Tim Worstall points out the good bits first:
Oxfam’s latest campaign, “Grow”, seems so lovely and cuddly that to criticise it is almost like torturing puppies. What could be wrong with trying to feed the hungry and thus make the world a better place? Alas, if wishes were kings we could all be monarchs for the day and what’s wrong with the campaign is not the initial wish but the list of damn fool things it intends to do.
Praise first: Oxfam is quite right that there are several entirely stupid things that are being done about food currently. The first and most obvious is the biofuels nonsense: food should go into people, or at least animals we can eat, not into cars. But the European Union has insisted that 10 per cent (to rise to 15 per cent) of all petrol/diesel must be made from plants instead. Oxfam seems to think that this will reduce emissions: despite every scientist worthy of his slide rule pointing out that growing and processing the plants emits more than the oil being replaced.
Another policy we should stop yesterday is the subsidy of the rich world’s farmers. Can’t make a profit growing what people want to eat? Then stop and do something else. We say this to car makers, to buggy whip makers and there’s nothing about wading in cow shit that makes farming any different. New Zealand did it and farming profits went up.
Well, that’s about it for the good:
And then the report goes entirely doolally over commodities speculation, over futures and options. One of the points the report makes (in one of the good bits) is that price volatility is damaging both to producers and consumers. So we’d like to have some method of dampening such volatility. At which point it insists that this means we must lessen speculation in foodstuffs. But, umm, speculation in foodstuffs is what dampens price volatility in foodstuffs.
If any Oxfam type happens to read this by mischance, here’s why. To make money in commodities you have to buy low and sell high. When you buy low you prevent prices from falling further, in fact you raise them: maybe only a little depending on how much of the market you’re buying, but raise them you do. Good, so we’ve just reduced the slumping of prices which do so much damage to farmers. When you sell high you’re increasing the supply onto the market at a time of shortage. This reduces the price volatility at the high end which does such damage to consumers. So, our speculator making money reduces price volatility: it’s only the speculator who buys high and sells low who increases it and as he goes bust very quickly we don’t need to worry about him.
The term in the headline explained.
