Here's what the news stories aren't telling you about the bill Senator Dodd brought out yesterday: it could spell life or death for hungry people worldwide. It all depends on what happens in the weeks to come -- and what Congress hears from constituents.
Here's what I'm talking about: when I was writing about the food crisis last year, which had plunged over 100 million people into poverty, I was appalled to realize that one big cause was speculation. What has been called the giant pool of money (the mushrooming amount of capital that global investors are looking to get a return on) took a notion to pour into wheat, corn, and other food futures contracts, helping to cause some food prices to double -- which spelled disaster for people who were already paying up to 80 percent of their daily income for food. Food riots ensued.
A couple months ago, I found out the good news: there is a road-tested, quick, and pretty darn cheap way to stop this from happening.
I found this information credible not only because the social-justice Catholic advocacy types who alerted me to it know their hunger policy, but also because the idea was endorsed by a U-of-Chicago-alum financial-industry insider, plus a hedge fund manager living in the Virgin Islands. After my head stopped exploding from this strange-bedfellows combination, I started to listen real, real seriously.
Here's the secret: We need to put back the ground rules that, until 2000, prevented big-money types from turning food prices into a high-rolling casino, with people's daily bread/rice/tortillas as the chips. These simple ground rules worked for decades. Throwing them out was a failed experiment in greed. And its complete, disastrous failure should not be a surprise, considering the source: the same speculative bubble-makers who brought us the dot-com bubble, the mortgage-securities bubble (and its child, the real estate crash), and seesawing oil prices.
Now that this incompetent crew has driven the economy off of a cliff, it's time to throw their ideas in the garbage where they belong, and reinstate food commodities speculation limits. The pre-2000 system allowed farmers and food buyers to hedge against risk; the post-2000 system hurts farmers and eaters with prices that wildly seesaw as investors stampede into and out of the market.
Compared to most other anti-hunger actions, fixing this is insanely cheap -- you don't have to ship food hither and yon, hire staff to distribute it, or worry about undermining local farmers. You just have to re-institute the principle: First, do no harm.
And that's why Dodd's bill might help. News stories report that it puts some restrictions on derivatives, the larger category that includes food futures (along with a lot of other things). I haven't yet read in-detail analysis -- it appears the current bill has some loopholes, and the details are sure to change as the bill sets off the mother of all turf wars between different interested parties and regulatory agencies in upcoming weeks.
But here's something anyone can understand: so far, Congress has apparently been flooded with lobbying from Wall Street types out to protect their profits -- while not hearing much at all from ordinary constituents asking them to do the simple, decent thing for farmers and hungry people worldwide. (On a different note, this giant bill might also bring about decent consumer financial protection for people in the U.S.)
Earlier, when talking about strange bedfellows, for dramatic effect I withheld a key piece of information: that hedge fund manager and that U of Chicago grad are both Christians, and feel called by their faith to fight world hunger. That fight is something that anyone, insider or not, can understand. You can read more about it at www.stopgamblingonhunger.org.
Elizabeth Palmberg is an assistant editor of Sojourners magazine.