Krugman’s at it again. In an op-ed piece in the New York Times, Drought, Floods and Food, Krugman explains that global warming caused crop failures that in turn led to price increases that then triggered the Egyptian riots:
While several factors have contributed to soaring food prices, what really stands out is the extent to which severe weather events have disrupted agricultural production. And these severe weather events are exactly the kind of thing we’d expect to see as rising concentrations of greenhouse gases change our climate — which means that the current food price surge may be just the beginning.
Now, to some extent soaring food prices are part of a general commodity boom: the prices of many raw materials, running the gamut from aluminum to zinc, have been rising rapidly since early 2009, mainly thanks to rapid industrial growth in emerging markets.
But the link between industrial growth and demand is a lot clearer for, say, copper than it is for food. Except in very poor countries, rising incomes don’t have much effect on how much people eat.
The price increases have nothing at all to do with massive liquidity washing over the world by dint of, particularly, US Federal Reserve policies, Krugman wants to make clear:
So what’s behind the price spike? American right-wingers (and the Chinese) blame easy-money policies at the Federal Reserve, with at least one commentator declaring that there is “blood on Bernanke’s hands.”
Honestly, I couldn’t make this stuff up if I tried. I wonder if Krugman read my post Ben Bernanke: The Great Satan? I didn’t put blood on Bernanke’s hands, but still pointed to the inflationary policies of the US Federal Reserve as the trigger for commodities (particularly agricultural commodities) price increases that in turn served as a catalyst for unrest in the Arabian world.
Is it true that severe weather events have disrupted agricultural production? Not according to the Food and Agriculture Outlook of December 2010 prepared by the United Nations. Cereal grain (e.g., wheat, rice, sorghum, etc.) production in 2010 is expected to be just slightly below (-1.4%) that of 2009, which was a record year. Of the nations listed in crisis that require external assistance for food, only one-third suffered crop failures because of weather (mostly lack of rainfall, or in the case of Mongolia, severe cold–which was undoubtedly caused by global warming). The rest were what the UN calls “food insecure” because of political turmoil, mainly in sub-Saharan Africa.
Krugman is correct to observe that economic growth and demand for metals like copper is far more closely linked than is economic growth and demand for agricultural commodities like wheat. People eat about the same amount every year, thus demand for agricultural commodities is far more stable, with growth coming mainly from population growth. Economic growth is more volatile. Bridges and skyscrapers needn’t necessarily be built, but people must be fed. Copper demand can therefore fluctuate wildly around the prospects for overall economic growth.
What Krugman doesn’t get is that with inflationary monetary policy, agricultural commodities, because their demand is more or less stable, will experience explosive price increases as soon as overall growth returns. With stable demand, ag prices are more easily supportable in a downturn. Wheat doesn’t need artificially-cheapened money to maintain its demand and prices. Copper does. As soon as economic performance bottomed and growth returned, all it took was a slight uptick in monetary velocity for the prices of both wheat and copper to spike. Also because of their stable demand, when prices begin climbing, ag commodities suffer a great deal more from hoarding tendencies than do industrials. With hoarding, overall quantity demanded appears to increase, shortages seem to materialize, fear that there won’t be enough food sets in, and prices for ag commodities skyrockets.
This stuff is all really simple, but Krugman chooses to ignore it, instead making the outrageous claim that global warming caused food prices to spike so that he could tut-tut about the dire future of humanity for its continued sin of burning fossil fuels. It gets more outrageous:
Consider the case of wheat, whose price has almost doubled since the summer. The immediate cause of the wheat price spike is obvious: world production is down sharply. The bulk of that production decline, according to U.S. Department of Agriculture data, reflects a sharp plunge in the former Soviet Union. And we know what that’s about: a record heat wave and drought, which pushed Moscow temperatures above 100 degrees for the first time ever.
As the United Nations report on 2010 makes clear, world wheat production is not down sharply. Not at all. It is down in some regions (Central Europe) and up in others (sub-Saharan Africa), but overall it is about the same as last year. Facts are messy things that Nobel Prize winners apparently needn’t dirty their hands with.
Indeed, Russia’s wheat crop was detrimentally affected by a “record” heat wave and drought. But did Krugman really say that Moscow’s temperature has never exceeded a hundred degrees? Perhaps in whatever records Muscovites may possess, covering certainly not more than the last two hundred years or so, Moscow, or just its particular geography, might not have experienced hundred-degree weather. But to say that is has never before experienced hundred-degree weather is simply induction gone wild. We know of perhaps 200 of the last 4.5 billion years of the weather history of the geography comprising Moscow, yet Krugman feels comfortable in claiming that it has never before exceeded a hundred degrees? The limits of inductive reasoning are apparently no restraint to the conclusions reachable by Krugman’s towering genius, either.
It also appears that mere words are no obstacle to the ability of Krugman’s intellect to form conclusions:
The Russian heat wave was only one of many recent extreme weather events, from dry weather in Brazil to biblical-proportion flooding in Australia, that have damaged world food production.
“Many” is a splendid word, as well are “recent” and “extreme”. How many is many? How recent is recent? How extreme is extreme? All these words convey relative quantities, but to what quantities do they relate? Krugman doesn’t say, and doesn’t need to. He is, after all, Nobel Laureate Paul Krugman.
But Krugman’s not done until, acting as one of many high priests for the High Church of Anthropogenic Global Warming, issues his altar call to repent, or else: the usual suspects will, of course, go wild over suggestions that global warming has something to do with the food crisis; those who insist that Ben Bernanke has blood on his hands tend to be more or less the same people who insist that the scientific consensus on climate reflects a vast leftist conspiracy.
But the evidence does, in fact, suggest that what we’re getting now is a first taste of the disruption, economic and political, that we’ll face in a warming world. And given our failure to act on greenhouse gases, there will be much more, and much worse, to come.
So, believing that Ben Bernanke’s three trillion dollar or so addition to the global supply of dollars might have something to do with a dollar becoming less valuable relative to a bushel of wheat is tantamount to being skeptical about the status of the global climate and man’s ability to affect it? That’s quite a stretch, even for a Nobel Laureate.
Simple math tells us that, ceteris paribus, if the stock of mony increases yet the stock of goods that money is intended to represent does not, then the value of the money relative to the value of the goods it represents will decline. In an economy where bushels of wheat are the only goods traded, if there are a hundred bushels of wheat and a hundred dollars, each bushel of wheat will equal a dollar. If ten extra dollars are printed, each bushel of wheat will then cost 1.1 dollars. No inductive reasoning is necessary to reach such a conclusion. We can’t jump from that deduction to necessarily infer that the global flood of dollars propagated by Bernanke is driving wheat prices higher, because in wheat markets, like the weather, all other things remain equal for only a very short time, if at all. But we do have an abstract and inviolable principle upon which to rest the theory that more dollars might be causing higher prices.
We, however, don’t even know for sure what effect increased levels of atmospheric carbon dioxide might have on worldwide temperatures. We know that relatively cooler periods in earth’s geologic history have had higher concentrations of carbon dioxide, and relatively warmer periods, less. Neither do we know for sure whether our activities are causing the higher levels of atmospheric carbon dioxide we’ve recently measured. So we make quite an inference to conclude that a) carbon dioxide yields a warmer earth-wide climate, and b) that we are the cause of it. This is inductive reasoning bordering on the mystical.
Krugman gets away with making preposterous claims that global warming is causing food price spikes today and will do so in the future because of the great deference afforded our modern-day priests and shamans. Put a Nobel designation on any fool, and we’ll listen with rapt attention, no matter how ridiculous are his pronouncements. We always look to the past in deciphering the present, and Nobel prizes have been awarded many times in the past to people who truly advanced our understanding of the world. This is not necessarily the case today, and in any event, Krugman received acclaim for his work in international economics, not climate science. As genuine discoveries that advance the human condition become ever more rare, Nobel prize awards will become ever more politically-determined. Political considerations already determine peace prizes (e.g., both Barack Obama and Yassir Arafat’s were political statements, nothing more). It is only a matter of time until politics also determine awards in the sciences.
When all is said and done, this era will be remembered for its remarkable hubris in the face of vulgar ignorance. The very thought processes that brought us success, i.e., a strict and logical discipline for investigating the world, are rapidly being abandoned for sloppy inference that succors our political biases. Science is dying because people believe in science, and science is not a belief system. The idea of anthropogenic global warming will be Exhibit A in the trial of its murderers.