I read a disturbing statistic recently; in 2008 the number of “food Insecure” in the world went up for the first time since we started recording it (roughly 1845, according to The Economist). What that means is that for the first time in 160 years, over a billion people did not have adequate access to food. In an ever-increasing global food network, why would this be? Was it a product of population increase in third-world countries? Droughts in food-producing areas? A result of the economic recession (which had yet to spread to the food industry at that point)? The answer is actually much more infuriating, and it starts in 1991.

            A July 2010 Harper’s article, The Food Bubble, Frederick Kaufman explains how in 1991, Goldman Sachs decided to turn agriculture into a commodity; eighteen to be exact, including corn, soybeans, two types of wheat, cattle, cocoa, and coffee. The stock market in 1991 had  largely been developed and everything that could be traded, speculated, bought, or sold was. As a result, banks were looking for new markets to open, so Goldman Sachs created the Goldman Sachs Commodity Index. It took food, a survival staple for everyone, reduced it to a mathematical assessment of actual value and predictive risk, and started selling shares. In Kaufman’s words, they “reduced what had been a complicated collection of real things into a mathematical formula that could be expressed as a single manifestation…the Goldman Sachs Commodity Index.” (27)

            The product was immediately successful, so much so that soon other financial institutions were creating their own food indexes. Shares soared and the price of those shares followed. However, as the success of the commodities indexes grew, so too did the price of those commodities. Food prices started to dramatically scale up, and that was only the beginning of the problem with making a human staple like food a speculative commodity. Food was in a bubble, and as with every bubble, there must eventually be a bust.

            One example is “hard red spring”, a type of wheat that, unbeknown to most laypeople (myself included) is used in the production of most bread sold in the world. It’s grown and harvested by Midwestern farmers, and is one of the nation’s largest exports. When people began to trade on hard red spring, the price of the wheat began to grow. As the price grew, so did investors interest and purchase of it (the speculative shares, not the actual wheat). Eventually hundreds of billions of dollars in vestment in hard red spring overwhelmed both the actual value of the wheat. Although farmers were still growing the stuff as fast as they ever had, it had become so expensive that other countries were finding it more difficult to import.

             What ensued were global food riots; more than thirty countries were dealing with massive food shortages as a result of this one commodity bubble. It also prompted the uptick in the world’s “food insecure”, denying 250 million more people adequate access to basic foods than it had the year before and bringing the grand total to more than a billion worldwide. The banks that had begun this time-bomb back in the early ‘90s suffered no penalty from the fallout. In fact, in addition to having made billions on people all over the globe that needed to eat, they were getting federal stimulus money from the government for the crash after the sub-prime mortgage crisis (another speculative bubble they blew).

            The moral of the story here is that our economy is a nuclear weapon; and the people with their fingers on the trigger will profit from the devastation. Until our Justice System reclaims its integrity and begins to prosecute criminal offenders at the very tops of these corporations, we will always be under the shadow of another collapse. With globalization, we can no longer even relegate the damage to our own backyards. The most vulnerable people all over the world pay for the self-interests of a few of the Wall Street proletariat.