A wager between a committed optimist and an incorrigible pessimist is worth recalling nearly three decades after it was made. Economist Julian Simon and environmentalist Paul Ehrlich took a bet in 1980, when rising commodity prices had, quite as in our own times, sent a Malthusian scare through the world.
Simon asked Ehrlich to choose five metals—and predicted that their prices would fall over the next 10 years. Ehrlich said they would rise. Simon won the bet. New technologies and economic incentives did the trick. The fears of the 1970s passed over.
Illustration: Jayachandran/ Mint
The food crisis and spiralling prices of industrial commodities are reviving the mistake that Ehrlich made—that there are not enough resources to support a prosperous world. That is the gist of economist Paul Krugman’s New York Times article that was published in this paper on Tuesday. “Concerns about what happens when an ever-growing world economy pushes up against the limits of a finite planet ring truer now than they did in the 1970s,” writes Krugman.
Really? These are undoubtedly trying times—but the case for long-term optimism should not be abandoned. Higher commodity prices are likely to intensify the hunt for new deposits and also the search for substitutes. The food crisis will hopefully spur the development of new crop varieties that use fewer inputs and produce more nutrition. Less vehement opposition to genetically modified (GM) would be a useful start.
Government policy has a role to play. As of now, most governments have been busy with perverse mercantilism— banning exports and encouraging imports. India, too, is an eager follower of this strategy. Starve thy neighbour cannot be a viable long-term policy, especially once more and more countries follow suit. The solutions that matter over the next few years will have to consider economic logic and technological possibilities.
India had faced a far more serious food crisis in the 1960s, when mass hunger was kept at bay with the help of emergency grain shipments from the US. Then came the Green Revolution—with new seed varieties and higher prices for farmers.
This time around, the job is no different. India needs a radical reform of agriculture —more public investment in irrigation and rural roads, modern supply chains built by organized retailers, vibrant forward markets and better access to credit.
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