Do rising food prices signal harder times to come?

Ripped from the wires ... Texas writer Rod Dreher discusses the disturbing implications for Americans of rising food prices.

By Rod Dreher

It's not every day that you see a Wall Street Journal columnist suggesting that Americans consider stockpiling food. But that's exactly what investment writer Brett Arends did recently, predicting that global food prices are about to take off into the stratosphere.

"Load up the pantry,'' top Wall Street investor Manu Daftary told the writer. "I think prices are going higher. People are too complacent. They think it isn't going to happen here.''

Complacency about the prospect of catastrophe can be a "deadly enemy,'' warns top investment strategist Barton Biggs in his new book, "Wealth, War & Wisdom.'' The rich are especially vulnerable, Biggs writes, "because they cherish the illusion that when things start to go bad, they will have time to extricate themselves and their wealth. It never works that way. Events move much faster than anyone expects.''

How much faith can any of us have that we'll see devastating events coming? According to Nassim Nicholas Taleb, not much.

Taleb is a former Wall Street trader who has become a philosopher of probability. He wrote a terrific nonfiction best-seller last year, "The Black Swan'' -- the title is his term for a totally unexpected, utterly game-changing event, like 9/11 -- that explored the importance of what we falsely think we know.

The notion that it isn't going to happen here is an example of a logical fallacy that Taleb calls confirmation bias. It's the same mistake made by the turkey that wakes up the day before Thanksgiving convinced that this day is bound to be just as terrific as the last thousand, based on his own experience.

And then there's the narrative fallacy, which depends on the human weakness for imposing patterns on data. Because we're hardwired to interpret facts in terms of a story, Taleb explains, we erroneously exclude information that doesn't fit our preferred narrative. It was easy for Americans to believe erroneously that the Iraqis would welcome U.S. invaders as liberators because that conclusion fits the story we like to tell ourselves about human nature and progress.

Both fallacies work to keep us from taking seriously the possibility that the country could face something as seemingly absurd as food shortages. We are psychologically invested in the idea that America is insulated from history and that our wealth, creativity and technological expertise will keep the barbarians, figuratively speaking, at bay.

Which is true -- until it isn't. At which point we will, in retrospect, look back at all the signs that pointed to the Black Swan event, as if its advent had been obvious all along.

It's not that nobody can ever see Black Swans coming, but rather that we tend to dismiss the dark spots on the horizon as meaningless, until they take us by surprise. How can we get better at seeing them coming?

"Train yourself to spot the difference between the sensational and the empirical,'' Taleb advises. Scary forecasts may not have facts or logic to support them.

And make sure to be prepared for the worst, he says. You never know.

What this has to do with food shortages is plain and sobering. The price of food is ballooning for two basic reasons. For one, there is increased demand from consumers in China, India and other industrializing nations experiencing a rapid rise in their standard of living. For another, the massive thirst for oil from those same nations is driving up the costs of food production and transportation.

If you believe the rise of China and India is a temporary phenomenon -- and that we will return to normal once the oil supply responds, as it always has, to meet unprecedented global demand -- you've got no worries.

But what if those emerging Asian powers are here to stay, and world oil demand will outstrip production, as most experts predict? In that case, rising grocery prices likely signal a more fundamental crisis in a modern civilization built on inexpensive, readily available oil.
Food prices these days are certainly sensational, but there are empirical reasons for their rise, reasons that point beyond a momentary spike. Grocery bills could be a proverbial canary in the coal mine, warning of dangers the rest of us can't detect.

And that canary? It might just be a Black Swan. We'll know eventually -- but too late for the complacent who didn't discern the empirical signs of the times and prepare.

Contact Dreher, a Dallas Morning News editorial columnist, at rdreher@dallasnews.com.

Comments?

Comments

[Richard L. Wolfe]

I have a question. Back in the 70's my family had a feed, saddle and tack business. We lived on James Island which has been battling the city of Charleston for sovereignity. When we first owned the store there were chickens, hogs, goats, etc. on the island. At some point, ( my memory is foggy on the subject )some government, ( the county, Chas. or J.I. ) passed a zoning law that only allowed certain animals on the island.

