Record Food Prices

Why is grain consumption going up?  More people and particularly, richer people eat less efficiently.  The Chinese are eating lots more meat and beer:

Gas Prices Are Rising,

The New Republic:

According to research by UC Davis's Jonathan Hughes, Christopher Knittel and Daniel Sperling, Americans are now less responsive to increases in gas prices. In the late 1970s, a ten percent rise in the cost of gas would lead to about a three percent decline in the amount of gas consumed. In the early 2000s, on the other hand, gas prices would have to rise about 60 percent to provoke a similar decline in gas consumption.

The Street Light: Return to the Center of the World

The Street Light: Return to the Center of the World:

Gavyn Davies points us to a neat map created by Danny Quah at the LSE in his recent paper "The Global Economy's Shifting Centre of Gravity" (pdf). In it, Quah calculates "the average location of economic activity across geographies on Earth." Here's the map:


The westernmost black dot on the map represents where the Earth's center of economic gravity was in 1980 - somewhere in the Atlantic Ocean, a bit west of the Madeira islands. Since then it has drifted eastward to its current position near Cairo. The red dots then extrapolate the motion of this point until 2050, assuming the next 40 years are characterized by similar growth patterns to the past 30 years.

One of the things I love about this map is that it reminds me (in an admittedly purely superficial way) of one of my favorite economic models: the "gravity" model of trade flows, in which the trade between two countries or regions is roughly predicted by the size of the two regions and how far apart they are, just like physical gravity.

More substantively, I also find it interesting to think about this movement of the world's economic center of gravity as really just backtracking, an undoing of the point's westward movement that took place between about 1700 and 1900. From the time of the first pyramids until perhaps the 16th or 17th century, the world's economic center of gravity consistently hovered in the Middle East somewhere. Its movement westward into the Atlantic is really a relatively recent phenomenon. (Granted, if Quah's projections are correct, we may overshoot a bit as the point moves back east to where it came from, but that remains to be seen.)

It's not a coincidence that nearly all European maps of the world until the 16th century had the Middle East (often specifically Jerusalem) in the middle of the map. To medieval European map-makers, the Middle East was, and had always been, right at the center of the world, geographically, spiritually, and economically. Note that the requirement to represent that visually is what led to the classic T-O maps of the European Middle Ages. (The T-O maps are oriented with east at the top, with the Mediterranean forming the vertical stroke of the 'T', and with the Middle East right at the center of the world where the three continents meet.)

In that context, Quah's map above - and the changes in the world economy that it so nicely distills - could be interpreted as simply the correction of a temporary global aberration.

Oil: A Commodity Traded On A Global Marketplace

Yglesias:

there’s a single worldwide price of oil that’s determined by global supply and global demand. It’s not possible for one country to unilaterally alter the price its own citizens pay at the pump by altering the quantity of oil it produces. A new well in the United States has exactly the same impact on global prices as a new well in Norway or Venezuela or Saudi Arabis and thus the exactly the same impact on the price American consumers pay.

And yet turn it into a political story and suddenly all this knowledge drops away:

“What about domestic supply?” asked Sen. David Vitter (R-LA) this week. “What about the Gulf of Mexico? What about all of our other vast energy resources that we are taking off the table and shutting down?”

Rep. Doc Hastings (R-WA), who is chairman of the House Natural Resources Committee, has cataloged ways he says the administration has frustrated oil production, from suspended drilling leases to increased red tape. House Speaker John Boehner (R-OH) posted highlights of the list on his website.

“Since this administration has taken over, they have done everything to block energy development in this country,” Hastings said.

Well what about domestic supply? Why would it matter if the supply is domestic?

Fun With Purchasing Power Parity

Yglesias:

Richer countries have higher price levels in general. But Japan is not richer than France, Germany, and the UK which makes its high cost of living evidence of a low-productivity service sector.

See Wikipedia for a great map of PPP in 2003.

Sawing Apart Gym Shoes At The Port Of Long Beach : Planet Money : NPR

Sawing Apart Gym Shoes At The Port Of Long Beach : Planet Money : NPR:

The U.S. Customs and Border Protection testing facility in Long Beach, Calif. looks like a cross between a university science lab and a theater props department. It's full of long work benches, people in white lab coats, and piles and piles of shoes, shirts and fabric. The people who work here have a serious mission: to catch importers who are trying to game the tariff laws.... Canvas sneakers with rubber or plastic soles, for example, are assessed a duty of 37.5 percent, but if the sneakers are made of leather, the duty goes down closer to 10 percent.

These seemingly arbitrary distinctions create a huge incentive for importers to try and get around the rules, which is why this testing lab exists. The people who work here are constantly verifying that importers are bringing in what they say they’re bringing in, and that verification can get ugly:

"One of the tools they like to use is an autopsy saw," says Marian Federoff, a scientist at the lab, "It does a really nice job of cutting through the leather, textile and rubber plastic components that we are trying to separate."

In the 19th century, tariffs were the main way the government made money. But for at least 50 years now, tariffs have had fewer supporters. Pretty much every economist, left or right, says tariffs make the U.S. poorer and don’t save jobs.

Imagining America as China - James Fallows - International - The Atlantic

Imagining America as China - James Fallows - International - The Atlantic:

If Americans wanted to imagine what it would take to be 'strong' in the way China currently is, [Thomas Barnett] said, all we'd have to do is think of moving the entire population of the Western Hemisphere into our existing borders. Every single Mexican. (Rather than enforcing the southern border, we'd require everyone to cross it, headed north.) Every Haitian, Cuban, and Jamaican. Everyone from Central America. All 190 million from Brazil. And so on. Even the Canadians. China, by the way, is just about the same size as the United States, though a larger share of its land area is desert, mountain, or otherwise nonarable.

If we did that, we'd be up to about a billion people -- and then if we also took every single person from Nigeria, and for good measure everyone in hyper-crowded Japan too, we'd finally be up to China's 1.3 billion size. At that point, like China, we'd have tremendous scale in everything. Rich people. Big businesses. A huge work force. Countless numbers of multi-million population cities. And we would also have a tremendous amount of poverty, plus pressure on resources of every kind, from water to food to living space. Just as China does now. Scale gives China some strengths. But it also creates tremendous challenges, as Americans would recognize if we thought about this prospect for even a minute. Seriously, reflect on this, and consider that it is China's reality now.