My word, that chart is absolutely amazing.

Tunisia, Algeria and Egypt all subsidise, through the tax system, the price of bread/other wheat products.

The government buys the stuff on the open markets (usually abroad) and then sells it for much less than they’ve paid to the bakers etc.

And look what happens! When you subsidise the price of something people eat more of it! Isn’t that just an amazing finding? Demand curves slope downwards?

The global demand for wheat appears to be stable. And although Russia had some weather problems last year, supply has held up in the big producers like the US.

So why the sudden huge spike?

@1

Huh? The countries have different diets- the arabs have a diet based mainly on bread, whereas we eat meat, etc. Thailand shows that: they don’t eat much bread because they eat (generalising) mainly rice. You don’t seriously think that do you? Otherwise, all the arabs would be pretty fat, wouldn’t they?

Tim is of course correct. If their government would just get out of the business of subsidising bread and thereby worsening the shortage, it would encourage them to consider eating cake instead.

it’s certainly true that a situation when very many poor people have grown reliant on subsidized food and other staples (see Iran and petrol subsidies) is very hard to extricate yourself from.

here’s some related links.
The empirical relationship between commodity price rises and conflict is weak:

http://chrisblattman.com/projects/commodities/

Self-reported access to food in poor countries paints a brigher picture then food price rise estimates.

Food prices in developing countries haven’t risen as fast as international prices.

none of that refute the argument in the OP that high food prices are a major problem for Arab countries that import and subsidize food rather than produce it.

[not sure why you wrote "when the Saudis give, you know it's serious" - the Saudis are secondly only to the USA in aid disbursements.]

“the arabs have a diet based mainly on bread,”

And of course the decades long subsidy of bread prices has nothing at all to do with this?

“Surely these are the crises we should be bailing out not bankers in their penthouses.”

Well the obvious question is why? We bailed out the banks because it was our money that was at risk. The deposits of ordinary British people. What do we owe to the people of Egypt? People who, by and large, have been our enemies for most of the past 70 years.

“Egypt alone has told donor nations it will need about $10 billion overall in aid in the next 13 months. That is money to keep its poor fed and stop them taking to the streets in all out revolt.”

That is a worry for the Egyptian government but what is it to us?

“Combine that with reports that the business elite who flourished under Mubarak are shifting their wealth to safer havens. In the first quarter $13 billion of Egypt’s foreign reserves has left the country.”

So the sensible thing would be to encourage the Egyptian government to be nice to its own capitalists and not steal all their property no?

“The Arab spring is going to turn nasty. The nations who were hungry will get hungrier and look to us to help them. If we don’t there is a real chance they will feel betrayed by us and by Democracy. If that happens then there will be the preachers of hate on hand to offer an alternative.”

I have no idea why they would feel betrayed by us. We don’t run the world any more. We certainly don’t run Egypt any more. What would be the point of turning to the Islamists? Bread won’t be one penny cheaper under Islamic rule. So it is up to them. They wanted independence. They need to deal with it.

And stopping subsidies would be a good start. Egypt is a large agricultural country. It was the breadbasket of the Roman Empire. But subsidised wheat destroys local farming. They need to restore their own agriculture. Why should we pay to put their farmers out of work and keep their kleptocrats in office?

The West subsidises it’s farming sector. Just a point.

We must agree with Tim – I mean why should we assist our fellow man – kill the weak, keep the strong – it’s the ‘survival of the fittest’ – right Tim?

We can start by getting rid of that Stephen Hawking – he’s weak, no good to society and costly too. Don’t worry about all that physics he’s taught us – we all know the earth is flat and that God made it all in 7 days.

Does this also mean we should get rid of Phillip Green too? – a successful capitalist he may be – but he’s certainly “eaten more than his fair share”.

Oh wait a minute, you don’t think that the people of Egypt are going without because fatties like Sir fill-em up Green is stuffing his face?

Subsidy has nothing to do with food shortages – it’s all the fat people stuffing their faces in the west.

I say – tax the fatties – suck out their fat and use it to power our cities. That way we can feed the world and Tim can shut his mouth about subsidising the poor causing the problems of the world.