My question is if there is a food shortage will these zoning laws be reversed?

[Nick]

I doubt it. Then there are local HOA's that'll probably prohibit livestock. Hell, I know I would think about a couple of hens for egg laying. That's food right there.

I've noticed prices going up, but it's on the convenience items. And there are things people can do to save money too. If people take the time to make the food, they'll save money. Sure, a bag of flour and the rest of the ingredients might cost more than the bag of cookies, but in the end, you can make much more than whats in the bag of cookies.

And then there's the idea of victory gardens. I've always had a garden, just a small one, maybe 20 plants max. This is the first year I plan on growing more than that. Nothing extravagant, just tomatoes, a few peppers, cukes, zucchini, eggplant, and I'm hoping for 20 bean plants that I'm trying from seeds. I've had good yeilds from 2-3 bean plants, so 20 should give me some to possibly freeze.

But even without the gardening, you can still save money. There are sooo many ways.

[beachguy(original)]

Unfortunately American intellectuals have little real knowledge.

The Democrats have gotten their wishes.....diesel fuel will soon eclipse $5 a gallon.....Heavy Trucks now cost about 25% more due to Changes in manufacturing legislated by the "socialist party"

Humerous ? They forgot that goods get distributed by truck. Consumers always pay the frieght.

Some grocers think they are in the grocery business...ha ha...they produce no groceries...they distribute them from their warehouse called a "Super Market".

Wal Mart owns its own fleet, and therefore has a better control over costs...they call sell for less and make more profit due to ownership of the entire transportation and distribution chain.

Until they invent the Star Trek transporter...the masses will pay for freight...even if it isnt on the bill

[Nick]

Yeah, they tend not to realize that they pay for freight. Up in NJ, we didn't have the luxury of a Super Wal Mart, but there was Wegmans, who did own their own fleet too. And their own chicken egg farm. And some stuff, if you knew what to shop for, was cheaper. Many items actually.
And instead of paying another company that is earning a profit from shipping the food, all they have to do is pay the cost of shipping, they can charge less, and still make a profit.

Which is something I've always said. Stores hate WalMart. The company I worked for was glad there was a law that essentially banned Super WalMarts from NJ (it was something about stores being over 100,000 s.f. needed a study done to see if they would affect local businesses, and there were also supermarket laws that prevented them from being too close to each other). But coming down here and being able to shop at a WalMart, I'm not stupid, I know they are making a profit on what I buy. I also know they pay their employees crap, but when money is tight, I can't worry about the cashier. But other stores that want business, why can't they lower their prices to compete with WalMart? My opinion, GREED. They've been able to get a high profit on food for soo long that they are not willing to give that up.

[jim sefter]

I read something once that said the U.S. only had a 3 day supply of food on hand in grocery stores. That if something happened to the transportation system(trucks, esp.), there would be REAL food riots. Kinda scary when you think about it. What's the best stuff to stockpile? My guess would be canned and dry foods. How does one cook a black swan??? (or a canary)

[beachguy(original)]

Jim: I wouldn't worry about stockpiling...your in SC

get a handcast net, and a crab trap....you'll never run out of food.

If you buy it though..you ain't seen nothing yet.

ha ha.

[Denney Clements]

BGO: You never run out of mercury, either.

dc

[Richard L. Wolfe]

Nick, You are the man! Run for anything and if I'm eligable to vote then you have my vote. Your ability to analyze and solve any problem is better than any politician I have ever heard of or voted for.

One caution when you get to the top there two good reasons to put a halter on greed. The French Revolution and the Communist Revolution.

[beachguy(original)]

Denney: That " heavy metal" warning is just a ploy by wildlife to get you to buy vietnamese farm raised shrimp (and you know how clean that is) or to purchase telapia that is raised at sewage treatment plants (heavy metal is their main food)......don't believe what the SC fish & wildlife tells ya.