You know how when you're a kid your mom always tells you to eat all the food you're given because "There's starving children in Africa!"? A thought occurred to me today. Not the usual thought that the starving kids in africa would not want my tofu stir-fry by the time it could be shipped to them, but something else. In a way, me wasting food is actually good for the hungry people in the world!
Let me explain. If I take more food than I should, or if I allow food to go bad that I have purchased, I am essentially artificially inflating the demand for food (both worldwide and locally). When demand rises, supply follows (on a long-term scale). When supply rises, prices fall. When the price of food falls, the poor can afford food more. Thus, by spending more than I had to on food, I have created economic benefit. I am satisfied in having more options and flexibility in my eating habits, the poor benefit from the drop in prices, and food producers/growers benefit from increased sales.
Now, the above thought doesn't take into account the fact that an increase in demand in a certain area may lead to temporary shortages which would increase the price of food temporarily, but supply would then catch up and even things out with lower prices overall in the long term. I'm sure there are other arguments to be made here as this is just an off-the-cuff thought, but I do find it interesting
The point to be made here is to actually think through commonly-accepted wisdom and determine how wise it actually is. Many things we "know" are not true but have just been repeated so often by so many people that we actually think they are true.
An area of policy that I am interested in but know very little about is farm subsidies and their effect on the economy. Another area related to food that I'm interested in is FDA regulation. I suppose the two are tied together in some cases, but my knowledge is very limited in these areas. Any good links you could leave in the comments or books you could recommend would be welcome.
Hey Kyle, good to see your blog up and running.
ReplyDeleteInteresting Idea, but I am not sure you have a valid point. When you increase demand, you increase the price that food is sold at in the short term. Over the long term, supply would increase and prices should drop back to original levels. In the long term the price should not be significantly effected.
However, I see a few other factors to consider. First, the food industry naturally tends to use land and resources that are efficient at producing food. As demand increases, less efficient resources (subpar land, unskilled farmers, etc.) must be employed. This could potentially cause a change in the supply curve and raise the price of food. This problem could potentially become worse over time as increasing human population makes land more scarse.
However, it is also possible that an increase in the demand for food would spark more agricultural research and increase the efficiency of our food production techniques. The end result is questionable.
Lastly, consider the fact that buy buying more food than is necessary, you potentially spend more money. If this wasted money were instead donated towards providing food for the poor, than the same economic price shift should occur while the amount of food available for the poor should increase.
David Mohr