In addition to this – anyone who has any economic knowledge (clearly not Tim) will know perfectly well that it’s the printing of money in the US which is causing worldwide inflation (the dollar is the reserve currency you know Tim) and putting pressure on food prices all round the world.

The Middle east is merely the beginning……and this has nothing to do with subsidy – it’s all to do with GREED.

well smfs if you don’t think the UK should care about what happens to Arab countries for simple altruistic reasons, it’s easy to construct arguments that it is in our self interest to have stable Western-friendly regimes in these countries. As opposed to whatever might emerge from the chaos if millions cannot afford to eat. Grains are much cheaper than bombs.

‘“the arabs have a diet based mainly on bread,”

And of course the decades long subsidy of bread prices has nothing at all to do with this?’

From what I remember from my Egyptology lessons bread has been a staple food source since before the pyramids were built, so they must have been subsidising it for considerably more than decades.

@2

So why the sudden huge spike?

Crop failures, then governments trying to maintain stocks for their own needs, then the standard reaction by the stock markets to exaggerate everything. Essentially it’s down to supply – there may not be enough to cope with demand; so the price goes up.

So get a country that depends upon that product (for whatever initial reason) and either they can’t afford to buy it in; or they buy it in, but have sell it at a loss (or a larger loss than before) so it can be afforded by the people. Either way it’s not good for the that country.

Winston ‘roots’ Green:

‘We must agree with Tim – I mean why should we assist our fellow man – kill the weak, keep the strong – it’s the ‘survival of the fittest’ – right Tim?’

Its actually possible to disagree with Tim (see my own comment above) without characterising him as a Nazi, especially when your own comment about turning people into fat are as facistic as it is possible to imagine.

Of course large bread subsidies explain the extent of bread consumption in Arab countries. What do you think would happen to bread consumption if bread prices doubled (but rice, pasta, potato, yam etc. prices held constant?). It’s hardly contraversial. It’s been known for ages.
NYT article from 2008
recent Foreign Affairs article

I’m not sure why Tim responded to this article by pointing out that this is an illustration of the fact that people respond to large subsidies of bread by consuming more bread. True, but beside the point.

@12
You’re wrong I’m afraid – food is priced in $ – the Fed has been printing $’s like there is no tomorrow – as a result the $ is falling in value – ergo it takes more $’s to buy a loaf of bread.

Most western currencies (including the £) are also going for currency debasement (these capitalists are so unimaginative) as this is the ‘tried and tested’ way out of recession – debasement followed by export led recovery.

However the US has never attempted this before on such a scale. Read up on FIAT currencies to see the eventual conclusion to this madness.

http://dailyreckoning.com/fiat-currency/

I mean you didn’t think that printing money had no consequences did you? I mean I know the people on the telly haven’t mentioned it – it all appears to be a ‘free party’.

Well now the world is hooked – see what happens if they don’t keep printing….oh and continuing to print will further exasperate the problems in food prices.

(P.s. Although the Russians did have wheat problems through forest fires – it was their protectionist overreaction which was different. Oh didn’t I mention that too? well protectionism goes hand in hand with currency debasement (stoping cheap imports flooding your market) and cheap money)

10. Luis Enrique – “well smfs if you don’t think the UK should care about what happens to Arab countries for simple altruistic reasons, it’s easy to construct arguments that it is in our self interest to have stable Western-friendly regimes in these countries. As opposed to whatever might emerge from the chaos if millions cannot afford to eat. Grains are much cheaper than bombs.”

I do think we should care. But subsidising piss poor policies that are only going to make the situation worse because they threaten us in some way (which is what the OP suggested) is foolish.

How do you know that giving aid will result in pro-Western governments? A long time ago I read someone who knew Nasser very well. He said Nasser made it clear that the way to get more money from the West was to behave badly, to threaten Western interests. Then he got paid off some more. As I look around the world it seems to me that the more we give in aid to any country, the more they hate us. After all, it works for them. Why continue?

Grain may be cheaper than bombs but welfare dependency is a dead end. They need a functioning economy. Driving out their wealthy and destroying their agriculture is not the way to go about it. In the end we will pay more and more as they grow less and less and the welfare rolls get longer and longer. It is better not to start down that road, but if we are on our way, it is sensible to stop as soon as possible.

n.b. subsidies matter much more when you are living on $2 a day than $200. In rich countries, if the price of bread halved, our consumption would hardly move. In a poor country, if one staple is half the price of all the others, nobody eats anything else.

