Monday, August 5, 2013
Sunday, August 4, 2013
The Great Tortilla Crisis
Krugman-Wells-Grady
“Thousands in Mexico City protest rising food prices.” So read the headline in the New York Times on February 1, 2007. Specifically, the demonstrators were protesting a sharp rise in the price of tortillas, a staple food of Mexico’s poor, which had gone from 25 cents a pound to between 35 and 45 cents a pound in just a few months. Why were tortilla prices soaring? It was a classic example of what happens to equilibrium prices when supply falls. Tortillas are made from corn; much of Mexico’s corn is imported from the United States, with the price of corn in both countries basically set in the U.S. corn market. And U.S. corn prices were rising rapidly thanks to surging demand in a new market: the market for ethanol. Ethanol’s big break came with the Energy Policy Act of 2005, which mandated the use of a large quantity of “renewable” fuels starting in 2006, and rising steadily thereafter. In practice, that meant increased use of ethanol. Ethanol producers rushed to build new production facilities and quickly began buying lots of corn. The result was a rightward shift of the demand curve for corn, leading to a sharp rise in the price of corn. And since corn is an input in the production of tortillas, a sharp rise in the price of corn led to a fall in the supply of tortillas and higher prices for tortilla consumers. The increase in the price of corn was good news in Iowa, where farmers began planting more corn than ever before. But it was bad news for Mexican consumers, who found themselves paying more for their tortillas. ▲
“Thousands in Mexico City protest rising food prices.” So read the headline in the New York Times on February 1, 2007. Specifically, the demonstrators were protesting a sharp rise in the price of tortillas, a staple food of Mexico’s poor, which had gone from 25 cents a pound to between 35 and 45 cents a pound in just a few months. Why were tortilla prices soaring? It was a classic example of what happens to equilibrium prices when supply falls. Tortillas are made from corn; much of Mexico’s corn is imported from the United States, with the price of corn in both countries basically set in the U.S. corn market. And U.S. corn prices were rising rapidly thanks to surging demand in a new market: the market for ethanol. Ethanol’s big break came with the Energy Policy Act of 2005, which mandated the use of a large quantity of “renewable” fuels starting in 2006, and rising steadily thereafter. In practice, that meant increased use of ethanol. Ethanol producers rushed to build new production facilities and quickly began buying lots of corn. The result was a rightward shift of the demand curve for corn, leading to a sharp rise in the price of corn. And since corn is an input in the production of tortillas, a sharp rise in the price of corn led to a fall in the supply of tortillas and higher prices for tortilla consumers. The increase in the price of corn was good news in Iowa, where farmers began planting more corn than ever before. But it was bad news for Mexican consumers, who found themselves paying more for their tortillas. ▲
Navigational Cell Systems Located in Human Brains - NYTimes.com
Navigational Cell Systems Located in Human Brains - NYTimes.com:
"Scientists’ discovery that rodents, bats and nonhuman primates have a system in the brain for what amounts to dead reckoning navigation is one of the most important brain research developments of the past few decades."
'via Blog this'
"Scientists’ discovery that rodents, bats and nonhuman primates have a system in the brain for what amounts to dead reckoning navigation is one of the most important brain research developments of the past few decades."
'via Blog this'
Is There Any Point To Economic Analysis? - NYTimes.com
Is There Any Point To Economic Analysis? - NYTimes.com:
"A few further thoughts inspired by the sad revelation that Beltway conventional wisdom has settled on the proposition that high unemployment is structural, not cyclical, even though there is now a bipartisan consensus among economists that the opposite is true."
'via Blog this'
"A few further thoughts inspired by the sad revelation that Beltway conventional wisdom has settled on the proposition that high unemployment is structural, not cyclical, even though there is now a bipartisan consensus among economists that the opposite is true."
'via Blog this'
Charles D. Varnadore, Whistle-Blower at Nuclear Lab, Dies at 71 - NYTimes.com
Charles D. Varnadore, Whistle-Blower at Nuclear Lab, Dies at 71 - NYTimes.com:
"After Charles D. Varnadore complained about safety at the Oak Ridge National Laboratory in Tennessee, where he worked as a technician, his bosses moved him to an office containing radioactive waste. When an industrial hygienist recommended that either he or the waste be moved, he was put in a room contaminated with mercury."
'via Blog this'
"After Charles D. Varnadore complained about safety at the Oak Ridge National Laboratory in Tennessee, where he worked as a technician, his bosses moved him to an office containing radioactive waste. When an industrial hygienist recommended that either he or the waste be moved, he was put in a room contaminated with mercury."
'via Blog this'
Of Courage and Cantaloupes - NYTimes.com
Of Courage and Cantaloupes - NYTimes.com:
"After the Senate passed a comprehensive immigration bill in June, hope for reform shifted to the House. That is where hope sits, on ice, getting freezer burn."
'via Blog this'
"After the Senate passed a comprehensive immigration bill in June, hope for reform shifted to the House. That is where hope sits, on ice, getting freezer burn."
'via Blog this'
The Hacking of Michael Pettis
Oh, wow. I mentioned a couple of weeks back that when I tried to get to Michael Pettis’s essential blog on Chinese economics, I ran into Viagra ads. At the time I found it funny; but I took another look today, and find Pettisreporting not just that he was hacked, but that it took place repeatedly, and that the blog is on hiatus while they rebuild.
Commenters over there are suspicious — this sounds awfully persistent for Viagra salesmen, and you have to wonder whether someone doesn’t like frank assessments of Chinese economic prospects. And it makes me grateful that this blog is protected by Times firewalls etc., given the stuff that has happened outside that protection — e.g., fake Google plus, Facebook, and Twitter accounts in my name, to cite just the stuff I know about.
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