High Food Prices to Come

High food prices might be considered a good thing from the standpoint of overall global economic efficiency, says Richard Posner on the current increase in global food prices.

The increased food prices are calamitous for very poor countries, and for poor people in other countries (in the absence of subsidy, such as the U.S. food-stamp program), but the world as a whole can take them in stride because they are self-correcting. High prices reduce demand and thus move output down the supply curve, resulting in a new, lower-price equilibrium. High food prices might even be considered a good thing from the standpoint of overall global economic efficiency. ... Of course the future is uncertain, and food prices famously volatile. Nevertheless the probability of continued increases in food prices cannot be reckoned slight.

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