High Commodity Food-Price Decade Challenges All Global Managers

Do you remember this video. A man who lifed side by side with the elite reveals plans of the elite . For example rising food prices.

The US Department of Agriculture’s (USDA) annual “Outlook Forum” in Washington D.C. usually draws a polite trickle of insiders and commodities traders, but on February 24 the forum’s venue was overrun with 2,000 attendees.

At the event, USDA chief economist Joseph Glauber warned of record farm prices for corn, wheat, and soyabeans for 2011, and resulting US food inflation of at least 4% this year and next as prices work their way through the supply chain.

The world situation is more extreme: the USDA says global food prices rose 25% last year, and set a record in January as world grain inventories suffered an estimated 13% decline. The U.N. Food and Agricultural Organization (FAO) in January reported its food-price index was up 32% in the second half of 2010, surpassing the previous record of June 2008. The index, which tracks the prices of a basket of cereals, oilseeds, dairy, meat and sugar, has risen for six consecutive months.

In 2008, food shortages triggered riots across the world, from Haiti to Somalia. It’s no coincidence then that the tottering regimes of Tunisia, Egypt, Libya, and counting, which could have fallen anytime in the last 30 years have come under acute pressure now. As Mary Antoinette would have noted in 1789, when bread becomes a luxury, rulers should watch out.

Rising food demand has many causes, from raised climate instability to demographic growth, to urbanization (loss of subsistence production), to higher emerging market (particularly Indian and Chinese) living standards, to speculation and hoarding, and so on. Some of the problems are systemic, that is, feedback loops apply. For example, the Arab revolt has driven the price of oil to well above $100, and transportation is a significant component of the retail cost of food.

A clear driver

What is evident is global production is not keeping up, or not yet, so in any plausible future prices cannot be coming down soon. High food prices are therefore what scenario planners would call a ‘predetermined element’ – something we should expect for a decade at least, until supply conditions fundamentally adjust.

In terms of thinking intelligently about the future and how to manage it, food is a very clear driver. This is because it is, of all commodities, obviously the most “inelastic” to demand conditions. People can significantly cut their consumption of iPods or scooters, or even health care and education, but not food staples.

The question for leaders and planners is, where does the food-price-crisis go from here; what kind of global operating conditions does it imply for businesses? Is the Arab revolt the extent of it, or are we to be rocked by deeper global social upheaval? Or real famine?

Without exception, genuine famines have political as well as agricultural causes. A crop failure is redeemable through cross-border flows of money or food, but where political conditions disrupt these flows; or worse, where food is provided or withdrawn as a mechanism of engendering political obedience, starvation looms. Western policy solutions  therefore need two prongs, raised supply and ensured equitable distribution, and neither is at this point guaranteed in poor parts of the world.

New faces

In a more optimistic view, business leaders should expect some new faces around their senior international negotiating and lobbying tables. On the ground, it is evident that political systems respond to social shocks such as food-price-hikes not unlike how buildings respond to earthquakes. Witness the tragic events in Christchurch, New Zealand: solid building stand up, weak ones fall. That’s why some Arab regimes are tottering and collapsing.

We are looking at a high-food-price period, perhaps even a food-price-crisis decade, which will cause every political system to shudder, and the weak ones to fall as the decade plays itself out.

Source: http://blogs.forbes.com/adamgordon/2011/03/01/high-commodity-food-price-decade/

Albert Einstein writes about God

albert einstein
Letter to Eric Gutkind
By Albert Einstein (1954)
May 16, 2008 Letter sold at auction for $404,000.00
Translated from the German by Joan Stambaugh

… The word God is for me nothing more than the expression and product of human weaknesses, the Bible a collection of honorable, but still primitive legends which are nevertheless pretty childish. No interpretation no matter how subtle can (for me) change this. These subtilized interpretations are highly manifold according to their nature and have almost nothing to do with the original text. For me the Jewish religion like all other religions is an incarnation of the most childish superstitions. And the Jewish people to whom I gladly belong and with whose mentality I have a deep affinity have no different quality for me than all other people. As far as my experience goes, they are also no better than other human groups, although they are protected from the worst cancers by a lack of power. Otherwise I cannot see anything “chosen” about them.

In general I find it painful that you claim a privileged position and try to defend it by two walls of pride, an external one as a man and an internal one as a Jew. As a man you claim, so to speak, a dispensation from causality otherwise accepted; as a Jew the privilege of monotheism. But a limited causality is no longer a causality at all, as our wonderful Spinoza recognized with all incision, probably as the first one. And the animistic interpretations of the religions of nature are in principle not annulled by monopolization. With such walls we can only attain a certain self-deception, but our moral efforts are not furthered by them. On the contrary.

Now that I have quite openly stated our differences in intellectual convictions it is still clear to me that we are quite close to each other in essential things, ie in our evaluations of human behavior. What separates us are only intellectual “props” and “rationalization” in Freud’s language. Therefore I think that we would understand each other quite well if we talked about concrete things. With friendly thanks and best wishes.

A. Einstein


Source: http://www.nytimes.com/2008/05/17/science/17einsteinw.html?_r=2

If climate scientists are in it for the money, they're doing it wrong

One of the more unfortunate memes that makes an appearance whenever climate science is discussed is the accusation that, by hyping their results, climate scientists are ensuring themselves steady paychecks, and may even be enriching themselves. A Google search for “global warming gravy train” pulls out over 50,000 results (six of them from our forums).

