supply and a competitive market, fuel prices will fall and the dollars you do spend can lift African farmers from poverty. The alternative is to continue sending trillions to sheiks and mullahs who openly declare that their mission is to kill your children. Is this really such a tough call?
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