Shatterface

Is it fascist to be anti-greed?

I’m sorry but I don’t see why the majority (who are not overweight) should have to suffer the consequences of those who CHOOSE to eat more than a) their share and b) what is good for their health.

Wasn’t it aristotle who said moderation is the key to happiness?

I apply the same fairly to greedy bankers, greedy politicians or anyone else who feels they deserve more than the rest.

I can’t help it if I am living a Bohemian lifestyle – I live in London, it’s the only way to pay the rent!

If disliking greed is fascist – then a fascist I shall be.

Not sure about the political analysis here, aside from the economic aspect.

My sense is that the “moderate, largely secular” movement that successfully pressed for the removal of Mubarak is far from content with the situation now, with many seeing it as the continuation of the old regime under new management. They appear to be highly conscious of the danger that their revolution will be hijacked by the military and the business class.

Certainly it is unclear why the Egyptian public would decide to reject democracy before, or shortly after, the first (moderately) free elections have been held. Having gone to such extraordinary lengths in pursuit of democracy, are they really going to reject it before its even got started, in favour of hardline Islamism? The idea doesn’t strike me as particularly credible.

Radical Islam is regularly invoked as a bogeyman by Western states, but the reality – as demonstrated by the Arab spring – is that secular democracy has far more purchase on the imaginations and aspirations of the region’s people. At any rate, the largest Islamic faction in Egypt is the Muslim Brotherhood, which is far more Turkish AK Party than Afghan Taliban.

What the US really fears here is independence, not Islamism. That is likely to be the real reason for it’s attempts to shore up the current regime: to prevent Egypt’s revolution going any further down the route it has already taken. Look at the way a moderately independent Egypt is already undermining US foreign policy re.Israel. The more democratic Egypt gets the more this sort of thing will happen. Washington’s aim now will be to manage the post-Mubarak transition and, crucially, to limit its effects on the status quo.

Arab states whose governments’ policies reflected the will of their people would be a total disaster for US policy in the Middle East. Hardline Islam is an irrelevance to that question. If Islam were the major consideration, the US wouldn’t have made Saudi Arabia a major ally. If the price of basic foodstuffs prompts a further uprising in Egypt, it will be a greater push for democracy and for a more thorough cleansing of the old order. That is what the US is afraid of, not the radical Islamist bogeyman.

food is priced in $ – the Fed has been printing $’s like there is no tomorrow – as a result the $ is falling in value – ergo it takes more $’s to buy a loaf of bread.

wrong.

internally the $ is falling in value at about 1-2% per year (US domestic inflation)

externally, against other currencies, the $ is falling in value at whatever rate it has been depreciating – you can google exchange rate data yourself.

if it was true that the $ price of bread rises as the value of the $ falls, it wouldn’t matter because although the $ price will have risen, you can now exchange your Egyptian £ for more $, because the $ has depreciated against the £ as per your premise.

start with:
bread price $1
exchange rate £/$=1
bread price £1
now $ loses value, and as you suggest $ bread prices rise
exchange rate £/$=0.5
bread price $2
bread price £1

So your story is utterly incoherent.

furthermore the $ has not depreciated anything like as much as food prices have risen, and it is not true that commodity prices boom every time the $ depreciates.

@15 So I’m wrong; apart from the crop failures; except in Russia, and Canada, oh and Kenya too. I’m also wrong about governments trying to maintain stocks for their own needs; except in Russia. So I guess I’m also wrong in stock market exaggeration too?

Yes you’re right about the devaluation of the $ but that’s part of the stock market. The dollar goes down; foreign countries can buy more for the ‘same’ amount so the price goes up. As the price rises more want in on this deal and buy to sell later; more buyers plus same supply equals price increase. Add in a supposedly dwindling supply and the price really increases.

David

why would Arab states whose governments’ policies reflected the will of their people would be a total disaster for US policy in the Middle East?

what would these Arab states do, w.r.t. Israel?
what else would these Arab states do, if their government policies reflected the will of the people?

