Free Markets Can Help Solve the Global Food Crisis, Government Policies Can Not

It is a common complaint that the growing population, the number of people living in poverty, and scarcity of resources mean that we are on the brink of some sort of Malthusian nightmare. In  2008 food riots hit over 30 countries across the globe, and many were quick to argue that we should expect similar behavior in the future if there are not some reforms in how resources are allocated. I could not agree more. The problem is that the food crisis of 2008 was not the result of too many market forces, but too few.

When the world’s population crossed the 7 billion mark the usual rhetoric of overpopulation and resource scarcity was heard all over the media. Yet population is not really the issue at all. You could fit all of the world’s people in an area roughly the size of Texas. There is plenty of room and there is no reason to think that a population much higher than 7 billion could not be supported given the right economic mechanisms. It is true that some places are more crowded than others and that some parts of the world are not as fortunate in their proximity to resources than others, but it cannot be argued that scarcity of space or resources is the problem. Indeed, countries such as the Democratic Republic of Congo and Nigeria are amongst the most resource-rich nations in Africa and should, based just on their natural resources, be amongst the wealthiest nations on the planet. The problem is getting the resources to people efficiently. In the history of the world, no system has been more efficient at distributing resources to those that need them than the free market system.

But a free market system is far from what we have at the moment. Protectionist trade measures and food subsidies distort the market and make it susceptible to the sort of behavior that the food market experienced in 2008. Producers cannot accurately price their crops according to quality, and consumers either pay too much or make decisions backed by governments. The evidence is that subsidies keep the price of products like corn high, something we should be against if we want to reduce global poverty.

As well as government protectionist measures we should also be wary of well-intended distortions in the market. Fair Trade schemes that claim to help sustainable and ethical farming only result in those who cannot afford to meet these standards being worse off. The false dichotomy between humanitarianism and capitalism is hugely detrimental to the alleviation of misery around the world.

It is easy to get depressed about the level of poverty in the world and the fact that so many are hungry is a world with a food surplus. Yet when put in perspective it is clear that some progress is being made. While the 2008 food crisis was worrying, it is important to remember than the proportion of undernourished people living in developing countries has dramatically declined, from close to 34% in 1969 to a little over 15% in 2010. It is also worth remembering that technology will continue to lower the price of food production and transport. It is up to government to decide if they want to infer with this progress or not.