Peace, food prices, (hunger?) deaths and inequality

Now and then one should look up and see if there are any trends that are not usually talked about in the media but that say something big about how humanity is going. I here want to briefly discuss the latest data on four big trends: war, food, (hunger?) deaths, and inequality.

Ongoing armed conflicts

On the question of the severity of current conflicts, wikipedia is pretty good as its entries seem to get populated by the right people (peace institutes and conflict monitors). The key graph on what has happened in the last 6 years, including 2020 is here on the left.

This graph shows you the estimated number of conflict-related fatalities in the world’s 17 deadliest conflicts. So the colours in each bar tell you the total number of deaths that year from a particular conflict that has made that year’s top 17. Of course the number of different conflicts that made it in the top 17 is larger in the 6 years depicted because some conflicts were not in the top 17 in each year, meaning there are close to 30 conflicts shown in this graph (which makes the colour scheme difficult!).

The key take-away is that the number of fatalities has halved the last 5 years and was down around 25% in 2020 versus 2019. That is undoubtedly good news. Indeed, historically speaking the last 5 years saw very low war fatalities anyway compared to previous decades and centuries, so we are living in extraordinarily peaceful times. That might change soon, but good news so far is good news so far!

World food prices and hunger (?) deaths

The place to look for world food prices is the FAO, which produces indices for many types of food. The key graph on what has happened the last 15 months is to the left which show you the movement in real terms of food prices for particular types of food.

The graph tells an alarming, but not unexpected story. Food prices have gone up: the ‘aggregate index’ rose 30% the last 15 months. The rapid rise the last few months is particularly worrying, even more so since the fastest growing prices are those that are relevant for the poorest in the world: those relying on cereals (up 20%), vegetable oils (up 100% relative to the index april 2020), and sugar (up 60%).

This really is a dramatic development, heralding the potential deaths of tens of millions of poor people around the world (as the FAO itself started warning about since late 2020 and again warned about recently). Think of this graph in the light that the economic recession caused by covid-policies is, according to the IMF, turning particularly uncertain for the poorest countries. It is absolutely gut-wrenching to think what this graph means for the plight of the poorest in the world.

On March 18th 2020 here on Troppo I warned how the economic recession due to the panic then was condemning 10 million poor people to death. This FAO graph makes grim reading in that light. Indeed, the large excess death not explained by covid in poor countries the last 12 months makes one fear those foretold 10 million deaths might have already happened and be a vast underestimate. The Economist magazine recently estimated that developing countries already lost up to 10 million more people than covid explained. There are of course lots of conflicting claims what these 5-10 million died of and whether the statistics are good enough for poor countries anyway. So there will undoubtedly be much false claims and political posturing in coming months and years before it truly becomes clear whether the world has already lost 10 million people due to collapsing from malnutrition and poor health, or whether it didn not happen at all, or whether it happened but was due to other causes (including covid). I personally fear that the calamity I anticipated last March has been happening the last 6 months and is accelerating right now (there in that regard many worrying in depth reports from India). The FAO food price graph makes me fear the worst.

The nightmare is thus that the world is thus in these very months losing tens of millions of poor people due the economic disruption from all the severed economic networks due to the lockdowns combined with increased authoritarianism that is making movement and health care difficult (which is what causes famines): as the UN just said, “People are not starving – they are being starved”. If it is clear in hindsight that those political choices, copied in other countries when the West instigated them, lead to disrupted food production and an inability of the poor to buy food, then I fear the current period may well be remembered in the West by our grandchildren as “Our Great Shame”. But let’s hope for the best. The increasing food prices are a huge worry, particularly combined with that IMF data on what is projected for the economies of the poor world.

Increasing inequality

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The Financial Times is always a good place to look for interesting stories on growing inequality. The graph to the left is what they reported on the growing amount of wealth owned by the billionaires.

The underlying FT story effectively says much of the money printed by central banks has ended up with the billionaires, and that the various avenues in which that has happened have had different effects in different places. The graph essentially tells you that, whilst the world economy shrank 3% in 2020 according to the IMF (a decrease they call the Great Lockdown, making it clear what they think caused the downturn), the billionaires gained some 30-50% wealth.

