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Cars vs. People

I have elsewhere discussed the possibility of a “buying power externality“–the idea that extreme inequality has unaccounted for costs when those with high purchasing power start bidding away a relatively fixed resource from others. I also worry that increasing inequality also drives the high margin, low volume IP markets I discuss here.

But I’d never thought of pushing the idea as far Lester Brown does in his piece “Starving the People to Feed the Cars.” Here’s a taste:

Plans for new ethanol distilleries and biodiesel refineries are announced almost daily, setting the stage for an epic competition. In a narrow sense, it is one between the world’s supermarkets and its service stations. More broadly, it is a battle between the world’s 800 million automobile owners, who want to maintain their mobility, and the world’s 2 billion poorest people, who simply want to survive. . . . Brazil, the world’s largest exporter of sugar, converts half of its crop into ethanol for cars, contributing to a doubling of the world sugar price over the past two years.

In general I have thought rising gas prices necessary to motivate investment in cleaner energy sources. But Brown points to a different dynamic: a gradual bidding away of food supply in order to promote mobility.

In any event, this process should lead us to rethink claims that the market is efficient because individuals’ “dollar votes” permit a fair collective determination of the best use of resources. If Brown can actually cash out his claim that gas-hungry Hummers are causing hunger, we face a far less sanguine market future, portending a possible new imperialism.