Lecture 4 What Caused China’s Famine? What is Famine? ? A famine occurs when sizable parts of a population do not have enough to eat ? Prolonged periods of food deprivation leads to increased morbidity and eventually death ? Often … in large numbers! Great Famines in Historical Perspective 2WarVietnam 1965-75 1FamineBangladesh1974 0.6FamineSudan1982 40WarWWII1940 4FamineHenan1937 3DroughtMongolia 1928 Deaths (millions) CausePlaceYears The causes of a famine ? Production declines ? Food Availability ? Food Entitlement ? Food Demand ? [Consumption Efficiency] “But most famines are avoidable” A. K. Sen (Nobel Laureate), 1981 ? Malthus is wrong … population growth and production failures -- which are a fact of life in the world for the past 200 years -- have not been behind famines … ? World food production has outpaced population growth ? Populations expand slowly, while a famine is an acute event The causes of a famine ? Production declines ? Food Availability ? Food Entitlement ? Food Demand NO! ? [Consumption Efficiency] “And, famines happen even when food production is not reduced too much and are avoided when there are severe production shortfalls …” 0 10 20 30 40 50 60 70 80 90 100 Percent of food available compared to normal year Suda n (F A M I N E) Eth i op i a (F A M I N E) Bots w a n a (n o f a m i n e ) Zi mb a b w e (n o f a m i n e ) C. Ve r d e (n o f a m i n e ) The causes of a famine ? Production declines NO! ? Food Availability ? Food Entitlement ? Food Demand NO ? [Consumption Efficiency] Famine when food is abundant ? Case of Bangladesh (famine of 1974) – Massive amounts of food in storage prior to floods of 1974 … ? Case of Sudan (famine of early 1980s) – Prior to drought, stocks of food were highest since the 1960s ? After flood/drought, traders exported food from Sudan / shipped food to Calcutta (across the border in Eastern India) ? 1 million people died in Bangladesh / 0.6 million in Sudan The causes of a famine ? Production declines NO ? Food Availability NO! ? Food Entitlement ? Food Demand NO ? [Consumption Efficiency] Sen’s Policy Contribution: Explaining causes of famine and devising prevention strategies ? Looks at why people starve? ? It is lack of “Entitlement” or loss of income and ability to access food ? When some event starts a shortfall of food (e.g., a flood), it also often eliminates the income earning opportunities of a group of people (e.g., landless laborers), who also are frequently the most vulnerable Sen’s Policy Contribution: Poor are caught between falling incomes and higher prices ? After some disaster, when large parts of the population have little or no income (and when there is little prospect of earning anymore), the price of food actually drops (of course, there is no one buying) … so, people with food (e.g., traders and merchants) will ship grain out of famine areas … [as they did in Sudan / as they did in Bangladesh] … ? The poor? They are out of a job; they have no earnings … most have no savings … ? The result: no food / no money / starvation The solution ? Entitlement programs .. Ensure the poor have income when they need it the most ? For example: Self-targeting Public Works Programs ? After disaster, set up Public Works Program ? Set very low wage, so only poor will come ? With new sources of income and a high demand for food, prices rise, grain traders will not leave and new ones will come … ? Famines can be averted … by attacking them at their real source: Summary: The causes of a famine ? Production declines NO ? Food Availability NO ? Food Entitlement YES! ? Food Demand NO ? [Consumption Efficiency] Sen’s Conclusions ? There should never be a famine if the proper institutions are in place – Good markets [domestic / international] – Public works projects, with low, self-targeting wage – Small amounts (at most) of storage for buffer (do not need a lot, markets will provide new sources of food) – [also free press ... publicize disasters and shortages] ? India, for example, a country that Sen has advised for decades, has not had a serious famine since the nation has set up its Public Works-based, Famine Prevention Network ? In sum … good governments can always avoid having its people starve Main Question: Why is it that socialist countries— countries that are supposed to have government set up to “serve the people”—have not only also suffered droughts, but have suffered the worst in history? 2WarVietnam1965-75 1FamineBangladesh1974 29FamineChina1959-61 40WarWWII1940 5FamineUSSR1932 3Drought/FamineMongolia 1928 Deaths (millions)CausePlaceYears Today’s Specific Questions ? What was the magnitude of the famine … and how did it strike the population ? What caused it? Was it merely a failure of entitlement like Sen hypothesized? ? What policies might have prevented it? Would public works projects have been sufficient? Historic Background ? Land Reform (give farmers land, “forever” … they are heros of revolution—1950/1951) ? Start close cooperation with Soviet Union (early 1950s) ? Central Planning replaces Markets (1952) ? Nationalization of Enterprises / Housing / Others (1952/53) ? “Voluntary” Cooperative Movement (1953) ? Creation of Mandatory Delivery Quotas (1955) ? Stalinist-style Heavy Industry first plan (mid-1950s) ? 