In the article a World Bank economist was quoted -- remarks which might go in the file with Summers' letter about exporting pollution.
The context is this:
There is a world-wide glut of coffee, and has been
for years. I'll quote from the SF Chronicle article Ian posted:
In the late 1980s, opposition from the Reagan administration forced the collapse of the International Coffee Agreement, a decades-old, cartel-like pact between coffee producing and consuming nations that guaranteed relatively high prices. After the pact ended in 1989 and the market was deregulated, prices plummeted.At the same time, the World Bank and its cousin, the Asian Development Bank, gave generous loans to Vietnam to plant huge amounts of low-quality robusta coffee - in line with international lending institutions' mandate to stimulate low-cost production and end market inefficiencies. The strategy succeeded with a vengeance, as Vietnam went from being one of the world's smallest coffee producers to being second-largest, after Brazil.
So here we have the World Bank making loans to
produce more of a crop of which there was already a glut.
Seems pretty stupid. Now here's the remark:
"Vietnam has become a successful producer," said Don Mitchell, principal economist at the World Bank. "In general, we consider it to be a huge success." Although Mitchell acknowledges the damage to nations that cannot compete with Vietnam's $1-per-day labor costs or Brazil's mechanized plantations - such as Guatemala, with its $3-per-day minimum wage - he said the losers must switch to farming other crops. "It is a continuous process. It occurs in all countries - the more efficient, lower cost producers expand their production, and the higher cost, less efficient producers decide that it is no longer what they want to do," he said.
Farmers losing their farms, revolutions, wars, people
dying, and Don Mitchell describes it as "... producers decid[ing] that
is no long what they want to do."
That should be quoted in every micro textbook -- I don't think it would get by too many students. But I'm a dreamer.
Gene Coyle
