Market Harms and Market Benefits

I MARKET HARMS IN THE WILD

Until the early 2000s, grain collected from the quinoa plant was eaten almost exclusively in its native Peru and Bolivia. But that changed rapidly as western shoppers learned of its nutritional properties—between 2005 and 2015, the amount of quinoa shipped out of Peru and Bolivia grew more than tenfold.11 Food and Agriculture Organization of the United Nations, “Crops,” accessed July 5, 2021, http://www.fao.org/faostat/en/#data/QC. With residents of wealthy countries demanding more and more of it, the price of quinoa rocketed from US$350 per tonne to a peak of $2,770.22 Food and Agriculture Organization of the United Nations, “Producer prices,” accessed July 5, 2021, https://www.fao.org/faostat/en/#data/PP. Prices here and throughout are the prices obtained by producers in the country of production, measured in 2021 US dollars.

How did this price rise affect those Peruvians and Bolivians for whom quinoa was a key staple food? Quinoa consumption in those countries plummeted.33 Dan Collyns, “Quinoa brings riches to the Andes,” The Guardian, January 14, 2013, https://www.theguardian.com/world/2013/ jan/14/quinoa-andes-bolivia-peru-crop. In Peruvian marketplaces, it sold for more than rice or even chicken, resulting in few locals being able to afford it. Some commentators predicted that this would lead to widespread malnutrition among the poorest in those countries.44 Ibid.; Joanna Blythman, “Can vegans stomach the unpalatable truth about quinoa?,” The Guardian (2013), accessed July 5, 2021, https://www. theguardian.com/commentisfree/2013/jan/16/vegans-stomach-unpalatable-truth-quinoa. And so it seemed that wealthy western quinoa eaters had imposed great harm by buying so much quinoa.

But that is just one side of quinoa's story. Although the price rise may have harmed those who consumed quinoa, it also benefited those who produced it. The income of quinoa farmers rose dramatically during this time, as did their self-reported life satisfaction.55 Andrew W. Stevens, “Quinoa Quandary: Cultural Tastes and Nutrition in Peru,” Food Policy 71 (2017): 132–42; Marc F. Bellemare, Johanna Fajardo-Gonzalez, and Seth R. Gitter, “Foods and Fads: The Welfare Impacts of Rising Quinoa Prices in Peru,” World Development 112 (2018): 163–79. And it so happens that quinoa farmers are among the poorest people in Peru and Bolivia, while quinoa consumers are typically the wealthiest—the average income of a quinoa consumer in Peru is approximately three times that of a quinoa farmer.66 M. Bellemare, S. Gitter, A. Katsterine, E. Obregon and A. Zotz, Trade in Quinoa: Impact on the Welfare of Peruvian Communities (Geneva: International Trade Centre, 2016); Bellemare et al., “Foods and Fads.” So taking a dollar from a wealthy quinoa consumer and giving it to a poor quinoa farmer achieves a more just distribution of wealth. And the dollar lost by the consumer constitutes a harm much smaller than the benefit gained by the farmer—the latter makes a far greater difference to the recipient's opportunities, material wellbeing, and overall welfare. Therefore, even if the price rise had reduced the wealth of those local quinoa consumers, it would still have produced a plausibly better outcome as long as it increased the farmers' wealth by at least as much. But, as it turns out, local quinoa consumers weren't even harmed by the rise in quinoa prices—economists have found that even they, as a group, ended up wealthier due to the influx of money into their communities.77 Bellemare et al., Trade in Quinoa. So the western quinoa buyers who sparked that price rise didn't just inflict harm; they also conferred considerable benefits on the poor of Peru and Bolivia. Indeed, it seems the benefits were far greater in magnitude than the harms.

Another dramatic price rise occurred, with less cheerful results, in the Indian province of Bengal during the Second World War. In 1943, Bengal saw astonishing demand for rice that year—a result of wartime hoarding, panic buying, speculation, and inflation.88 Ibid. The price of the grain rose dramatically, leaving many of Bengal's poorest—for whom rice was the cheapest available staple food—unable to afford to meet their caloric needs. In the ensuing famine, approximately three million people died.99 Stephen Devereux, “Famine in the Twentieth Century,” IDS Working Papers 105 (2000), accessed July 5, 2021, https://www.ids.ac.uk/publications/famine-in-the-twentieth-century/. This occurred despite Bengal producing its largest rice crop to date that year.1010 Amartya Sen, “The Great Bengal Famine,” in Poverty and Famines: An Essay on Entitlement and Deprivation (Oxford: Oxford University Press,1983). How? By buying excess rice, the hoarders, panic buyers, and speculators of Bengal drove up the price, priced the poor out of the rice they needed, and thereby inflicted enormous harm on their fellow, more vulnerable, consumers.

Yet another demand-driven price rise occurred globally for various staple foods in 2007 and 2008. Much like Bengal did for rice in 1943, the world saw its largest wheat harvest to date in 2008.1111 Food and Agriculture Organization of the United Nations, “Producer prices.” But this was accompanied by astonishing demand for wheat, along with rice, corn, and soybeans. Where did this increased demand come from? Largely from wealthy western investors. In the midst of a global recession, investors poured money into commodities like wheat, which were seen as safe investments.1212 Frederick Kaufman, “The Food Bubble: How Wall Street Starved Millions and Got Away With It,” Harper's Magazine, July 2010, https://harpers.org/archive/2010/07/the-food-bubble/; Katie Allen, “Hedge Funds Accused of Gambling With Lives of the Poorest as Food Prices Soar,” The Guardian (2010), accessed July 5, 2021, https://www.theguardian.com/business/2010/jul/19/speculators-commodities-food-price-rises. Among other causes, this led to a sharp rise in the prices of various staple foods. And that price rise pushed forty million people into hunger and triggered riots in over thirty countries.1313 Food and Agricultural Organization of the United Nations, “Number of Hungry People Rises to 963 Million,” (2008), accessed July 5, 2021, http://www.fao.org/news/story/en/item/8836/icode/; Anuradha Mittal, “The 2008 Food Price Crisis: Rethinking Food Security Policies,” United Nations Conference on Trade and Development G-24 Discussion Paper Series no. 56 (June 2009), https://unctad.org/system/files/official-document/gdsmdpg2420093_en.pdf. Yet again, some market participants did harm to others through their purchases.

In these cases, was the behavior of those consumers morally wrong? And, if so, are consumers more broadly at risk of committing similar wrongs? These are the questions that I wish to answer here.