The intensifying scramble for food and water
Early last year some 75,000 people took part in what came to be called "tortilla riots" in Mexico City protesting rising food prices. As reported in a story in the US News & World Report on March 17 ("The Growing Food Cost Crisis"), this event has been followed by similar protests against rising food prices around the world. People took to the streets over onion prices in India and over soybean prices in Indonesia. In Burkina Faso rioters burned down government buildings over grain prices. And merchants in Milan protested over pasta prices. The situation is in some ways reminiscent of the early 1970s, when high energy prices pushed up the cost of food. But this time the causes are more complex.Record-high crude oil is pushing up the cost of fertilizer and making it more expensive to transport food. Climate change may also be a factor. And the promotion of grain-based ethanol as an alternative fuel is seen as contributing significantly to the problem. "In the United States this year," the USNW notes, "nearly a third of the corn output will be used to make an estimated 9.3 billion gallons of ethanol." Institutions providing food relief, such as the UN World Food Program and USAID, now face major budget shortfalls and may have to slash some of their emergency aid. Ethanol, intended to serve as a fuel substitute to help control global warming, seems liable to end up causing starvation.
Another factor behind higher food prices, as many have pointed out, is the growth of the middle class in China and India due to those countries' rapid economic development. An essay in the Wall Street Journal on March 24, "New Limits to Growth Revive Malthusian Fears," dealt with various resource-related problems that may arise if these two countries continue to grow at their current pace, harking back to the warnings of Thomas Malthus of a bleak future in which population would outgrow the means of subsistence. As the above USNW article points out, rising affluence in China and India is increasing demand for beef, and it has been estimated developing countries will consume 25% more poultry and 50% more pork in 2016 than they do now. The WSJ article points out that it takes 10 pounds of grain to produce a pound of pork and more than 20 to produce a pound of beef. The shift to these grain-guzzling sources of protein exacerbates the food crisis. The WSJ essay, which opens with a paragraph referring to Malthus's grim prediction, closes with an expression of hope that the human capacity to understand and respond will make it possible to find a way out of the crisis.
The same essay also takes up the problem of water, another critically limited resource. Demand for water in China and India is drawing down groundwater supplies. In Beijing water tables have dropped hundreds of feet, and a large lake in nearby Hebei Province has shrunk greatly. Countries in Africa, the Middle East, southern Europe, and Latin America face the prospect of serious water shortages. Edward Miguel of the University of California at Berkeley and other economists have reportedly found a correlation between declines in rainfall and civil conflict in sub-Saharan Africa, such as in Sierra Leone, where a sharp drop in rainfall in 1990 was followed by an outbreak of civil war the following year. While the fight for water is unlikely to cause people to take up guns against each other in China, it can be expected to turn into a major cause of political conflict.
The March 21–27 issue of Britain's Guardian Weekly featured a story about the politics of water, titled "Every Drop Counts." More than a billion people around the world lack access to clean water. More than 2.5 billion lack proper toilets. As many as 5,000 children a day, the story reports, die because of water and sanitation problems. And according to the World Health Organization, 80% of all illnesses worldwide are caused by unsafe water. The United Nations calculates that it will take some $10 billion (about ¥1 trillion) a year to halve the share of people without access to adequate sanitation by 2015—but that the annual cost of not meeting this objective is about $38 billion.
The Guardian Weekly carried a story relating to a different sort of water problem in its March 14–20 issue, "Europe Expects a Flood of Climate Refugees." The weekly reports the prediction that within a decade there will be millions of "environmental migrants" driven from their homes by problems like rising sea levels caused by global warming. One-fifth of the world's population lives in coastal areas threatened by rising seas. The situation is especially critical in Central America, the Caribbean, China, and India. Having lost the land where they live to the rising waters, many are likely to seek refuge in Europe and elsewhere. Meanwhile, global warming may also cause fresh water supplies to fall by up to 30% in some regions.
China and India seek resources
The March 15–21 issue of the Economist carried a special report on the global rivalry for crude oil and various mineral resources, focusing on China's moves ("A Ravenous Dragon"). The cover of the issue showed a group of people on camels advancing across a desert, with the leader carrying a large Chinese flag; the cover title reads "The New Colonialists." This is the Economist's take on China's global quest for the natural resources it needs to feed its economy.In Congo, an African country that has one of the world's greatest endowments of resources but is also among the world's poorest, Chinese entrepreneurs have set up half of the 50-odd copper smelting plants in Lubumbashi, located in the mining belt deep in the hinterland. Chinese state-owned enterprises reportedly are going to invest some $12 billion—triple Congo's annual national budget and far in excess of aid from Western countries and international organizations—in projects to build or improve railways, roads, and mines around the country. The Chinese have been selecting countries that have been ostracized by the West and approaching them in their quest for resources, such as crude oil from Sudan and rice and timber from Myanmar.
