Nicholas Nassim Taleb on Forecasts

"If you ever have to heed a forecast, keep in mind that its accuracy degrades rapidly as you extend it through time." Nassim Nicholas Taleb, 'The Black Swan'

Sunday, September 16, 2012

Surprise - Rising Food Prices Lead to Riots!

"Let them eat cake" famously  Marie Antoinette said of the starving French.  How did that work out?

Of course every politician knows that rising food prices can spell at the very least a lost election and sometimes a lot worse.  Even the Roman emperors knew that bread was at least an equal to circuses to keep their constituents quiet.  A little more recently FoodWorks was in Pakistan in 2008 when the price of "atta" (flour) rose sharply - people burned down shops in Lahore and Karachi.

So it hardly seems we needed an august academic group at the New England Complex Systems Institute to tell us that rising food prices are linked to civil disturbance.  Nevertheless they have produced this interesting chart. Here's what they say:

"......protests may react not only long-standing political failings of governments, but also the sudden desperate straits of vulnerable populations. If food prices remain high, there is
likely to be persistent and increasing global social disruption. Underlying the food price peaks we also and an ongoing trend of increasing prices. We extrapolate these trends and identify a crossing point to the domain of high impacts, even without price peaks, in 2012-2013. This implies that avoiding global food crises and associated social unrest requires rapid and concerted action
" (see reference below and click here to download the paper).

Oh, OK, so now we know.

In all seriousness, the Cambridge folk are right.  We've been arguing for years that rising food prices are a critical factor in instability and that with populations increasing exponentially in many developing countries where natural resources are depleted (take Yemen as an example) we are indeed facing a genuinely Malthusian crisis. We'll keep coming back to the issue... will anyone listen? 

Reference: The Food Crises and Political Instability in North Africa and the Middle East
Marco Lagi, Karla Z. Bertrand and Yaneer Bar-Yam
New England Complex Systems Institute, 238 Main St., Suite 319, Cambridge, MA 02142, USA, (July 19, 2011; revised August 10, 2011)

For more information or to make a comment, email gqb@foodworks.ag