As I recently said, barons with huge political power and wealth are rising. A kind of new feudal system is taking shape under our very noses, something you can also tell from the stock markets. The world’s poorest are worst hit whilst the rich are getting richer. But at least in 2020 that hasn’t yet lead to more wars. 30,000 less dead from wars than a year earlier is something to celebrate, though 5-10 million more dead from causes yet to be convincingly (though a famine and general health crisis is underway right now as the UN is documenting) shown is a tragedy. It might get much worse if one reflects on the rapidly rising prices for basic foods whilst the poorest are getting poorer. Awful things are afoot and should be lamented.

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14 Responses to Peace, food prices, (hunger?) deaths and inequality

  1. conrad says:

    I imagine the story with inequality would have been true no matter what as far as I can tell — covid just accelerated it. But the assumption is that people and governments will do nothing about it — A good example here is Australia. Covid has brought the debt up to 60% of GDP, which in reality should be easily serviceable. Many countries were well above this before covid. If people were worried about the economic kick-on effects of inequality (and I personally think they should be), then the simple solution here would be to have policies to reduce it. But we don’t get them in many places, including democracies where everyone can vote. One might argue that some groups are so powerful that they control the public discourse (e.g., the mining industry in Australia), but at least part of the answer is probably that people either don’t care or indeed want it because they either are a beneficiary of it, believe they will be a beneficiary of it, or like comparing against people worse off than them because it makes them feel good.

    On this note, the beneficiaries are probably more widely spread than just the ultra-rich. For example, thanks to asset price inflation, things like housing are unaffordable in many places, including to people with quite good income streams. This means that if inequality increases but you are, say, at the 70th percentile and can remain there, then it will knock out a large proportion of people that could otherwise compete for the same assets as you. So you might be a winner even if you don’t win very much as long as other lose more.

    • paul frijters says:

      yes, there is a lot in what you say. Essentially you are describing the misdirection of anger we have seen in the last 20 years, and there will be more such misdirection. Still, there is a limit to that misdirection.

      The inequality is rising particularly fast now , and money printing at current levels is now translating into inflation, so creaks are appearing. The recent Aussie budget in that sense was a shocker. I interpreted that budget to say “we are going to print money till the structural problems solve themselves”.

      Inequality comes with many cultural adjustments of the variety “whose bread one eats, whose word one speaks”. Money does buy power, via propaganda, ideology, bribery, and many other ways. So extreme inequality is not commensurate with meaningful democracy. The barons take over, and some places they arguably already have. Their ideological needs are particular as well (as I talked about in previous posts): they like divide-and-rule ideologies (both upwards and downwards). That is not commensurate with nationalism.

      So something has to give. And my bet is that ultimately the barons have to give, but not before a whole lot of strife. As I already said in 2019, rising nationalism is the obvious thing that can make take the barons down a peg. You see that rising nationalism happening very clearly in many countries now (think of that letter from the generals in France!), including Australia (as I foretold in 2019). What i am now reading in the more right-wing Aussie blogs is pretty strong stuff, calling ‘woke’ university academics ‘anti-western’, ‘traitors’, or worse. That development, combined with the national crowds created by the covid-policies, is a very scary thing. I really do wonder how far we are away from some serious tensions. Not clear at all to me who would then be the first to get hurt, but in Australia I sure wouldnt want to be seen as a CCP sympathiser. If I were a ‘woke warrior’ (which I am not), I’d be erasing my internet history now. The barons will be the ones able to direct the nationalist wave initially, but eventually it will come for their wealth.

      Hopefully I am reading those developments wrongly and too pessimistically. Easy to do. As Nick says, some people see the 1930s in everything. That is also true, so one must retain some doubt when seeing things as too dire.

    • Saupreiss says:

      “A good example here is Australia. Covid has brought the debt up to 60% of GDP, which in reality should be easily serviceable. Many countries were well above this before covid.”

      I think the argument is problematic. Just because other countries do worse does not mean that Straya is doing fine. Also, while that kind of debt might be serviceable (under the current interest rates but see what happens in the USA), it is still something that at some point will have to be paid off. Also it does reduce the wiggle room that the government (any government has down the road).

      Otherwise I agree.

  2. Nicholas Gruen says:

    Thanks Paul,

    I remember being freaked out by large rises in the price of various food staples in the last decade or two. I’m not sure when it was, but I thought — here we go, there will be tens of millions of death by starvation. I didn’t follow it closely, but that instinct turned out to be generally wrong because a lot of the poorest of the world were attached to agriculture and so as agricultural prices rose, there was a natural hedge. As someone who watches this stuff more closely than me you may be able to identify what I’m talking about and say more (including of course setting me straight where my description is a bad one.)

