Kuta Beach

Kuta Beach

Saturday, 26 April 2008

Food Prices Rise

See World's New Crisis: Soaring Food Prices.

With food riots around the world today, many are making Malthusian predications about the world. One of Malthus's predictions is that more wealth would result in higher fertility rates because of lack of moral constraint, and so this would lead to mass starvation since people grow at a faster rate than food. Malthus turned out to be completely wrong. What we see today is that fertility is highest in poor countries while rich people tend to have fewer babies.

Producing children in chaotic, poor countries is a form of insurance since children can be used for labor on farms and also children may help the parents when they are older, making them akin to a pension.

This is why in Australia fertility rate is so low. Producing children has no actuarial benefit. Rather, children are only produced for pleasure. The problem is that children compete with other luxury goods for pleasure, such as Ferraris and holidays, which further reduce levels of fertility.

Some Australians I have spoken to say that the problem of food scarcity may make Africans desperate to escape to developed countries like Australia. They advocate then a wall around the country.

If Africans are breeding too much and Australians are breeding too little and if there is a scarcity of both skilled and unskilled labor in Australia then economic theory suggests the best idea is to allow free flow of labor between Australia and Africa. Unskilled Africans can work picking fruits on Australian farms. This will increase food production as well.

Putting a wall up separating free flow of labor is a form of Communism since you are not letting the free market allocate labor inputs to its most productive use but rather you are using central planning.

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