Policy Approaches to Undernutrition

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The World Food Problem

Leathers and Foster, 2004 http://www.lastfirst.net/images/product/R004548.jpg

Ethics: Pope John Paul II

• • • “Contrasts between poverty and wealth are intolerable for humanity” “It is the task of nations, their leaders, their economic powers and all people of goodwill to seek every opportunity for a more equitable sharing of resources” – Example of

Beneficence

• Personal moral duty to help the poor http://schoolnet.gov.mt/liceovassalli/mav/MAV%20Zones/Students/Essays/Pope%20John%20Paul%20II.jpg

Ethics: Right to Food?

United Nations • • Right to Food – Included in International Covenant on Economic, Social and Cultural Rights – Adopted by UN – Signed by 85 countries Now must address hunger issue – to protect fundamental rights of society – Don’t need to feel personal moral duty to help the poor http://orrinwoodward.blogharbor.com/United%20Nations%20Assembly.jpg

Ethics: Right to Food?

• • • • • Rights taken very seriously Absolute entitlement Non-negotiable Would require government to act to prevent hunger Conflict with property rights?

Feeding orphans, Yemen http://www.yobserver.com/uploads/1/orphans5.jpg

Economist’s Questions

• • What is the appropriate policy for society as a whole?

How can government best manipulate human greed to achieve its policy objectives?

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How to Move Society Forward

Government Manipulate self-interest to achieve policy goals Economy Capitalism Ideology Self-interest

Economics Policy Decisions

Three Gorges Dam, China http://www.thelightisgreen.com/China%20Three%20Gorges%20Dam%2001.jpg

• • • • Every action has costs and benefits Marginal costs and benefits – For 1% increase in cost, what is the increase in benefits?

Ideal decision: where marginal costs = marginal benefits Free market will allocate resources optimally, but – Without concern for • • Social costs Environmental costs – Can everything be put in dollar terms?

Externalities

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• Costs and benefits sometimes go to people outside the market transaction – Should wealthy benefit from costs borne • By the poor?

– Exploitation = externality • By the environment?

– Exploitation = externality – To feed hungry has indirect benefit to wealthy • • We feel better = externality No market for this

Every action has costs and benefits

• How much would you pay for… – A human life?

• Speed limit 10 MPH?

• Nutrition for every man, woman, and child?

– Food without pesticide residue?

– No pollution?

– Freedom?

– Fair trade?

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Harnessing greed in policy

• • • Economic incentives – Can make it more expensive • To have children • To degrade the environment – Need property rights Production increases with reward – If we eat less: • other countries won’t benefit • Farmers will produce less As demand increases – efficiency increases • • Products made available more cheaply Alternatives found http://sheepwaker.tripod.com/greed.jpg

Policy to reduce undernutrition?

• • 250 Calories/day would erase Calorie deficit of hungry – Cost 35 cents/day/person – = $6,400 invested at 2% interest – Value of Human Life?

For 800 million people, this policy would – Increase food prices – Increase environmental costs of food production http://www.pbs.org/newshour/images/africa/july-dec07/1126_somalia_bhead2.jpg

Policies to raise incomes of poor

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• • Redistribute income from rich to poor – Rationale: declining marginal utility of income • Rich don’t benefit from a dollar spent as much as poor do – But should incomes be equalized?

Improve rate of economic growth – Is Globalization beneficial to developing nations?

Policies to reduce price of food

• • Population reduction – Demand will rise slower – Food prices will rise slower Increasing supply – Research investment – Loans to farmers http://farm3.static.flickr.com/2300/2198720003_b56c80b97c_o.jpg

Policies to reduce cost of food

• • Price supports • Sell food to consumers • Subsidies to farmers – Both reduce economic efficiency – Therefore distortionary Corrective price policies – Example: correcting distortions that reduce food output

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Aid Policies

• • • • Aid can help – If targeted to poor • Example: School feeding – In emergencies Aid can hurt – If wealthy elites profit from it • makes the problem worse Often designed to further our national and trade interests Directed mainly at political allies – not hungry nations

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Aid Policies

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• • • Have been used as a lever – to impose “structural adjustment” on foreign trade policies If foreign countries do not open up markets – or reduce subsidies as directed by U.S.

• Aid may stop Designed to create new markets – foster dependence on U.S. grain • Korea

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Aid Policies

• • • When aid is given as free grain – undermines prices for farmers – driving them out of business Military aid can lead to armed conflicts – that generate hungry people Well-off divert aid to help themselves – further widening gap between haves and have-nots

U.S.Agency for International Development (USAID)

USAID in Uganda • • • • Started with Marshall Plan after WWII Principal U.S. foreign aid agency to help countries: – Recover from disaster – Escape poverty – Democratic reforms Partnership with – 3,500 U.S. businesses – 3,000 Organizations $8.8 Billion

U.S. Foreign Aid

• • • • U.S. gave $28 billion (2007) Largest Donor in world Less generous based on capacity to give (GNP) < 0.22% Federal Budget – Majority think U.S. Aid is 20X more http://news.bbc.co.uk/nol/shared/spl/hi/pop_ups/05/business_aid_and_development/img/1.jpg

U.S. Foreign Aid Budget

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U.S. Generosity

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• • • 2007 Government Aid: – $28 billion 2007 Private giving – $93 billion • $61 billion: private payments to family members 2007 Private Lending, Investment – $69 billion

Third World Debt

• • • Forgiving third-world debt – would help countries become self-sufficient Honduras annual debt payments – exceed amount spent on health and education combined Total debt payments – greater than foreign aid and foreign investment combined http://bloodbankers.typepad.com/submerging_markets/chart_intro.1.%20Growth%20of%20the%20Debt.jpg

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