2009 and Beyond: The New Strategic Environment, Part 1

     Sometimes its hard to tell if recent events, like the generalized global economic meltdown, cast a shadow that is a vapor and will burn off as the sun comes out again, or whether they are a harbinger of a more persistent, new strategic environment in the global market and political system.

     There is certainly a feeling in the air that some substantial things have changed but time will tell if they are persistent or even fully realized.  Some of the things which form the emerging global situation that U.S. agricultural will operate in include:

1.  World population is growing dramatically, some analysts say at the current pace of about a billion new people every eight years.  Don't get too excited about translating that into more demand for meat.  The areas where most of these new lives are landing are the most impoverished regions of the globe.  Developed economies and the emerging nations including China, with its harsh population control measures, are mostly stable or in slight declines with respect to population growth.   So we will have a lot more mouths to feed but they will be in areas that largely subsist on coarse grains and have little income to purchase locally or on the global markets.  They are no longer primarily in rural areas either as cities around the globe have swollen to the breaking point with the poorest of the poor.  A new focus on locally produced, intensive agricultural methods is gaining ground and offers some surprisingly optimistic outlooks if implementation can succeed.  Aid agencies are experimenting with providing vouchers for purchasing available food rather than free food since it is less disruptive to the local economy and small scale producers.

2.  There is a kind of rejoicing throughout certain areas of the world regarding the financial trouble that is currently besetting and brewing in the United States.  There is also some positioning to lay the groundwork for moving into the power vacuum left by the U.S. if it cedes its position on any number of financial, political and military fronts as a result.  I suppose the good news in that regard for the U.S. is that the would-be climber nations are in no position to capitalize, in any sustainable way, on any weakness which currently besets the U.S. as they have their own challenges which in many cases make U.S. issues look small by comparison.  However, self imposed and asymmetric economic growth restrictions and limitations such as new taxes, bans, tariffs and regulations by developed nations on themselves and their trading partners, will help emerging nations make advances which would othewise not be possible.  The extent of that will depend on when developed nations come to their senses about what is happening. 

3.  Which brings us to the pendulum swing politically toward statism which is gaining ground afresh largely due to the false notion that capitalism caused the current financial problems throughout the world.  One of the key tenents of Marxist political theory is that capitalism has within it, the seeds of its own destruction so it will naturally implode on its own because it cannot avoid extreme redistributions of wealth which eventually lead to insurrections (military or political).  Historically, work on Henry Ford's assembly line and then the growth of unions in the U.S. in the early 20th century offered high wages and a true middle-class emerged, which granted an extended reprieve from the predicted outcome.  Now, however, we live in what Marxist's refer to as "Post-Fordism", where the sustained migration of higher paying manufacturing jobs, which supported a middle class, to low-wage countries over the last several decades has let up on the brakes, fostering they predict, movement toward an eventual socialist outcome.  The result is that free trade agreements, frictionless flows of capital on a global basis and the belief that free markets and global trading produce more wealth and prosperity for all (rather than the few) are all under challenge by an emerging political, scientific and an already entrenched academic mainstream.  The near term outcome is that we see nations taking steps to protect their interests with more government intervention rather than market based solutions.  This will make investments in promising areas of the world less attractive, free trade agreements will become laden with "conditions" and all of this will delay the return of reasonable credit standards and much needed long-term trading agreements of all sorts. 

4.  The global economic meltdown may at least temporarily save developed nations from the taxing, banning, and restricting that are already on the drawing board.  The global growth restrictors are meant to stop us from drowning in a fearfully predicted polar icecap meltdown.  However, man-made global warming is getting increasing criticism from credible voices who are coming out of the closet now that the steamrolling witchhunt for dissenters (I think the word is "deniers") has been mitigated by the recent destruction of discretionary global income and wealth.  The recent slide in purchases of organic foods in the U.S. for instance shows how income elastic the demand for such attributes really is.  Such attributes (organic, carbon-neutral, Certified Inefficiently Produced etc.) are currently in the marketbasket of the wealthy, and then only when wealth in growing.  Forcing them into everybody's shopping cart everyday will be difficult, which is very, very lucky for the world's poor.

Don't count on the recession-induced slowing of the let's-make-everything-artificially-more-expensive-by-taxation movement to be permanent.  The motive is to reduce the quantity demanded of all sorts of goods, which will make us more healthy, just, fair, equal and environmentally responsible (and, by the way, fill government coffers). It won't slow down because the religion of environmentalism is replacing mainstream Judeo-Christian religion in the western world.  No matter how many religious cults and kooks of the latter have wrongly predicted the day the world would end, the next one in line seemed to take the baton almost effortlessly and with full credibility among adherents.  Don't expect this to change just because nature is the new diety.