Price controls in Niger would increase starvation

By Anthony Batty | 12 August 2005

In perhaps the worst reporting of the food crisis in Niger, the Washington Post carries an article entitled The Rise of a Market Mentality Means Many Go Hungry In Niger. The article tells the story of Rachida Abdou and her family who travelled five days to find food. On entering Maradi, a trading centre, they found rice, peanuts and millet - but they could not afford the price.

Among other things, the article blames this on the removal of price controls on food (at the urging of the World Bank). It complains about price rises: "[a shop] is stocked with luxuries such as instant coffee and 110-pound bags of rice, once priced at $20 and now selling for $35... Millet and other commodities have doubled or even tripled in price".

Yet the article also says that "this time, unlike during earlier food shortages, the market economy has remained vibrant." What is happening is that traders are importing and transporting food from elsewhere to help feed people. High prices food are not nice, but they are not increasing starvation: they're actually reducing it. They are directing people's efforts into importing food and bringing it to market. That effort would evaporate if the government reimposed price controls. Don't get me wrong: I think the situation in Niger is appalling. It's just that if prices had been fixed at the pre-famine price, that trading centre of Maradi have been empty of rice, peanuts or millet.

For further reading, the seminal book on the history of price controls is Forty Centuries of Wage and Price Controls by Robert Schuettinger and Eamonn Butler. It gets a write-up here. Other blogs covering the Washington Post article include Prof. Don Boudreaux and Craig Newmark.