Inspiring student leadership from Venezuela

I suspect I am not the only person who is cycnical about student politics. My parents' generation demonstrated for free love and against Vietnam, but when the 1968 generation came to power, they were self-indulgent and spineless (Bill Clinton and Gerhard Schröder come to mind). The student union 'leaders' during my time Oxford spent 90% of their time debating arcane matters of student politics. The only two substantial protests they organized were against student tuition fees (a bad cause) and against the Iraq war (which the government ignored).

How refreshing, then, to hear from the leaders of a Venezuelan student movement who have, in the space of only a year, built a non-partisan coalition that is changing the face of Venezuelan politics. The students began by protesting against the closure of Venezuela's oldest TV channel, RCTV, in 2007. They moved on to President Chavez's attempts to abolish presidential term limits in a constitutional referendum in December 2007, which Chavez lost narrowly - his first electoral defeat since 1998.

There seem to be two reasons for the students' success. One, they avoid the sterile pro-Chavez/anti-Chavez debate by recognizing that "Chavez is a product of historic forces". In other words, he's the government, like it or not, and the questions is how to make life better for Venezuelans and safeguard freedom and democracy. Two, their non-violent tactics stand in contrast to their (initially) harsh treatment at the hand of security forces and 'Chavistas'.

The representatives from the student movement who spoke at the Kennedy School were impressively articulate, both in Spanish and English and deeply sincere. I was inspired by their example and hope they manage to avoid the cynicism and careerism that affects student 'movements' elsewhere. Two reservations, though. One, they still looked and sounded like members of the elite (not surprisingly, perhaps, given the high cost of tuition at good universities). Two, they were in the USA to accept the 'Milton Friedman prize for liberty' from the Cato Institute. One can't begrudge them the money, but doesn't this increase the risk that Chavez and others will denounce them as imperialist stooges?

Let them eat spaghetti

When I last visited Liberia in January, there was much talk of higher rice prices and their impact on people's eating habits. After all, the Kennedy School's Nolan Miller has shown that rice consumers sometimes exhibit Giffen behaviour - that is, they consume more when the price rises, because they have had to cut back spending on vegetables, meat or other foods. (His paper is due to be published in the American Economic Review).

I had been hoping that Liberians would respond to the rising price of imported rice by switching to home-grown country rice, which tastes just as good but often has rocks in it and is difficult to find in the capital.

People often told me that "people in Monrovia won't eat country rice". But the Liberian palate may be more flexible than that! The BBC's Katie Price reports that restaurants in Monrovia have started serving spaghetti. A plate costs $1 - half that of a plate of rice. Could be good with a hot chilli sauce. I have eaten spaghetti in Somali restaurants, where the Italian influence on cooking lingers, but this is the first time I have seen or read about it being served in West Africa. Sadly, I doubt this will be a lasting response to the food crisis, because most Liberians don't eat in restaurants and the price of wheat has been going up too.

Now, how about making spaghetti from cassava flour?

Robert Zoellick visits the Kennedy School

Last week, the World Bank's President Zoellick made a brief stop at the Kennedy School to address the Harvard International Development Conference. A few of us were also lucky enough to attend a small group meeting with him beforehand.

Zoellick is probably the most impressive Republican official I have ever encountered: smart, engaging and thoughtful. He spent an hour and a half asking each of us where we came from and what we were working on. In the picture above, he is quizzing my friend Carlos on the effects of the Colombia Free Trade Agreement (which Zoellick helped negotiate) on Carlos' native Ecuador.

It was left to Professor Dani Rodrik, sitting opposite Zoellick in the picture, to point out the inconsistency in the World Bank's attitude towards trade. (He did so in a different meeting, as we didn't let the professors say anything in the first one!). Essentially, Zoellick wants to conclude the Doha Round at the same time as increasing the supply of basic foods. But the Doha Round entails reducing the subsidies the USA and EU pay to farmers to grow these foods, which will raise their price in the short run, just when the world is facing record shortages of rice and other staples.

Is this a real contradiction, or will it disappear over time? I'm inclined to think that the supply response of farmers in Africa and Asia will ultimately outweigh the decline in US and European production. After all, the subsidies are most distorting in crops like cotton, which is not a food crop and not in short supply. The Bank's own research suggests that eliminating subsidies will increase global rice prices by 4.2% and wheat by 5%. That's much less than the current spike in prices. So what is the elasticity of rice supply over 3-5 years?

Driving up food prices

The BBC reports that Cote d'Ivoire's president has reduced taxes and customs duties on food in response to rioting. As the prices of wheat, rice and other staples continue to rise, I wonder if we are seeing a new kind of 'beggar-thy-neighbour' trade policy emerging?

In the last few months, export taxes have been imposed in Argentina and export restrictions imposed in Thailand and Vietnam. A few months ago, I noticed the same thing in Ecuador. These measures may work to contain the price rise in food exporting countries, for a while; but they will drive prices even higher for everyone else. This hasn't had much effect in Cambridge, Massachusetts, where food makes up maybe 10% of our expenditure, but most of the poorest countries in the world are food importers and poor people spend over two-thirds of their income on food.

I teach a course on globalization and the parallel with the 1930s is alarming: at that time, the Smoot-Hawley tariff provoked retaliatory tariff increases by Europeans, South Americans and others. A tariff may be optimal for one country is detrimental to the world. Only this time, we are talking about restrictions on exports, not imports.

What are the options for dealing with this? Maybe the World Food Programme or FAO should convene an emergency food summit to try to persuade food exporters not to starve everyone else.