Monday, September 1, 2008

Encircling the World's Commodities: Not Just Oil and Gas

I've noticed several small to mid-sized city newspapers running articles or op-ed pieces about how our lack of rail infrastructure is damaging US ability to transport food, exactly when rising food prices make one of our strongest exports all the more valuable (one in the Scottsbluff, Nebraska Star-Herald, one in the Reading, Pennsylvania Eagle; they boil down to this AP article.) It may very well be a coordinated campaign to get middle America and the farm lobby to recognize that a strong rail system is necessary to food transport. Campaign or not, it's ludicrous that our transport system is limiting our ability to take advantage of this great global market for our exports, and that foreign oil has such an impact on the price of our exports.

I've also been writing about Russia's use of its resources as a foreign policy bludgeon, as well as the recognition in the West that the early 21st century is about encircling the world's remaining resources, and that there are real bad guys doing it, the kind that you can't just take the DVD out when they get too scary. So it seems almost embarrassingly obvious that as a net exporter of grain, we haven't thought of the same thing (read "An OPEC for Food?", from Agcapita Farmland Investment Partnership based in Alberta, Canada.) And, as it turns out we're not the first to think of this. Russia has had this idea with its own grain but fortunately they don't have much leverage in their biggest foreign markets - yet.

The idea of a Grain-PEC might raise free-market hackles, but limiting supply to Russia in hard times or certain East Asian powers should they behave aggressively toward Taiwan or South Korea would not damage US grain exports severely or over the long term, and it would protect and stabilize the global markets that we all depend on, including our farmers. Free markets don't work without some government guarantee of stability enforceable contracts, and as Friedman pointed out in The Lexus and the Olive Tree, the governments and sometimes militaries of the world's liberal democracies protect those markets. (A historical note to hardcore libertarians: free markets don't just happen on their own. Otherwise, the Silk Road today wouldn't be significantly more perilous to trade along than it was seven centuries ago. Why? No Mongol armies guarding the length of it from bandits, that's why.)

By the way, the irony is not lost on me that a recent Obama convert is supporting the geopolitical conclusions, if not the action plan, of the PNAC's whitepaper. But Obama has a golden opportunity for hardheaded pragmatism to regain the mainstream of American politics, by recognizing the hard realities of resource politics and move strategically to make sure this century ends with liberal democracy still the dominant form of government on our planet. And there are real bad guys out there willing to use their control of resources - not just oil - to manipulate the world's democracies. Still think T. Boone Pickens and others like him aren't making sense? Or that we can wait?

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