We economists quite often speak about the economic impacts of higher food prices in terms of higher overall inflation, surging interest rates and rising government debts as governments are forced to increase subsidies of food and lower customer duties on imports. These measures widen governments’ budget deficits and increase domestic debt. The public debt could become unsustainable and the country involved may go into bankruptcy.
But mainstream economists rarely discuss the impact of food inflation on geopolitics and social unrests but they should do so. Currently, the most pronounced predictions call for higher food prices in the months ahead. Given the high share of food in household budgets, developing countries are then poised to suffer much more from food inflation in 2011 and beyond than they did in 2010. The revolutions in Tunisia and Egypt are vivid examples of food inflation mingled with geopolitics, giving rise to social unrest.
It seems that when food inflation mingles with oppression, the likelihood of rising geopolitical risk multiplies. Thus, a high mix of those misery factors may explain why the revolution started in Tunisia and Egypt but not in the rich oil-producing countries despite similar oppression. It’s reasonable to assume that higher food inflation than oppression and injustice in the misery mix would push the geopolitical risk higher and lead to the toppling of governments. Hungry people will usually revolt fast.
The world population is now about seven billion inhabitants. At a growth rate of 2%, the world population should double every 35 years. This means in year 2045, the world population will be 14 billion. There are those who believe that our planet can sustain up to 10 billion people. Where should the extra four billion go in 2045? The Arab World’s population is now 340 million, and it grows at varying but fast rates. At a growth rate that exceeds 2%, the Arab population will double to become 680 million in less than 35 years. The Arab population growth is really a dynamic time bomb for its rulers who will not be able to provide subsidies forever while still maintaining sustainable debt. levels
The Arab World has more than its share of both geopolitical risk factors. This means the process of the revolution is not likely to stop in Tunisia and Egypt but is going to search the more vulnerable countries in the Arab World, as food prices continue o accelerate. But some Arab countries have their own peculiarities which might delay the evolution of revolution but the tide raises all ships. The double whammy misery mix should rise over the next months and we should see an extension of the Tunisia-Egypt revolution. Higher food prices in the next months should bring us more surprises? Which regime is doing down next? You make your own guess. You have many choices and the answer is not restricted to one.
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