There is considerable impact to food in the post below. If you’re hesitant to read the numbers, I encourage you to struggle through it and share it – it portrays a challenge that local and slow food sometimes avoid – and without dialogue on the numbers, how will we make the greater change that many of us are trying to persuade? I am not an economist nor an expert – this is merely my reflections on listening to some of the World’s experts discuss the topic last evening). The Occupy movement was discussed in the debate – though that isn’t the function of this post nor is it assessing the validity of big corporations. This is simply an effort to look at raw numbers and forecast the implications to local food…
I had the absolute privilege of attending the Munk Debates in Toronto last night. The debates happen about twice a year and are typically sold out within 72 hours. There were 2,700 live attendees last evening and an on-line audience of almost 4,000 to watch resolution at-hand:
- Be it resolved North America faces a Japan-style era of high unemployment and slow growth.
The panel was highly qualified. On the pro side were:
- Paul Krugman (columnist for the New York Times, 2008 winner of the Nobel prize for Economics)
- David Rosenberg (Globe and Mail, Wall Street Journal and more)
On the Con side were:
- Lawrence Summers (former Cheif Economist of the World Bank, U.S. Secretary of the Treasury, and President of Harvard)
- Ian Bremner (Wall Street Journal, Washington Post, New York Times, CNN and more).
The debate was fascinating and informative. Both sides were passionate and able to communicate their complex knowledge in a way that was easy to comprehend. Both sides agreed that the economic problems had real short-term solutions that could change current economic trends but disagreed over the likelihood of the ability to move nations to do so. There was also agreement that the risk of falling is very real but argued about where our fate would lie.
The arguments for optimism included North American resiliency, argued that Japan didn’t have the political experience we do (after 20 years of a single-party system), that North America isn’t struggling with the same magnitude of problem that Japan did and that there were few options Globally for people to invest their money – which all favoured the US. On the flip side, the cautious view listed the few options as a sign of risk (that no other nation would buy exports to help North America up), that the problem is already very deep and that there was little political goodwill to actually solve the problem due to the state of divided partisan lines.
The optimists swayed a lot of votes. We cast a vote before the debate and 56% thought the economy would continue at a snail’s pace, 26% were optimistic there would be change and 18% were undecided. At the end of the vote, the Pessimists were at 55% while almost the entire undecided vote flopped to 45% (there was no option to be undecided at the end). So, perhaps, this is good news.
I found Paul Krugman to be the most compelling. He used a lot of statistics and numbers to back up his arguments and while I know numbers can be interpreted in infinite ways, I found them to be more persuasive than anecdotal evidence. Here are some of his facts (to the best of my recollection):
- The US, when prosperous, held the budget deficit at 800 billion dollars.
- It raised to 3.5 trillion.
- Interest rates are at an all-time low, close to 0%. Based on an index I was unfamiliar with, he reports that “true” interest rates are running around -1% right now. The ability for the Government to raise money without taxes is limited.
- More than 70% of the US total debt is housing. People over-leveraged themselves and are over-mortgaged (the 70%+ number was the surprising number to me).
- People are in a period of un-leveraging themselves – meaning they need to shed their mortgages. There are two primary ways to do so; pay down your mortgage aggressively (with less money for other things in life, such as food) or default on your loan (walk away; and I don’t mean that casually as I know people who have lost their home and more in this economy). Walking away creates many personal problems as well as other economic problems – the inability to pay affects the organization that loaned the money and ultimately the economy at large. This again becomes a lack of money into the economy which slows it down further.
- By his estimation, 1 trillion US dollars of mortgages have been de-leveraged with another 2.5 trillion remaining. His best estimate was that we were 2-3 years into the cycle with an additional 5 years remaining. 5 years where people who have mortgages focus on those which takes money from other ‘expenses’ they would typically incur.
The net result is that the focus will be on housing and paying debt. People will have to find shortcuts to save in order to have such focus. And, although mentioned briefly, cheap food is one of the main ways a family has to make such a cut. While local, whole food doesn’t necessarily have to be cheap – it will continue to struggle when compared dollar-to-dollar with imports from afar, genetically modified ‘super crops’ and prepackaged food that’s aimed to either be or appear cheaper than the real food products that it can replace.
If you believe my interpretation of Mr Krugman’s presentation and you value whole, slow or local food then it’s more important time to act than ever. Inspire others through your actions, welcome people to the dialogue and make your own difference by growing, preserving, supporting local where possible and cheering on those who do. We aren’t nearly 100% local but we hope to be the difference we hope to see in others…
I welcome comments, dialogue and sharing of this post – it’s easy to become complacent and think we’re nudging the food system and our future food safety in the right direction. And, while that may be true, there’s a tough road ahead and lots of work left and recognizing the challenges ahead will best prepare us for them. Then again, maybe the other side will have the last laugh – in which case we’ll have even more opportunity to share the message.