    • paul frijters says:

      thanks Nick,

      its true food prices have risen in the past without huge famines, such as in 2010 when the real food price index peaked roughly at the same level it is today. So the price hikes alone would not be enough to generate a huge famine. That is of course why I also looked at what the UN, the FAO, and the Worldbank have been saying about whether there now is a famine. The UN’s statements I quoted on this are particularly informative: “People are not starving – they are being starved”.

      It’s the old insight attributed to Amartya Sen: what causes a huge famine is not lack of food, but a system whereby the amount of food is close to too little, coupled with a political system that does not care about starving people who have no political power. What you then get is starvation in one region whilst the rich in another region hog all the food in warehouses, or where food sellers are physically prevented from delivering to places without food, or where people desperate for food are fleeced by local corrupt politicians able to rob them and let them starve. Essentially, famines are about the combination of poverty, close-to-food-scarcity, and predatory politics.

      So this is where the increased authoritarianism of the last 15 months, coupled with the economic disruption that hampered food production and distribution, kills. And I fear it kills big. Its that same combination that killed about 30 million Chinese in the Great Leap Forward. But I wont claim certainty on the current situation yet. The simple truth is we dont know for sure. Maybe millions right now are dying of an avoidable famine, maybe millions are dying due to covid (avoidable or not), and maybe there is no mass excess dying happening at all and the international agencies are effectively preventing that mass famine. The “fog of war situation” we are now in wrt media means we wont know for a while. But it is something we will eventually know pretty sure, for the simple reason that skeleton bodies dying of famine look different from other causes of death.

      In 2010 there was no huge famine despite the same food price level because the politics was different. In the current circumstances, with the cameras all on that other issue and the politicians in many countries using the opportunity to amass more power, one fears the worst.

      • Nicholas Gruen says:

        Like the Irish potato famine which saw the Irish export high quality grains while their population starved. I remember many decades ago, describing this as ‘ironic’ in my economic history class. My lecturer said that that showed that I didn’t understand economics. :)

  3. When will economists get it? says:

    Bitcoin is the watchdog on all this.

    Food prices rising? A consequence of monetary and fiscal policy.

    Rising inequality? The same.

    Eventually, governments and central banks will be able to do nothing as their whole sorry system cracks. You only have to look at the bitcoin price to see this is happening extremely rapidly.

    • paul frijters says:

      the move to bitcoin and its adoption by some of those big international companies like Tesla is interesting. There is surely an effect there of lots of liquidity in the system due to money printing by the central banks, and also the increased concentration of wealth and power among the big internationals who are thus looking for their own money.

      But still, I do not pretend to understand why bitcoin is so high. It is such an enormously wasteful technology, slow, and terrible for the environment. Besides which, it is not trustworthy enough for the big internationals. They can do much better.

      Rather, I see bitcoin as a means of cashing in on stolen energy. Anyone stealing energy in the world can convert it to bitcoin via those hash-oriented computations. Lots of stolen energy is then a signal of something else, namely corrupt incompetent governments. That is what I see it as the weather vane for. But am not even sure of that. Its tricky to understand. So please explain why you see it your way.

      • When will economists get it? says:

        Thanks for the reply and I like your analogy that it’s the weather vane for incompetent governments – I completely agree with that assertion too (even if you’re not sure of it!).

        The reason I see it like this is the network effect it continues to create, and it’s resilience in the face of so much doubt and volatility over what is now a very reasonable time-frame.

        Where I think you’re missing the big picture in your reply is this:

        Besides which, it is not trustworthy enough for the big internationals. They can do much better.

        Two points:

        1) Exactly where is ‘better’ as an alternative treasury reserve asset to cash then the first perfectly deflationary scarce asset created? If you can name an alternative, I’ll invest in it (don’t worry – I’m well diversified either way! By no means am I a bitcoin or bust type person).

        2) if history is a guide, the bigger institutions will inevitably come. First it was the cypherpunks, then the computational scientists, then more techie people, then a few of the mainstream ‘libertarians’, then people in Cyprus who didn’t want to take a haircut, then some minor speculators, then start ups, then hedge funds, then some small caps, then a few mid caps, then an S&P 500 tech firm … ok, there’s a chance that where it ends but would you really bet the farm on it?

        The problem is the cat is out of the bag now with how conventional ‘money’ works and is created – something that most people never really realised, and bitcoin particularly of all the cryptos is its antithesis. Governments and central banks *would never* create something like it as their own digital currencies – that would completely fly in the face of the debt based financial system.

