posted Dec 03, 2007

Following up on Scientific Federalism:

Over the past 20 years, the World Bank and some rich nations Malawi depends on for aid have periodically pressed [Malawi] to adhere to free market policies and cut back or eliminate fertilizer subsidies, even as the United States and Europe extensively subsidized their own farmers. But after the 2005 harvest, the worst in a decade, Bingu wa Mutharika, Malawi’s newly elected president, decided to follow what the West practiced, not what it preached.

Stung by the humiliation of pleading for charity, he led the way to reinstating and deepening fertilizer subsidies despite a skeptical reception from the United States and Britain. Malawi’s soil, like that across sub-Saharan Africa, is gravely depleted, and many, if not most, of its farmers are too poor to afford fertilizer at market prices...

...This year, a nation that has perennially extended a begging bowl to the world is instead feeding its hungry neighbors. It is selling more corn to the World Food Program of the United Nations than any other country in southern Africa and is exporting hundreds of thousands of tons of corn to Zimbabwe.

In Malawi itself, the prevalence of acute child hunger has fallen sharply. In October, the United Nations Children’s Fund sent three tons of powdered milk, stockpiled here to treat severely malnourished children, to Uganda instead. “We will not be able to use it!” Juan Ortiz-Iruri, Unicef’s deputy representative in Malawi, said jubilantly. - Ending Famine, Simply by Ignoring the Experts - New York Times via dangerousmeta

I find this example particularly interesting because I would also probably have said "let the free market do its thing", and it seems I would also be wrong. Copying the successes is better than any received wisdom.

(One can argue that agriculture is a bit of an exception to some aspects of the free market. If normal economic pressures would result in most food production being moved outside of your country, it is arguable that there is a strategic interest in twiddling the market so that you still have internal food production. A country like Malawi may have no choice but to meet Western market distortion with its own market distortions.)

(One could also argue that the preceding is a post-hoc rationalization.)

 

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