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From China to Iowa

Mar 5, 2011 • Demand, Supply, and Markets, Developing Economies, Environment, Money and Monetary Policy, Thinking Economically • 108 Views    No Comments

We can travel very quickly from China to Iowa.

In an excellent report from The Economist on feeding the world, you can see how an increasingly affluent Chinese urban consumer affects many of us. One example connects more Chinese meat consumption to soaring prices for corn, wheat, and soybeans because of a growing demand for animal feed.  

This takes us to Iowa where the price of farmland is skyrocketing. With escalating worldwide crop prices, low interest rates, diminishing lending standards, and investors who say the only direction is up, the price of Iowa farmland is nearing a 1979 high.

Covering issues that range from population, technology and water to land and climate, the February 24th issue of The Economist ideally discusses “How Much is Enough?” It also returns us to the Reverend Malthus who might be saying, “I share your concern.”

The Economic Lesson

Perhaps one of the first environmentalists, Reverend Thomas Malthus (1766-1834) told us in 1798 that population grows geometrically while resource production expands arithmetically. Consequently, resource prices will rise and supply will become increasingly inadequate.

 

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