        But their big problem is this thing exists. And no matter what they try and do, I don’t believe they are going to be able to shut it down. It’s a decentralised network. They cannot ban it as a medium of exchange, even if they ban its conversion from or back to conventional currencies. People are sick – especially the youth – of being disenfranchised by the current model. This offers one massive F**k you to that. I personally love watching it.

        For twenty years I watched my peers with my head in my hands as, for instance, housing became ever more out of their reach, begging for some form of passive resistance (just don’t buy, and refuse taking out a big mortgage). I see bitcoin as the revenge of the prudent against the debtor – not as an investment actually. It’s an interesting thing to be part of.

        • paul frijters says:

          interesting and thanks for replying. I see you are enjoying the idea of seeing some of the powers that be squirm. Nothing wrong with that feeling :-) But I am not sure they are feeling the heat quite yet.

          You ask what other assets the internationals could use. Well, land and housing is the traditional long-run asset the rich invest in, and I read Bill Gates is now a big landowner. Also, however, the internationals could set up a kind of new hanseatic league and put out their own money. Imagine Big Tech, combined with a few other Bigs (Pharma, Energy, Weapons), setting up their own digital currency. Not in a distributed network, but literally as the money of a new hanseatic league, which would have offices in many major cities. That would give them a lot more control and make them less dependent on national money (which, as you say, has the problem for them of money creation as a means of taxing them).

          The only major reason not to do this is that they would fear a strong nationalistic backlash that could destroy them. But I dont see bitcoin filling that void, precisely if it cannot be controlled. It is still a niche asset when it comes to regular trade. And the fact that the US authorities and others havent shut it down makes me think they have a good reason not to shut it down, which makes me think it is not as independent as it might seem. After all, transactions between the wallets are visible and so it offers a lot of information on the users.

          Of course I am happy to see a few early adopting bitcoin mavericks get rich against the tide, but power just cannot be denied. Bitcoin is only a minor nuisance (if at all) to it. The pure energy waste in the mining can of course also not be allowed to grow too much.

          I do look at the creation of national digital coins as real disruptors though. If the Chinese were to set up a viable digital currency, then that could displace a lot of local ones or even the dollar in international traffic.

          • When will economists get it? says:

            Hmmm – Interesting idea for Corps to set up their own ‘gold standard’ currency. That would have potential, although the existing infrastructure of BTC gives it first mover advantage and to an extent already reasonable acceptance. I like it though.

            As far as land goes – for an individual billionaire – yes, sure. It’s not a bad place to park capital to retain value. However for a corp, which might need immediate liquidity to deploy the capital elsewhere, it’s a sub-optimal choice vs an asset that can be sold at a mouse click to raise cash. All imho.

            The potential replacement/avoidance of the dollar as the reserve currency is a whole extra dimension on all of this, no matter what ends up happening. There’s nowhere near enough analysis on what reserve currency status means for geopolitical shenanigans in the mainstream, but the more cynical recognise the covert and overt actions that happen because of the USD status as such. That’s not a partisan comment – it’s a ‘interesting how the world really works’ type facetious comment!

      • When will economists get it? says:

        By the way, I wouldn’t trust too much of the whole environmental disaster angle. That is very likely to change and it is already as we see miners desperately adopting renewables. They are profit driven, and anything they can do to cut operational costs, they will do.

        Yes, I don’t disagree that the energy harvested could be put to better use in some senses, but for now – it’s position in showing the emperor has no clothes is utterly priceless (imho).

  4. paul frijters says:

    World food prices up another 5% in May compared to April according to the FAO. They are expecting even higher prices in the second half of the year.
    This is not a good development, though the early warning famine systems of https://fews.net/ are not sounding big alarms.

  5. paul frijters says:

    update: the newest data on food prices that came out yesterday show a 2.5% decrease in June relative to May. Still more than 30% up over March 2020, but good news, definitely. (http://www.fao.org/news/story/en/item/1415065/icode/).

    Oxfam has now claimed that 11 people die every minute of hunger (against 7 deaths per minute of covid, but of course those dying of hunger are far younger, so in terms of years of life lost, it’s a problem roughly 20 times worse). That’s 5.8 million deaths per year.

    https://www.oxfam.org/en/research/hunger-virus-multiplies-deadly-recipe-conflict-covid-19-and-climate-accelerate-world

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