100 Flowers Campaign (1956) ? Anti-Rightist Campaigns (1956-57) ? Collectivization Movement (1956-57) ? Communization of Farming (1957-58) ? Great Leap Forward – Backyard Steel Mills (1958-61) ? Break with the Soviet Union (1959-60) State of China in 1959 ? Best of times / and the start of the worst … ? Morale is high … economy has grown since 1950 ? But, the mistakes of the Great Leap and Communization are starting to become apparent ? Much of the steel output is useless but at Mao’s insistence efforts of forced industrialization are redoubled Famine Strikes: The Facts Possible causes of China’s famine? ? Production ? ? Food Availability ? ? Food Entitlement ? ? Food Demand ? ? Consumption Efficiency ? Production ? YES … but why? ? In fact, it was a bad weather year (Y.Y. Kueh, 1996) ? But, China’s government blamed all of the famine on bad weather is not supportable. ? Problem with this argument? no correlation between places where famine hit worse and the places where there was bad weather Abnormal Weather and Death Rates YesNormal weather Sichuan NoBad weather Henan YesBad weather Shaanxi yesBad weather Anhui Higher than average death rates? Weather was abnormal? Province Other Production Factors ? All able bodies men and women were working in the steel mills, cutting down trees to make charcoal, and searching for iron ore … ? MOST IMPORTANT: real incentive problem in China’s communes … output not tied to effort … no way to monitor laborers … free rider problem prevails … no one works hard and output falls – For each extra unit of grain produced by each additional increment of labor, how much does villager get: ? On own farm: 100% ? On cooperative: ? to 1/3 of unit ? On collective: 1/n, where n = 10 families or so ? On commune: 1/N, where N = 20,000 Possible causes of China’s famine? ? Production YES! ? Food Availability ? ? Food Entitlement ? ? Food Demand ? ? Consumption Efficiency ? Ever increasing quotas and food availability and the disappearance of China’s food supply ? During Great Leap Forward, communes (like steel mills) were pressured to increase production … ? Much evidence of falsifying reports ? Pictures in People’s Daily of children dancing on top of wheat in the field ? “The corn will grow higher, the harder one wills” … low output = bad political attitude … ? Fear of a repeat of political reprisal like were used in the mid-1950s ? With the over reporting of grain output, the state began extracting ever increasing amounts of grain ? Despite falling stocks, extraction continues … communes report phantom increases in output … ? The big question: “Did Mao know?” China was still exporting grain in 1960 and 1961 even as the nation was starving! Grain Exports 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 Millio n s o f T o n s Grain Procurement—before, during, and after the famine 17 17 29 32 1963 1964 16261962 17261961 22311960 28471959 21411958 17331957 14281956 Percent of Output (%) Net Procurement (Million Tons) Year Possible causes of China’s famine? ? Production YES ? Food Availability YES! ? Food Entitlement ? ? Food Demand ? ? Consumption Efficiency ? Food Demand ? Not rising population (would not cause an acute famine like this … although China’s population was growing very fast prior to 1960) ? But because of massive work effort to make back yard steel and other projects of the Great Leap Forward, may have been significant increase in the demand for calories Possible causes of China’s famine? ? Production YES ? Food Availability YES ? Food Entitlement ? ? Food Demand YES! (small) ? Consumption Efficiency ? How much would you eat? ? You live in a commune ? Your commune has a fixed amount of food ? You eat in a common dining hall just like a dorm … the price is free ? Even when facing a shortage, how much would you eat? – If you cut back, what might your neighbor do? – Your neighbor thinks, if he cuts back what will you do … – He might eat/ so you eat … He thinks you might eat, so he eats … and more rapidly than would happen if the stocks were held privately, the food is eaten up Many doubt the consumption efficiency story? ? But, there is doubt: – Villagers and their leaders are not so dumb as to let an institution exist that will allow them to eat themselves into starvation – Dining halls in many areas disbanded quickly – Many adopted rules and started rationing – Institutional response to scarcity … Possible causes of China’s famine? ? Production YES ? Food Availability YES ? Food Entitlement ? ? Food Demand YES (small) ? Consumption Efficiency YES! (maybe) The Causes of the Famine ? First: It is NOT a traditional Sen-like famine – Most communes had money and access to funds [it was food they lacked … and since no markets, grain did not flow in] – Grain was not flowing out the countryside because of a lack of entitlements [there were no profit-seeking grain traders] – Exports happening through State Trader (not Cargill) – Migration restrictions … no labor market option … ?WORSE: Policy restrictions kept people who needed food – even those who had the means to purchase it – from buying it ? Hence: Sen’s advice would not have worked Irony of China’s famine? Reverse of famine in a market economy ? Production YES ? Food Availability YES ? Food Entitlement NO ? Food Demand YES (small) ? Consumption Efficiency YES (maybe) Final Summary of Answers to the Specific Questions? ? What was the magnitude of the famine? And how did it strike the population? – Huge … with 30 million dear, largest human-made disaster in history – It struck all parts of the population—including women/children/elderly ? What caused it? Was it merely a failure of entitlement like Sen hypothesized? – It is not a traditional famine – Multiple causes … some natural … but most the result of policy … unlike the USSR famine in the Ukraine that was probably a policy of purposeful genocide, this was BAD POLICY … but, people just as dead … ? What policies might have prevented it? Would public works projects have been sufficient? – Sen’s solutions would not have worked … – Sen, in fact, in “Poverty and Famine” says it is precisely because of the nature of Central Planning that this could happen … need markets / free press / then entitlements!