19. David Wearing – “Arab states whose governments’ policies reflected the will of their people would be a total disaster for US policy in the Middle East. …. If the price of basic foodstuffs prompts a further uprising in Egypt, it will be a greater push for democracy and for a more thorough cleansing of the old order. That is what the US is afraid of, not the radical Islamist bogeyman.”

This strikes me as less than lazy. Why would the US be afraid of that? Suppose that Egypt did become a democratic country. In what way wouldn’t that benefit the West? So they might tear up their treaty with Israel. They are in no position to invade Israel any time soon. They might host terrorists but it is unlikely as Israel would be likely to make them pay. Would a democratic country spend the billions it would cost to maintain an Army that could even think of taking on Israel? Not a chance. Democracies don’t waste much money on the Armed Forces. They would rather spend it on bread. So what else might they do? Push for higher oil prices? Prices are set by the market, not by voting so it would be pointless. Anything else? On the other hand, Egyptians would be likely to consume more Western goods. Export more to the West. Host more tourists. Send more students.

It is a frankly no-lose situation for the US. And it is absurd to pretend otherwise.

@20 but it does add in a small difference which coupled with the effects I’ve already mentioned can start the avalanche.

Consider parity $1=£1=1 loaf of bread. If the dollar depreciates by half such that $2=£1. If bread stays at the original price of $1 I can get 2 loaves for the same price – yippee! Buy, buy, buy!

It really only needs one nudge, but in this case it got several.

Flip C

yes … that’s just a change in terms of trade, nominal exchange rates and international traded prices moving at different rates so real prices change (from perspective of importers/exporters). As you say, a decrease in real price can cause an increase in consumption. But we’re not talking about a situation in which the real prices of commodities have fallen are we?

what about the hypocrisy of supporting democracy in certain middle east countries but turning a blind eye to bahrain? the hypocrisy makes politicians look duplicitous

‘Wasn’t it aristotle who said moderation is the key to happiness’

I don’t remember him suggesting fat people should be rendered, especially since ‘fat’ does not correlate with being rich.

A couple of people have asked why the US would object to Egypt or any other Arab state becoming democratic. Its certainly worth expanding on that point.

Actually, the effects of the Egyptian revolution, although it is far from complete, have already been seen in this regard, as I alluded to in my first comment. US policy towards Hamas over recent years has been to isolate it in Gaza and keep it apart from Fatah. By brokering a reconciliation deal between the two factions, and if it follows through on its pledge to open the Rafah crossing, Egypt has ceased collaborating with that policy, and undermined it to an all but fatal extent. Further democratisation in Egypt and corresponding moves toward independence could see the close intelligence ties that currently exist between Egypt and Israel – based in part on a hitherto shared hostility towards Hamas – begin to come undone.

More generally, and as this poll shows, it is hard to see how democratic Arab governments would do anything other than cool their relations with Washington. Public views of US policy in the Middle East are overwhelmingly unfavourable. For instance, it is not obvious why democratic Arab states would maintain the close military ties with the US, established under autocracy, when almost no-one in the Arab public believes that the US is interested in promoting peace and stability in the region. Instead, the view is that the US is motivated by the desire to bolster Israel and control the regions’ oil, which agenda of course has no public sympathy. Close military ties between the Arab states and the US can only be maintained by the marginalisation of the public, another sense in which autocracy in the Middle East suits American interests.

The most admired world leaders amongst the Arab populations are people like Erdogan, Chavez, Ahmedinajad and Nasrallah, all representing various kinds and degrees of independence from Washington.

Interestingly, the Egyptian public actually views Iran’s possible pursuit of nuclear weapons as a positive development. If that were reflected in Egyptian public policy then Washington’s efforts to isolate Iran would be undermined.

The view that the US actually seeks to promote democracy in the Middle East – as expressed in the comment above – is barely above zero in the region itself, as the poll also shows.

@Winston “typo” Chruchill

If disliking greed is fascist – then a fascist I shall be.

Challenging greed and our generally wasteful lifestyles in the west: OK.

Equating “fat” with “greedy” and suggesting that people who happen to be fat are the cause of all these problems: a very long way from OK.

David

so that boils down to you think the Americans think that an independent Egypt would staring helping Hamas, and the Americans don’t want that.

well, no doubt you are right the Americans wouldn’t like to say anybody help Hamas. Help Hamas do what? Are we talking about making it easier Hamas obtain arms and evade Isreali intelligence services, or did you have more innocuous form of help in mind?

