Here's an example of how old: The Economist's food-price index was created in 1845.
We used that little chart a few times in 2007, more rambling after the jump.
From The Economist's Free Exchange blog:
BACK in the late 1960s and early 1970s, rapid worldwide population growth and soaring commodity prices gave rise to fears that humans were outgrowing their planet's resource capacity. Some worried that crisis and Malthusian collapse was imminent. Among these pessimists was one Paul Ehrlich, a biologist who warned that population increase had gotten dangerously out of hand. Mr Ehrlich's writings generated scepticism in some quarters, however. Economist Julian Simon famously disagreed with Mr Ehrlich's view and argued instead that rising commodity prices would lead markets to respond, through efficiency, substitution, and supply increases. In 1980, he entered into a bet with Mr Ehrlich: that the price of a basket of five commodities (chromium, copper, nickel, tin, and tungsten) would be lower in a decade's time, in 1990. Mr Simon easily won his bet, striking a blow for the view that over the long run commodity prices effectively trigger market responses, thereby preventing Malthusian catastrophes.One of the 2007 posts was "Global Warming, Politics, Laws and Opportunity--Part II" and contained this line:
Still, the view that a fundamental scarcity may generate commodity price spikes—and economic damage—beyond our capacity to respond is alive and well, fueled by a new era of dear commodities. It seems possible, some reckon, that Mr Simon just got lucky with the timing.
He may have, according to an interesting new NBER paper examining commodity prices over the very long run, from about 1850 on. David Jacks has assembled real commodity price data for 30 commodities, spanning animal products, energy products, and industrial and precious metals. He identifies three price trends corresponding to three time horizons: long-run trends, medium-run "supercycles", and short-run booms and busts.
Short-run booms and busts make for compelling financial journalism and can have nasty effects on the economies of commodity exporters. But it is the medium-run supercycles, which generally span a few decades, that seem to do most to shape our perceptions of "long-run" commodity price trends. