“Well written and an interesting perspective.” Clan Rossi --- “Your article is too good about Japanese business pushing nuclear power.” Consulting Group --- “Thank you for the article. It was quite useful for me to wrap up things quickly and effectively.” Taylor Johnson, Credit Union Lobby Management --- “Great information! I love your blog! You always post interesting things!” Jonathan N.

Saturday, March 26, 2011

Arrogance on Stilts during a Flood OR an Educated American Electorate: Which Do We Want?

According to Newsweek, when the magazine asked 1,000 U.S. citizens to take America’s official citizenship test in early 2011, 29 percent "couldn’t name the vice president. Seventy-three percent couldn’t correctly say why we fought the Cold War. Forty-four percent were unable to define the Bill of Rights. And 6 percent couldn’t even circle Independence Day on a calendar. For as long as they’ve existed, Americans have been misunderstanding checks and balances and misidentifying their senators." The magazine's analysis treats all of the questions as equally important. However, I contend that the lack of knowledge on matters such as governmental checks and balances is more problematic than whether a citizen knows the name of his or her U.S. Senator. To take another pair, only 20 percent could name the U.S. President during World War I, while roughly the same percentage could name one of the enumerated powers of the federal government. The second lapse is more serious, for if the electorates do not know the constitutional limits placed on the power of the U.S. Government, the founders' assumption that elections would correct for any encroachment can no longer be relied on in the absense of other checks on the federal government. Given the continued growth in the power of the federal government relative to the state governments during the twentieth century, it could be that the voters are the last remaining wall in the way of complete political consolidation. However, if only one fifth of American citizens know what the federal constitution enumerates for the U.S. Government, how can a majority determine whether that government has overstepped its constitutional authority? Lest we leave this matter up to the U.S. Supreme Court, we might want to be reminded of the institutional/governmental conflict of interest in a branch of one of the governments in federalism contest being the umpire. Ordinarily, one could point to the constitutional amendment process superseding the high court's decisions, but this process involves representatives elected by the citizens, and most of us haven't bothered to study our own federal constitution.

As another example of some ignorance being more harmful than others, Newsweek reports that "(a) 2010 World Public Opinion survey found that Americans want to tackle deficits by cutting foreign aid from what they believe is the current level (27 percent of the budget) to a more prudent 13 percent. The real number is under 1 percent." This ignorance could well mean the demise of the United States, for a $14 or $15 trillion debt held by the federal government alone (Illinois, California, Nevada and Florida having sizable sovereign debts of their own) may well be unsustainable. It is conceivable that American electorates will elect representatives who will placate them by cutting waste to "make a dent" in the deficit (which is the annual increase in the debt), as if that would deal with the problem. 

In general terms, the American founding fathers believed that for a republic to endure, its citizens must be virtuous and knowledgeable concerning the republic and the issues of the day. Public education was thus viewed as having a civic as well a vocational and academic function.  Hence, American college students typically get an undergraduate degree in the Liberal Arts or Sciences before moving laterally over to a law or medical school for its undergraduate (i.e., first) degree (i.e., the J.D. and M.D.).  The E.U.'s states do not require such a broad education at the college level, though their pre-college education is said to be more rigorous than in the American states.  In fact, even in making this comparison, even educated Americans suffer from ignorance, as we tend to mistake political categories, such as in likening the U.S. to one of the E.U.'s states rather than to the E.U.  Anyone want to guess how many American citizens know of the E.U. at all? I would put the figure at 5 percent, but this could be overly optimistic.  To see the category mistake in action among the "best and brightest" in this land of isolationism, consider the following argument presented in Newsweek.

"Most experts agree that the relative complexity of the U.S. political system makes it hard for Americans to keep up. In many European countries, parliaments have proportional representation, and the majority party rules without having to 'share power with a lot of subnational governments,' notes Yale political scientist Jacob Hacker . . . In contrast, we’re saddled with a nonproportional Senate; a tangle of state, local, and federal bureaucracies; and near-constant elections for every imaginable office (judge, sheriff, school-board member, and so on). 'Nobody is competent to understand it all, which you realize every time you vote,' says Michael Schudson . . . 'You know you’re going to come up short, and that discourages you from learning more.' While at Yale, I took a seminar on the politics of American education in the political science department. I don't know if Hacker was on the faculty then, but his ignorance in comparing the U.S. and E.U. is startling. I suspect that he is simply stuck in an old paradigm traditionally used in trans-Atlantic comparitive politics. I contend that the E.U. is just as complex politically as are the U.S. For example, in terms of education alone, just as the American states must deal with local school boards, so too must the European states.  Furthermore, just as the American states must deal with federal regulation, so too must the European states. Indeed, the E.U.'s executive branch, the European Commission, has been actively involved in education policy in standardizing the various degrees offered by various state universities. While it is true that some of the E.U.'s states have regional governments that are also involved in education policy, whereas the American states only have counties and localities, the differential amount of complexity is not significant as compared with the basic union-state-locality structure that characterizes both the E.U. and U.S.  Newsweek reports that European citizens tend to do significantly better than Americans on citizen questions; the reason is not because the U.S. is somehow more complex.  Rather, I would point to the relatively lax schooling in the U.S. and the attitude of American parents (and students) toward academics, self-discipline and homework. Anti-intellectualism thrives amid such disvalues.

In the end, the American plight is one of values, and this transcends love of money and even knowledge. The ignorance reported by Newsweek is kein Zufall (no accident), and it will continue unless knowledge stands up not only to power and money, but also to conceit and the ignorance itself to break the cycle of "I can't be wrong."  Ignorance presuming itself as impossibly wrong!  This is the tragedy of the American dream--of modernity as having "made it."  Of course, we have no need of the classics; they have nothing to teach us!  We are the highpoint of human civilization, standing here among our sophisticated technology in the twenty-first century. We are like the Arian Christians who said more than a millennium ago that they could save themselves, as though they were gods on earth. Augustine sought to hammer humility into them by (overstating) the depravity of the fall in creation and mankind. The question for us is perhaps how a crack in arrogance can be found such that ignorance may finally be made uncomfortable in its own presence. Modernity is too comfortable with itself--too convenient wallowing in its own ignorance, which too many American citizens portray as knowledge. A bad smell!  Sadly, we have grown so accustomed to it that we can no longer smell it, so we presume it no longer exists. We presume.

Click to add a comment or question (and view published comments) on arrogance and American education.

Source: http://www.newsweek.com/2011/03/20/how-dumb-are-we.html

Thursday, March 24, 2011

Medical Marijuana and Drug Trafficking Across State Lines: Of Two Governmental Sovereignties in American Federalism

"Federal agencies conducted 26 raids on medical marijuana facilities in 13 Montana cities [in mid-March, 2011], as agents seized thousands of marijuana plants and froze about $4 million in bank funds. The raids stunned medical marijuana advocates, many of whom believed the Obama administration's policy was to leave states with medical marijuana laws alone. That belief stemmed from Attorney General Eric Holder's announcement in October 2009 that the pursuit of 'individuals whose actions are in clear and unambiguous compliance' with existing state medical marijuana laws would be the lowest priority of U.S. law enforcement. . . . Montana U.S. Attorney Michael Cotter said there was 'probable cause that the premises were involved in illegal and large-scale trafficking of marijuana. . . . When criminal networks violate federal laws, those involved will be prosecuted.' . . . While 15 states have legalized some form of medical marijuana use, the federal government still considers the drug an illegal controlled substance with a high potential for abuse and no accepted medical use. Justice Department officials contend the focus of investigations involving marijuana is on large-scale drug traffickers and not on individual patients. 'We have made clear that we are not going to look the other way while significant drug-trafficking organizations try and shield their illegal efforts from investigation and prosecution through the pretense that they are medical dispensaries,' Justice Department spokeswoman Jessica Smith said. Marijuana advocates say enforcement of illegal activities involving medical marijuana should fall to the states, not the federal government."

The complete essay is at Essays on Two Federal Empires, available at Amazon.

Wednesday, March 23, 2011

The War Powers Act: On the Letter and Spirit of the Law in the Case of Obama's Decision on Ameican Involvement in Libya

The New York Times describes the War Powers Act of 1973 as follows: “(P)assed in the aftermath of the Vietnam War, [the act] puts limits on the ability of the President to send American troops into combat areas without Congressional approval. Under the act, the President can only send combat troops into battle or into areas where 'imminent' hostilities are likely, for 60 days without either a declaration of war by Congress or a specific Congressional mandate. The President can extend the time the troops are in the combat area for 30 extra days, without Congressional approval, for a total of 90 days.” While the law is beneficial in that it enables the President to act in his capacity as commander in chief when time does not permit a preceding Congressional declaration or more specific resolution (e.g., the U.S. being attacked), the act is not limited to such cases. Therefore, the President can put off Congressional approval even when he could obtain it before sending the troops into battle.  Regardless of the exigency of the military action, Congressional approval is required within 90 days, and this applies even if the President is acting on behalf of the U.S. as a member of the United Nations to enforce a Security Council resolution.

President Obama, on behalf of the U.S., decided that the U.S. military would take part in the international coalition enforcing the Security Council’s resolution allowing members to use all means necessary to protect Libyan civilians from Qaddafi’s government, which had turned on its people. The President did not need to obtain a Congressional declaration or resolution before he did so, even though he could have done so by asking Congress’ House and Senate to convene to debate and vote on the question. Although some thought hearings would have been necessary, that would have been excessive, as the judgment required was beyond simply requiring more information. In any case, a closed briefing for both chambers could have been held before the debates and votes. The President knew of the Security Council’s debate and vote beforehand, so he could have notified Congressional leaders in enough time for them to prepare to convene a day or two afterward. “We should have been called into session yesterday or the day before,” Rep. Nadler said at the time the American involvement in the international enforcement action commenced. Even though the President did not have to take this route, I contend that he would have been on firmer ground democratically had he done so. Had either of the Congressional chambers voted down a resolution authorizing American involvement, I believe the President would have acted illegally in involving the U.S. military in enforcing the U.N. resolution. The U.N. itself cannot activate any military of any of the members.

Because in a republic the legislative representatives should have a role in the decision up front if doing so is possible, the President should have done so in the Libyan case because there was time for it. “I think [the President] has a duty and an obligation to come to Congress,” Rep. Jason Chaffetz (R-Utah.) told The Huffington Post. “I see no clear and present danger to the United States of America. I just don't. We're in a bit of the fog at the moment as to what the president is trying to ultimately do.” Chaffetz was saying, in effect, that the War Powers Act should only be applied when there is not time for a President to get Congressional approval up front.

Other members of Congress challenged the War Powers Act itself. “In the absence of a credible, direct threat to the United States and its allies or to our valuable national interests, what excuse is there for not seeking congressional approval of military action?” asked Rep. Jerry Nadler (D-N.Y.) in a separate interview. “I think it is wrong and a usurpation of power and the fact that prior presidents have done it is not an excuse.” The usurpation language challenges the constitutionality of the Act. Similarly, Rep. Ron Paul (R-Tex.) was circulating a resolution "[e]xpressing the sense of Congress that the President is required to obtain in advance specific statutory authorization for the use of United States Armed Forces in response to civil unrest in Libya." The measure was supported by Reps. Michael Honda (D-Calif.) and John Conyers (D-Mich.), among others. This resolution directly challenged the War Powers Act, presumably because they thought the President could have obtained Congressional approval before acting.

As it stands, the War Powers Act gives a President 90 days to get Congressional approval. To limit the Act to cases where there is no time to get Congressional approval would ensnare application of the law to judicial interpretation: Was there really a window for Congressional approval? Yet to give the President 90 days regardless of whether he could obtain such approval at the outset enables him to take cover under the letter of the law even when he violates its spirit. The members of Congress who criticized the President for not obtaining Congressional approval before sending troops over the Libya were essentially accusing the President of having done precisely that. Had the President secured Congressional approval beforehand, his hand as commander in chief would have been strengthened because a majority of the American people and states would have been behind him. Had Congress refused, he should not have proceeded with the action; doing so anyway, while expedient, would not have been in line with our republic. So going to Congress first would have been a win-win for the President from a democratic standpoint, although not from that of wanting to take part in the international effort. Sometimes it takes self-discipline for a President to put the republic form above even what he wants to do in a particular case.

Click to add a Comment or Question (or View Posted Comments) on Congress and the UN Seccurity Council as war powers.


Monday, March 21, 2011

A Social Media Internet Bubble? Can Irrational Exuberance Recognize Itself?

 On March 17, 2011, USA Today observed, “Tech and Internet stocks turned into bad words after the dot-com bust in 2000. But the get-rich-quick feelings toward tech are back. . . . Given the near-hysteria about promising but largely unproven companies, investment [practitioners] warn that things could start getting out of hand.” So why did the government not step in and stop it from going so far and then crashing?  This is easier said than done. Beyond the difficulties in having regulators intercede to stop transactions that may be necessary to avert a party from bankruptcy, the sheer ambiguity in ascertaining whether a bubble does in fact exist can have a paralyzing effect. "It's a boom, not a bubble, when you hear the sound of dynamite profits," according to Bing Gordon, a partner at a venture-capital firm and a board member of social-gaming company Zynga, which was valued at $9 billion in March of 2011.

However, a big boom can explode in a giant bust; Gordon’s distinction doesn’t carry much water. Neither does that of Geoff Yang, a founding partner of Redpoint Ventures. "There is effervescence, but no bubble." Effervescence can manifest, however, as an attribute of the sort of irrational exuberance that characterizes bubbles. That the market mechanism not only does not temper, but may even magnify the volatility from, this all-too-human psychology, whether in pushing a “boom” or “bubble,” is the real problem. Government regulation will not be able to effectively pull up this root until its nature is uncovered. In the meantime, we are left with the problem of discerning whether a bubble can even be identified as it is expanding. Consider, for example, Facebook in 2010.

In 2010, Facebook had about $2 billion in revenue according to USA Today. MSNBC puts the company’s profit for that year at $600 million. Facebook was being valued at $75 billion, based on private transactions from the SharesPost market. If an accurate valuation, USA Today claimed that “this would make the social-media upstart more valuable than Disney.” It would also mean that Facebook had a price-earnings ratio (P/E) of 125.  This essentially means that higher future profits were expected.  The average P/E ratio for the technology sector was about 25, making 125 extraordinarily high.  This could be taken as being indicative of irrational exuberance,  as one typically compares a company’s number with the average of its sector.

However, the technology sector was quite broad at the time, and one would expect companies on the forefront like Google, Yahoo and Facebook to have much higher numbers than other companies in the sector. Even a very high P/E ratio for such companies relative to a sector’s average does not necessary point to there being a bubble. However, even lesser-known companies, such as Color (a photo-sharing and social-networking start-up) was being valued at around $100 million by venture firms even though the company had an untested product in a crowded market. According to The Economist, competition among angel investors has helped drive up valuations of social-media start-ups by more than 50% from May 2010 to May 2011.

Furthermore, in March of 2011 USA Today claimed, “Even big companies are said to be drinking the Internet Kool-Aid. There is speculation that Google and Facebook have considered bidding as much as $10 billion for online microblogging service Twitter.”  In December of 2010 according to USA Today, “The New York Times reported that Twitter was valued at $3.7 billion after a funding round. In March of the following year, it was pegged at about $7.2 billion, according to SharesPost.” The sheer variance between these figures indicates high risk, but this did not seem to bother those drinking the kool-aid. Such psychology is a red-flag that a bubble is likely in the works. It is like a tornado watch: conditions are right for one to form.

The risk can be seen by uncovering fallacies in the way the private tech companies are valued. According to USA Today, “Until companies finally go public and the stocks actively trade on major exchanges, the small and relatively thin trading on private markets sets the price. . . .  Private marketplaces, including SecondMarket and SharesPost, allow owners of shares of private companies such as Digg, Facebook, Zynga and Twitter to sell to high-net-worth individuals and institutions. Typically, the sellers are employees at these firms looking to cash in on shares they've received. And the buyers are sophisticated investors who understand they could lose their entire investment. These online services provide a way for employees to sell their shares now rather than waiting for an IPO that may never occur. However, with the great power that such marketplaces offer comes confusion. Many of the valuations put on companies are overinflated based on limited sales of shares occurring on the relatively small markets. . . . Before long, estimates for the value of popular Internet companies can soar.” In short, one should not generalize from a highly particularized market to project a total market value because there are unique dynamics going on in that market that would not apply were the firm listed on the NYSE.

Crucially, the generalization is in the direction of overstating; hence, it can camouflage irrational exuberance while feeding it. Therefore, risk is increased by how private companies are restrictively “traded” even as the risk is cloaked—making it even more dangerous. “Given such huge risks, the level of the public's infatuation with shares of privately held Internet companies is again taking on a feel of a mania, Gary Freedman, securities lawyer, said, according to USA Today. He noted that several ingredients that inflate bubbles were all present, including a broad acceptance of the companies' products.  Intensifying the distortion, according to him, was the fact that there was very little financial information on these private companies. "It's the same mania," he claimed. "Markets are cyclical. It's really no different than looking at the Internet bust and the housing market." Lest one conclude from this a slam-dunk case, USA Today pointed out that the not all of the practitioners were on board.  That is to say, there was serious difference on whether there was any bubble at all.

USA Today represented the other side as follows: “proponents of the next breed of Internet companies say the valuations aren't absurd this time because the companies have fundamentals behind them. ‘We're talking about real companies with real revenue and real profit,’ says Jeremy Smith of SecondMarket. A major shift in technology is bound to create companies with massive market values, the proponents say. The emergence of social media (more than 500 million accounts on Facebook alone), combined with mobile phone use (4.5 billion), is disrupting all of technology, so giant winners are to be expected, say venture-capitalists such as Cohler and Yang. ‘I think this boom is going to last awhile,’ Ted Schlein, a managing partner at KPCB, averred. ‘The trend lines are unlike anything we've seen in history,’ He says the enormous size of the social and mobile Internet market — tens of billions of people — dwarfs the markets for the fledgling Internet (billions) and personal computers (hundreds of millions), putting companies such as Facebook, Twitter and Zynga in prime position to strike it rich in IPOs. ‘This is just the beginning of a big market run,’ says Tim Draper, founder of a venture-capital firm.” John O'Farrell, a partner with Andreessen Horowitz, a venture capital firm that owns stakes in Facebook, Twitter, Zynga and Groupon agreed. “These are serious businesses with huge global market opportunities ahead of them. To an uninformed person, the valuations may look like a bubble, but we believe they will in fact prove to be very low valuations.”

Indeed, LinkedIn’s IPO on May 19, 2011 shot up immediately, more than doubling from the company’s initial pricing at $45. The IPO began at $83 and was over $100 (up around 140%) at noon. That's 540 times the company's 2010 net income! That valuation of an internet company was the largest since Google’s IPO in 2004. According to the Associated Press on the day of the IPO, “Renaissance Capital, an IPO research and investment firm, said LinkedIn's 84 percent increase at the market opening Thursday was the biggest for a U.S. IPO since the 2009 debut of OpenTable Inc., a restaurant reservations website. IPO analyst Scott Sweet, the founder of IPO Boutique, credits the increase to LinkedIn selling a relatively small number of shares, 7.8 million. [However,] (t)he demand reflects investors' belief that Internet services that connect people with common interests will be able to make more money as the Web's audience steadily expands.” This seems to be the question regarding any social media bubble; namely, will the internet audience continue to expand such that anticipated revenue increases from advertising and premium packages will be realized?

                         Business Insider

To be sure, the emergence of social media had been a huge phenomenon in defining or characterizing daily life in the first decade of the twenty-first century. Anything so big would tend to attract a lot of money. Even so, the P/E ratios were at nosebleed territory.  Facebook’s ratio of 125, for example, harkened back to the dot.coms in the 1990s. Like a jet that steeply climbs after take-off and then eventually levels off, the social media companies could not be expected to continue their climb forever; they were bound to level off at some point, and then the extended boom would be truncated or even turned to a bust if the market gets stung by the high P/E ratios.

The question seems to be whether too much stock is placed on the expectation of future profit. For example, in June 2011, Groupon filed to go public in an IPO that could value the company at as much as $20 billion, according to The Wall Street Journal. The company was only two and a half years old at the time, with a loss of $413.4 million in 2010 and another $113.9 million in the first quarter of 2011. With revenues during the quarter of $644.7 million, the company's management could make the argument that it was investing for future expansion and profitability. Even so, it could be argued that it is the extent of expectation that renders the company's valuation part of a bubble.

In fact, a bubble can be defined as an expectation of an “extended boom.” The “bubble” lies in the difference between the expectation and the reality that even such a boom is apt to end. The more things change, the more they stay the same. The next bubble is always said to be something different—something new—even as it is easy to relate it back to the last one. Identifying a bubble in progress with some degree of consensus does not seem to be likely. Were such identification even probable, what would government regulators do to let the air out of the balloon? Limit how high LinkedIn’s price could soar on the morning of its IPO? Prohibit LBOs if the price seems too high?

If Facebook, itself iffy with a P/E ratio of 125, wants to buy Twitter for $10 billion even though the latter had been valued at just over $3 billion a few months before, would blocking the purchase lessen the bubble? Were Twitter in trouble in spite of its growing presumed market value, would its bankruptcy take the air out of the bubble only to provoke a recession?  The aim of the regulators would have to be to release air from the balloon without triggering a recession (which is the downside of a bubble anyway). If anything is clear, it is that much more knowledge is needed for the market to be managed, let alone designed, so bubbles are identified and depressed before doing so could do harm to an economy as a whole. In the meantime, we can expect bubbles to top up because markets are susceptible to the human psychology of irrational exuberance. Such a condition is not surprising; what is astonishing is the human propensity to engage in denial while being completely blind to it even as it is in progress.

In my view, the degree of uncertainty related to the expectation of future profits in the social media companies means that that industry ought to be treated by investors as if it were in a bubble, even if it turns out that the expectations were spot on. That is to say, investors should buy in lightly, and supported by a diversified portfolio. So perhaps the question of whether the industry is in a bubble is not as vital as the media may suppose; the extent of uncertainty, which was clearly evident for instance in LinkedIn's trading at 540 times its prior year's profit, is itself a factor not to take lightly. So call it bubble or not, the difference between known and expected revenues is itself worthy of consideration, and when that difference is significant, the wise and prudent investor naturally treads lightly, even if it seems that others may make out like bandits.


Jon Swartz and Matt Krantz, "Is a New Tech Bubble Starting to Grow?" USA Today, March 16, 2011.

Nicholas Carlson, "Facebook 2010 Profit? Try $600 Million," MSNBC.com,
Michael Liedtke, "LinkedIn IPO Price Jumps Up Value to Over $4 Billion," The Huffington Post, May 17, 2011.

The Associated Press, "LinkedIn Shares More Than Double in NYSE Debut," CNBC.com, May 19, 2011.

The Economist, "Another Digital Gold Rush," May 14, 2011, pp. 85-87.

Anupreeta Das and Geoffrey A. Fowler, "Groupon to Gauge Limits of IPO Mania," The Wall Street Journal, June 3, 2011, p. A1.

Food Prices Rising: Population Growth Reaching the Threshold Point?

According to USA Today, by mid-March in 2011 the World Bank’s food index had soared 29% from its level just the previous January and was a mere 3% below its 2008 peak. From March in 2010, Corn had increased 52%, sugar, 60%, soybeans, 41%, and wheat 24 percent.  The paper reports that the surge in food prices had many causes, including 1) rising population, which means increased demand for food, 2) speculators, who bid up commodity prices to artificial heights unrelated to supply, 3) soaring oil prices, which increase resource costs to the farmers and transporters, 4) trade policies, which become restrictive when shortages arise within a country (increasing the price on the world market), and, ironically, 5) improved standards of living in emerging nations, as new middle class consumers buy more meat. Of all of these factors, I contend that the rising population is the most fundamental, followed up by the related factor of oil.

A few months into 2011, the world's population stood at 6.8 billion, more than double the three billion in 1960. For a person of 50 years, the world's population had doubled in his or her lifetime. Thomas Malthus, the early 19th-century scholar who proposed that eventually, the world population would exceed the Earth’s ability to feed everyone, has been consistently ignored as India and China in particular have continued to grow in population at unsustainable rates (especially India--China having a quasi-one-child policy that has moderated its increase). Dan Seiver, a financial economist at San Diego State University, points to the green revolution as still being implemented in parts of the world; he is thus not yet ready to concede that the Mathusian thesis has arrived. However, he discounts the relatively high population growth rate; the increased efficiency or yield from the continued dissemination of "green" technology would have very great to outweigh the fixed (and in fact constricting) constraint of the world’s fertile land area that is used to grow food. In fact, according to the World Bank’s Hassan Zaman, the percentage of the U.S. corn crop that was used to make ethanol went from 31% in 2008 to more than 40% projected in the 2010-2011 growing season. While it is true that unlike the supply of oil in the ground, the land is being consumed, it can indeed be overused if it is not allowed to lie fallow, for example, to rest for a growing season. As the growing population exerts more and more pressure on the land to produce more and more, the land, like a horse pushed too far on a long journey on a hot August day, will tire and slow down. This would tend to happen just as the world needs each agricultural acre more. Therefore, if we as a species are unwise and expedient now in how we manage our land, our descendants will pay for our selfishness later.

I contend that it is in our interest as a species to see that our population size is managed toward a steady state rather than as a maximizing variable (i.e., schizogenic). In fact, we have a right and obligation as one body to see that our various limbs are coordinated such that none engages in hypertrophy. That is to say, the whole has the right to protect its viability by arresting excessive growth in one of the parts. That much of the world's population growth takes place in the developing world does not mean that this right, or obligation, of the world is somehow a plot by the developed countries to oppress the poorer countries. In fact, much of the pain of the higher food prices is in the developing world rather than in the industrialized countries, so it is in the interest of the developing countries to accede to the world’s demand that their population growth be stopped.

While the effect of higher food prices is modest in the developed world, 50% or more of a family budget goes toward food in many emerging markets. American consumers spend about 9% of their income on food, and another 3% for dining out. The difference is not because food is more expensive in the developing world; rather, the percentage is so high because the typical income there is so low. “For many people who spend two-thirds or three-quarters of their income on food, even small price increases disrupt normal routine,” says Hassan Zaman, lead economist for the World Bank in poverty reduction and equity. “They start sacrificing non-food items, such as clothing, and then start eating less.” Indeed, the rising cost of food has been one factor in the protests in the Middle East that were not so pristinely "pro-democracy" as the media represented. 

USA Today reports, for example, that "(w)hen Mohamed Bouazizi set fire to himself in Tunisia in December [of 2010], it wasn’t because he was yearning to vote. It was because he couldn’t feed his family and police had confiscated the fruits and vegetables he was trying to sell." Although perhaps not focused on gaining a vote, however, Bouazizi had had enough of police-state tyranny so his protest was not merely economic. Perhaps the economic, at least when it manifests in vast inequalities supported by an infrastructure tilted by powerful vested interests rather than by a differential in talent and effort, is inherently political.

In short, developing countries should be amenable to population control even if the directives come from international organizations. Such countries should not resist the world acting as one body just because much of correction needed for sustainable human living on Earth would take place in the developing countries.  We as a species can no longer afford to be petty or partisan with such matters as concern our species' continued existence. If the world does not act as one mind over its body and engage in some much needed weight-control, the patient will grow too big and soon die of a heart attack. In the end, it is not a developed/developing contest, but, rather, a decision for all of us: are we to continue growing like a virus or are we better than that?  If we continue to refuse to take responsibility for our species as a whole, perhaps the cock roach will deserve to survive us.

It is ironic that we vaunt ourselves as being made in the image of God while our species refuses to step up to the plate even to manage itself so it can survive. Many of the world's religions teach us to submit to something greater--to something wholly other. It is more difficult, it would seem, for us to submit to the good of our species as a whole, even as we as a species run up against the semi-permeable membranes that delimit us on our planet in so many ways.

I contend that we are getting closer Malthus’ "the threshold point." Future population growth (and the added consumption, such as of food and energy, that is inevitable with such growth) could have dramatic implications for human life. The previous growth did not have such implications, at least  with respect to the world as a whole, so that growth was qualitatively different than that which we shall face if we continue to add billions to the global human population.  This qualitative distinction is precisely what we as a species have been having such a difficult time in grasping. To the chagrin of financial chartists, who try to divine stock movements in the future based on past trends, what was the case yesterday may not be the case tomorrow anymore. We got hits of this when the global financial system almost collapsed in September of 2008 and the Japanese nuclear plant almost had a meltdown in March of 2011. There being no financial market or no Japan would have been a wake-up call to us all concerning the assumptions we all implicitly make about there being a tomorrow like today. The sun may rise again, but we may not be around to watch it. Being made in God’s image does not guarantee us a seat. To grasp this vital point requires moving one's eyes from the rising prices on the shelves at our favorite local grocery store to consider the big picture with respect to the human race on planet Earth.  To act on this point requires significant reform of international organizations, such that they would be more than the sum of their parts.

If coordination between countries such as through the U.N. is not sufficient to arrest growth in the worst offenders, a transfer of a degree of sovereignty adequate for the tasks needed to avert reaching the threshold point beyond which the Earth can no longer support the human race is needed. This is particularly true if the worst offenders do not have the political will to correct themselves even if doing so is in their own interests. All too often, continuing in the status quo is too convenient to be resisted with enough energy to reverse the entropy even if correction is urgently needed. Lest the fear of a world government or federation enable the insufficient coordination to be presumed as the best we can do, the governmental sovereignty that is transferred should be accompanied with a design of checks and balances such that political consolidation does not occur. This is not, in other words, an argument for one world government. Rather, it is an observation that the human race as a species as reached a point where the species itself needs manage itself with respect to the planet as a constraint. Otherwise, the continued viability of our species will be in jeopardy. The fear of nuclear war during the last half of the twentieth century was just the dawning of this recognition. The question now is whether we act on our new awareness and situation with respect to the Earth.

Click to Add a Comment or Question (or View Posted Comments) on food prices and global population growth.

Source: http://www.usatoday.com/money/industries/food/2011-03-17-food-costs-world-hunger.htm