I’m not sure what an “independent” Egypt means. Does it mean a country that receives only unconditional foreign aid? What other means does the US have to interfere with Egyptian sovereignty?

David Wearing,

I think the flaw in your logic is expressed in the following gem:

The most admired world leaders amongst the Arab populations are people like Erdogan, Chavez, Ahmedinajad and Nasrallah, all representing various kinds and degrees of independence from Washington.

Really? Do you think that Mr Chavez, with his support for Colonel Gaddafi, or Mr Ahmedinajad, with his own domestic oppression, are the icons of the Arab spring? That these are the people the young Arabs hoping for democracy and prosperity actually look to? I think I need some evidence to believe that, because my experience of those connected to the Arab spring is that they might not like US foreign policy, but they are smart enough not to interpret that as meaning they have to like despotic regimes.

It is possible to have a pro-western, anti-US foreign policy position you know – Jordan has managed it for years.

Still, I think the key is your phrase “The Arab population” (of where?). You see all Arabs as the same, oddly. This is like assuming the actions of Poland will be logically determined by the views of all of Europe, rather than just the Poles. It is a form of imperialism – refusing to recognise that Arab nations can be different and their populations contradictory. Until you realise that Arabs, like anyone else, do not actually act as a cohesive group, but are instead just individuals labelled with a racial term, your commentary lacks any great value.

@28

“The most admired world leaders amongst the Arab populations are people like Erdogan, Chavez, Ahmedinajad and Nasrallah, all representing various kinds and degrees of independence from Washington.”

As Watchman has noted, Chavez lost any support he may have had in Libya by cuddling up to the murderous Gadaffi.

Just a note of caution when discussing Gaddafi.

This notion that he was a murderous despot hated by libyans is not quite true. Gaddafi was certainly not averse to murdering people when it suited him. But he nevertheless enjoyed widespread support within many groups within Libya. For the reason that he was not simply another Idi Amin or Mubarak raping his antions resources for his personal benefit.

Gaddafi did quite a lot to make the lot of ordinary Libyans better. Better by far than the lot of the poor in many of the nations we supported for decades. Libyans have a good and free health service, good edcuation system and Gaddafi in many ways spent Libya’s income fairly wisely.

For example the “Great Man Made River is a truely visionary feat of engineering which has and will continue to benefit the people of Libya. It was Gaddafi’s brain child. I wonder if it will remain the property of teh Libyan people after we have liberated Libya and given it the freedom of teh Free Market? Or will it be privatized out from under them?

Gaddafi was disliked within Libya and by many North African Arabs mostly for his pan-African beliefs and policies. Many, in Libya and in the countires around Libya do not like Africans from sub Sahara. There is a good deal of racism. Gaddafi was notable for sharing none of that racism. This made him enemies,

Of course from the West’s point of view it was his support for terrorist organization fo all kinds that earns him his reputation. But the Irish, for example, should have nothing but praise for him as he stood shoulder to shouder not with ‘terrorists’ as they would be seen in London, but with revolutionaries fighting against Imperial Oppression. Which is how Gaddafi saw his suport for not only the IRA but all the terrorist organizations.

My point is if we are going to discuss people like Gaddafi and the situation and politics of other nations then we are going to have to stop simply applying card-board cut out goodies and badies analyses conveniently provided for us by those keen to sponsor wars designed to prop up this months regime-du-jour and villify the regimes whose usefulness has run out.

@33

Fine, and Hitler improved the German economy considerably.

(Anyone calling Godwin on that should bear in mind Godwin’s Law doesn’t apply if the parallel is a true one.)

S.Pill,

And was also quite well-liked by the German people. The Gaddafi parallels work well here.

Bluntly, any successful despot has some support from within society – often the middle classes (or those who are benefitting) and army in particular, and in Gaddafi’s case (and in Syria also), from certain tribes (with others opposed). It is unsurprising therefore that despots can do some good. None of which excuses the fact they do not allow democracy to their people.

Gaddafi did quite a lot to make the lot of ordinary Libyans better. Better by far than the lot of the poor in many of the nations we supported for decades. Libyans have a good and free health service, good edcuation system and Gaddafi in many ways spent Libya’s income fairly wisely.

what are you basing that on?