It’s tempting to respond with indignation; after all, researchers generally are doing something they love without a focus on compensation. But, more significantly, the accusation simply makes no sense on any level.

You can’t make a bundle pushing the consensus

So, are there big bucks to be had in climate science? Since it doesn’t have a lot of commercial appeal, most of the people working in the area, and the vast majority of those publishing the scientific literature, work in academic departments or at government agencies. Penn State, home of noted climatologists Richard Alley and Michael Mann, has a strong geosciences department and, conveniently, makes the department’s salary information available. It’s easy to check, and find that the average tenured professor earned about $120,000 last year, and a new hire a bit less than $70,000.

That’s a pretty healthy salary by many standards, but it’s hardly a racket. Penn State appears to be on the low end of similar institutions, and is outdone by two other institutions in its own state (based on this report). But, more significantly for the question at hand, we can see that Earth Sciences faculty aren’t paid especially well. Sure, they do much better than the Arts faculty, but they’re somewhere in the middle of the pack, and get stomped on by professors in the Business and IT departments.

This is all, of course, ignoring what someone who can do the sort of data analysis or modeling of complex systems that climatologists perform might make if they went to Wall Street.

It’s also worth pointing out what they get that money for, as exemplified by a fairly typical program announcement for NSF grants. Note that it calls for studies of past climate change and its impact on the weather. This sort of research could support the current consensus view, but it just as easily might not. And here’s the thing: it’s impossible to tell before the work’s done. Even a study looking at the flow of carbon into and out of the atmosphere, which would seem to be destined to focus on anthropogenic climate influences, might identify a previously unknown or underestimated sink or feedback.

So, even if the granting process were biased (and there’s been no indication that it is), there is no way for it to prevent people from obtaining contrary data. The granting system is also set up to induce people to publish it, since a grant that doesn’t produce scientific papers can make it impossible for a professor to obtain future funding.

There’s not much money in climate (or green energy)

Maybe the money is in the perks that come with grants, which provide for travel and lab toys. Unfortunately, there’s no indication that there’s lots of money out there for the taking, either from the public or private sector. For the US government, spending on climate research across 13 different agencies (from the Department of State to NASA) is tracked by the US Climate Change Science Program. The group has tracked the research budget since 1989, but not everything was brought under its umbrella until 1991. That year, according to CCSP figures, about $1.45 billion was spent on climate research (all figures are in 2007 dollars). Funding peaked back in 1995 at $2.4 billion, then bottomed out in 2006 at only $1.7 billion.

Funding has gone up a bit over the last couple of years, and some stimulus money went into related programs. But, in general, the trend has been a downward one for 15 years; it’s not an area you’d want to go into if you were looking for a rich source of grant money. If you were, you would target medical research, for which the NIH had a $31 billion budget plus another $10 billion in stimulus money.

Not all of this money went to researchers anyway; part of the budget goes to NASA, and includes some of that agency’s (rather pricey) hardware. For example, the Orbiting Carbon Observatory cost roughly $200 million, but failed to go into orbit; its replacement is costing another $170 million.

Might the private sector make up for the lack of government money? Pretty unlikely. For starters, it’s tough to identify many companies that have a vested interest in the scientific consensus. Renewable energy companies would seem to be the biggest winners, but they’re still relatively tiny. Neither the largest wind or photovoltaic manufacturers (Vestas and First Solar) appear in the Financial Times’ list of the world’s 500 largest companies. In contrast, there are 16 oil companies in the of the top 100, and they occupy the top two spots. Exxon’s profits in 2010 were nearly enough to buy both Vestas and First Solar, given their market valuations in late February.

So, despite sporadic accusations otherwise, climate researchers are scrambling for a piece of a smaller piece of the government-funded pie, and the resources of the private sector are far, far more likely to go to groups that oppose their conclusions.

They lose by winning

If you were paying careful attention to that last section, you would have noticed something funny: the industry that seems most likely to benefit from taking climate change seriously produces renewable energy products. However, those companies don’t employ any climatologists. They probably have plenty of space for engineers, materials scientists, and maybe a quantum physicist or two, but there’s not much that a photovoltaic company would do with a climatologist. Even by convincing the public of their findings—namely, climate change is real, and could have serious impacts—the scientists are not doing themselves any favors in terms of job security or alternative careers.

But, surely, by convincing the public, or at least the politicians, that there’s something serious here, they ensure their own funding? That’s arguably not true either, and the stimulus package demonstrates that nicely. The US CCSP programs, in total, got a few hundred million dollars from the stimulus. In contrast, the Department of Energy got a few billion. Carbon capture and sequestration alone received $2.4 billion, more than the entire CCSP budget.

The problem is that climatologists are well equipped to identify potential problems, but very poorly equipped to solve them; it would be a bit like expecting an astronomer to know how to destroy a threatening asteroid. The solutions to problems related to climate change are going to come in areas like renewable energy, carbon sequestration, and efficiency measures; that’s where most of the current administration’s efforts have focused. None of these are areas where someone studying the climate is likely to have a whole lot to add. So, when they advocate that the public take them seriously, they’re essentially asking the public to send money to someone else.

To sum up: climate research doesn’t pay well, the amount of money dedicated to it has been shrinking, and if the researchers were successful in convincing the public that climate change was a serious threat, the response would be to give money to someone else. If you come across someone arguing that scientists are in it for the money, then you can probably assume they are willing to make arguments without getting their facts straight.

Source: http://arstechnica.com/science/news/2011/02/if-climate-scientists-push-the-consensus-its-not-for-the-money.ars