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There is
an ancient Hebrew adage found in the Book of Proverbs.
“Pride goes before disaster, and a haughty spirit before
a fall.”
A more
modern translation of the ancient Hebrew would read,
“First pride, then the crash; the bigger the ego, the
harder the fall.”
For the
last 30 years, governments around the world believed
that the answers to basic human needs are fulfilled best
only when under their legislative and administrative
command. Governments have created laws and
infrastructure to take more and more control over
economies out of the hands of the people and have
therefore subverted the free-market system.
Today,
around the world, we are seeing the results and
consequences of government pride and subsequent action
to control the vastly complex organism called the
economy.
From
Europe and Africa, through Asia to the Americas, the
world is facing a food crisis. No nation will be spared
from the “unintended” consequences of many widespread
bad government policies over several decades. Even
China, while officially denying (as usual) any supply
problems, is paying farmers substantial cash amounts to
increase wheat and rice production.
Riots
and near-riots occurred in several countries in the last
few months, in as diverse places as
India,
Mexico, Egypt and Russia. Although public unrest over
food shortages is not uncommon through history, the
recent disturbances center primarily on the availability
of subsidized food.
Perhaps
the most indicative example of bad government policy
happened in Egypt where literally thousands “torched
buildings, looted shops and hurled bricks at the police
who responded with tear gas Sunday” (Associated Press).
Since the 1970s, the Egyptian government has subsidized
bread prices, a loaf selling for the equivalent of 1 US
cent or about 40 Philippine centavos. Bread that is not
subsidized by the government sells for about 10 times
higher.
Of
course, this 30-year policy was designed to “help the
poor.” Then again, all government interference in the
free market is to help the poor. How much is Egypt
spending each year on food subsidies to help the poor?
Nearly $14 billion.
That
means that the Egyptian government could give each year
$700 cash to every adult and child living below the
poverty line, almost doubling their average annual
income. Something about teaching a man to fish and not
simply giving him food for one day.
In 2006
I wrote a column entitled, “The ethanol-biofuel
deception.” I received an e-mail from the director of
the Agricultural and Development Economics Division (ESA),
United Nations Food and Agricultural Organization (FAO),
kindly saying, “It’s the best piece I have read about
biofuels and certainly the most sobering.”
National
governments would not listen to the FAO’s concerns about
food-supply disruption. Now, the United Nations is being
forced to limit food-distribution programs because of
the rising costs due in part to the shift from food
production to biofuel-crop production.
On the
subject of biofuel, although underreported in the local
media, the Philippines is about to become a big importer
of another commodity—ethanol. From Reuters: “The
Philippines plans to import about 170 million liters of
ethanol from Brazil and Thailand in 2009. The Philippine
government had passed a Biofuel Act in 2007 that made it
mandatory to mix 5 percent of ethanol in gasoline from
February 2009. ‘It will translate into 200 million
liters of ethanol a year,’ said Archie Amarra, executive
director of Philippines Sugar Millers Association Inc.
‘Our production capacity is not much. . . we have one
ethanol plant with capacity of 30 million liters per
year.’”
Now here
is the sentence that scares me; “‘The ethanol imports
would be a temporary measure as the
Philippines
would boost capacity to meet its domestic needs within
the next five years,’ Amarra said.”
The
current world price of ethanol is about P20 a liter,
meaning we will import about P3.5 billion worth of
ethanol this year; and maybe this amount annually for
the next five years.
Does
that make sense? Perhaps the law should have been
written to more slowly increase the amount of biofuel
mix mandated to avoid having to spend billions to import
ethanol. Doesn’t anyone in government that makes policy
think about the future?
Sen. Mar
Roxas II has called for a 10-year food-security plan.
The senator proposes a “soup-to-nuts style,” meaning
from seed distribution to market access. It sounds
noble, but it may create an economic disaster for the
Philippines.
When the
biofuel bill was passed, did anyone know that the
Philippines would spend P3.5 billion in 2009 to import
ethanol? Were the future consequences ever discussed?
When the
bill was passed, one congressman said the country would
save about $300 million a year in foreign exchange. I
wonder if that amount is before or after the $100
million we will spend on ethanol imports next year.
The
nation does not need a 10-year plan. What we need is for
policymakers to consider the results of their action
three, five, 10 years in the future.
E-mail comments to mangun@email.com. |