“For the reason that he was not simply another Idi Amin or Mubarak raping his nations resources for his personal benefit.”

His substantial personal wealth is merely a coincidence, then?

I see intellectual laziness is alive and well.

If you read the article at all I made it clear that Gaddafi murdered those who he disliked. I am not interested in defending him as a saint.

The comparison with Hitler is feeble and I suspect you know it.

I am interested in a full and honest understanding of another country as opposed to parroting convenient half truths. But if you prefer the latter and enjoy feeble comparisons then don’t let me stop you.

Gaddafi has creamed off a fortune. But if you want to get righteous about it how come no word was ever said for decade after decade about Mubarak who siphoned off far more. One is a ‘terrible tyrant’ who offends our democratic jusitce loving sensibilites, the other was our valued friend for decades.

Mubarak did very little to help his people or improve his nation. He helped concentrate wealth in a small slice of the population. Gaddafi for all his barmy and unpleasant side, DID help many – not just this tribe or that one as some of you try to suggest – and he DID build the Great Man Made River. These are just facts. If they don’t fit with your prejudices then do yourself a favour and nip out and get yourself some better ones.

I was asked what I based some of what I said about Libya. One place to start reading is this article – http://panafricannews.blogspot.com/2011/03/libya-getting-it-right-revolutionary.html?spref=fb

There are many articles about The Great Man Made RIver. This is a good start – http://www.water-technology.net/projects/gmr/

Christ Dave, that’s hilarious

some fun passage

Under the revolutionary leadership of Muammar Qaddafi, Libya has attained the highest standard of living in Africa … Today, all Libyans own their own homes and cars …. Libyans now earn more per capita than the British….New colleges and hospitals are impressive by any international standard. All Libyans have a house or a flat, a car and most have televisions, video recorders and telephones.

that’s utter rubbish Dave, you need to find some differnet sources of information.

First could you please use my name. It’s David.

Second, the little peice you quote is itself a quote from a book by two very well repsected British Jouranlists, David Blundy and Andrew Lycett. Together they wrote a book called “Qaddafi and the Libyan Revolution” in 1987.

Lycett worked for the Times as a correspondent in Africa, Middle East and Asia. He is a Fellow of the Royal Society of London. Blundy, now dead, was a war corrspondent killed by a snipper in El Salvador.

They are my sources. What are yours?

The rest of the article you try to discredit contains a great deal of interest and many leads for further reading. I did not proffer this one article as all you need to read, nor as a summary of my beliefs, but as an alternative to what appears to be your rather cosy and unquestioning acceptance of the main-stream and official story.

Ok David

I am quite willing to accept that material standards of living in Libya were, relative to the region, high. Small population, big oil revenues, not such a great surprise. The sentence “Libyans now earn more than the British” shouldn’t pass the laugh test, probably originates from an oil revenue per capita figure and does not tell you about the real incomes of Libyan households. I don’t care whether the writer was a fellow of the Royal African Society, it’s a daft thing to write. They won’t have been the first people to write starry-eyed appraisal of revolutionaries – the dangers of “cosy and unequestioning” acceptance of what you read are everywhere!

my knowledge of Libya comes from sources like “Baghdad without a map” by Tony Horowitz (pulitzer prize winner) and I guess this although it contains very little concrete about living standards, and say information like the US State department page that talks about periodic shortages of staple goods caused by economic mismanagment, although let me guess you’re going to call me naive for believing the US State department.

scratch that!

the book you refer to is no starry-eyed appraisal – in fact some quick googling locates a review in Foreign Affairs which says the author [1] conclude “Qaddafi as a danger underestimated by the West and urges Washington openly to support an alternative leadership in Libya.”

so even if the trains run on time, so to speak, they’re hardly defending him

[1] not sure why use of single tense

“Libyans now earn more per capita than the British” is a particularly hilarious statement.

The IMF’s 2010 global PC GDP (at PPP) ranking place the UK at #21 and Libya at… #63: http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)_per_capita

Yes, Gaddafi’s got a really dynamic *centrally planned* economy going there. I doubt the all the (er, hello) *oil* provides any economic benefit at all.