#OccupyWallStreet, Food Prices, Civil Unrest: It All Comes Back To Oil
New England Complex systems institute/Public Domain
It has been said that the #occupywallstreet protesters can't really explain why they are there, and what they want to change. I suspect that had one interviewed the people in Tahrir Square at the beginning of their protests, there might have been a similar response.
Back in August, everyone was talking about a study titled The Food Crises and Political Instability in North Africa and the Middle East. The researchers correlated food prices against the starts of occupations and riots across the Middle East, and guess what: when food prices go up, people get angry and demand change. The researchers concluded that "The current [food price] problem transcends the specific national political crises to represent a global concern about vulnerable populations and social order."
I thought of this when I read Mike's post the other day, The U.S. Now Uses More Corn for Fuel Than Feed!- In America, as Michael Pollan wrote in the Omnivore's Dilemma, if you eat a typical American diet, you are essentially made of corn. I paraphrased him in my review of the book:
If you eat industrially, you are made of corn. It holds together your McNuggets, it sweetens your soda pop, it fattens your meat, it is everywhere. You are also partially fossil fuel- the corn needs a lot of nitrogen and gets it from fertilizer instead of the soil, which used to get it from rotating crops.
So after reading Mike's post I was curious, now that more corn goes for fuel than for food, what is happening to the price of corn?
USDA Market News/Public Domain
It's going through the roof, that's what's happening to the price of corn. It has almost tripled in 15 months. And thanks to Henry Blodget,
Henry Blodgett/Public Domain
We know that the average wage hasn't really increased in years, and that the unemployment rate is higher than it has been in years. Over at Civil Eats, in Siena Chrisman's post Why the Food Movement Should Occupy Wall Street, she writes:
In the U.S. today, the richest one percent hold 40 percent of the wealth, while almost one in five Americans is on food stamps. Rampant Wall Street speculation on commodities is driving up food costs, small farmers are being driven off their land, and agribusiness holds monopoly control of our seeds and stores. In this climate, the struggle against massive wealth disparities, unregulated financial institutions, and excessive corporate power is our struggle as well.
Economist Jeff Rubin has written that the recession was caused by rising oil prices and their effect on food prices.
As oil prices soared from $35 per barrel in early 2004 to almost $150 per barrel in the summer of 2008, consumer price inflation in the US tripled to a rate of almost six per cent. It didn’t take long before interest rates caught up to inflation and, in the process, blew up the massively over-leveraged subprime mortgage market and the economy with it...it was the massive rise in energy inflation, and an associated rise in food prices.
So what are we doing now? The United states government is massively subsidizing the agriculture and ethanol industries to take half the corn in the country and feeding it to cars instead of people.
With every bite they eat, the poor, the young, the unemployed and the underpaid are subsidizing the happy motoring world by paying too much for the food they eat so that the drivers can pay too little for the fuel they use. The Maybachs and the Black Cabs carrying the 1% are fueled by subsidized corn, while nobody else can afford to eat.
Sure, the people occupying Wall Street can't put their finger on what is bothering them. But they can feel it in the pit of their stomachs. If you follow the money, it all goes back to oil. It always does.