Journal Stargoat's Journal: Starving Chinese Farmers 1
If you're like me, you're aghast at that statement. How can a farmer, the source of all food, be starving? How is it that the person who makes the food be the person without? And more importantly, how do we solve this problem?
The reason farmers are starving is because the price of all goods in China is rising. The price in unprocessed food though is not rising as quickly. This is because the average Chinese farmer is becoming more efficient. He can produce more food than he could ten or twenty years ago. This means that the price of unprocessed food in China is declining relative to the price of other goods, such as labor.
At the same time, the price of labor in China is rising in relative and actual terms. In fact, the price of all goods in China is rising. There is significant inflation currently in China, a statistic that the PRC is not freely handing out.
The reason for the inflation is the glut of goods being sold over seas is rapidly raising the price of goods in China. The Chinese market must compete with the outside market. But the outside market has an advantage because of the artificial Chinese exchange rate. So, the price of goods in China will adjust itself to reflect that the price of goods sold outside of China.
So the real price of processed food, and the price of other goods are rising, but farmers' real income is remaining unchanged. This could also be stated that farmers' relative income is declining. Farmers' incomes are declining. This is why they are beginning to starve.
What is the solution?
There are several solutions. The Chinese government is a unique combination of capitalism, a tyranny and Communism. The government will probably try and artificially raise farmers' incomes. They will probably redistribute wealth to do this. This will help the problem for a couple of years, but it will not solve the problem.
The real solution is far more complex. It involves letting farmers migrate to cities, something that the government has been thus far unwilling to do, but has recently promised to consider. This would have the benefit of raising the average farmer's wage.
It also involves removing the artificial exchange rate to the west. That would reduce the rate of Chinese GDP growth, but it would reduce the price of non-food related goods in China. However, the Chinese government is unlikely to consider this a viable option, as it reduces the rate of economic growth.
Life in China is going to become significantly more difficult for farmers and other people on a fixed income, such as the retired. In a free country, migration would occur, and prices stabilize. But China is not a free country. The Communist government must act quickly, or they run the risk of starving peasants. The current government was responsible for the last great peasant starvation. However, now the poorer population of China is more access to media and the West. If it happens again, revolution will not be far behind.
External pressure on farmers (Score:1)