As the Economist reports, some nongovernmental organizations fear that Chinese firms in these countries will ignore basic legal, environmental, and labor standards as they rush to secure resources, "leaving a trail of corruption, pollution and exploitation in their wake." And they may encourage such countries to feel that they can ignore international public opinion. If this influence spreads, the "Washington consensus" of economic liberalism and democracy will find itself competing with a "Beijing consensus" of state-led development and despotism. In fact, Angola has accepted aid and investment from China and decided to stop taking aid from the International Monetary Fund, which imposes stiff requirements for transparency and sound economic management. In some ways, the situation as analyzed by the Economist is reminiscent of the pattern seen in nineteenth-century colonialism as practiced by imperial powers like Britain, with local comprador elites linking their countries to their imperial masters while exploiting the local population.
A look at this issue from a different angle appears in two articles in the March/April issue of Foreign Affairs: "The Democratic Rollback" and "China and India Go to Africa." In the first of the two, Larry Diamond, a senior fellow at the Hoover Institution and coeditor of the authoritative Journal of Democracy, expresses concern that the tide of democracy that had been rising around the world since the 1970s has started to recede. Since 1974, he notes, more than 90 countries have made transitions to democracy, and as of the turn of the century about 60 % of the world's independent states were democratic. But over the past few years a contrary trend has been occurring, with democracy being overthrown or gradually stifled in countries like Nigeria, Russia, and Venezuela. Diamond points out that merely holding elections and establishing a constitution does not make a country democratic, and he further opines, "Now, with the momentum going against democracy, a resurgent and oil-rich Russia flexing its muscles, and China emerging as a major aid donor in the rest of Asia and Africa, it will be more difficult to encourage reforms." External pressure is an important condition for the promotion of democracy, but Russia and China are pushing in the opposite direction.
In the second article, "China and India Go to Africa," Harry G. Broadman, economic adviser for the Africa region at the World Bank, looks on the positive side of these two countries' economic activities in Africa. The positive orientation can be seen in the article's subtitle, "New Deals in the Developing World." Exports from sub-Saharan Africa to China grew at a blistering rate of 48% a year from 2000 to 2005, two and a half times the pace of growth in exports to the United States and four times the figure for exports to the European Union. While noting that these exports now consist largely of resources from just a few countries, as described in the above Economist article, Broadman points out that the growing middle classes in China and India are now starting to buy Africa's light manufactured products, household consumer goods, and processed foods. He suggests that a combination of export growth and investment from these two countries could provide the opportunity for Africa to achieve the economic development that has passed it by until now.
Of course there are problems. The resource-centered investment from China and India has not created many jobs, and imports of textile products and other goods by Chinese firms has been hurting some African manufacturers. Broadman also acknowledges that China may have political designs. But he asserts that the Chinese government is fully aware of the potential damage to China's reputation from its companies' overseas activities, and it has recently started taking steps to deal with this problem, such as issuing "good corporate citizen" guidelines to govern the operations of Chinese multinationals in Africa. Is Beijing serious about this, or are its moves just cosmetic? We will need to observe further in order to be sure, but in my opinion we should probably judge that a struggle is now underway within China itself between the new forces favoring international harmony and the older forces placing China's interests first with respect to the country's advance into overseas economies.
As we noted in our report for February, it is important to consider the paradigm shift that may be occurring in today's world pivoting on the slowdown in the US economy, but it is also important to consider this paradigm shift from the viewpoints of China and India. Reports and commentary that were informative in this respect stood out in the media in March.
Darkness in global society
An interesting piece from the perspective of the global paradigm shift due to the US slowdown was the column by Martin Wolf that appeared in the Financial Times on March 25 titled "The Rescue of Bear Stearns Marks Liberalisation's Limit." In Wolf's view, March 14, 2008, the day the US Federal Reserve Board decided to rescue the troubled investment bank Bear Stearns, was the end of an era. He declares, "It was the day the dream of global free-market capitalism died." The process of deregulation has reached its limit. With its move, the Fed showed its agreement with Josef Ackermann, chief executive of Deutsche Bank, who declared, "I no longer believe in the market's self-healing power." Wolf, a veteran economic journalist, offers a column that is trenchant and penetrating.Another article relating to globalization that caught my eye was the report on slavery in the modern world by E. Benjamin Skinner that appeared in the March/April issue of Foreign Policy ("A World Enslaved"). According to Skinner, though many may think slavery is a problem of the past, because of wealth gaps and local conflicts around the world, there are now more slaves than ever before in human history. Human traffickers have forced as many as 2 million people into prostitution and labor in Europe, Asia, and the Americas. In Haiti, 300,000 children have been sold as slaves and work under harsh conditions as domestic laborers.
The darkness in global society is deep.
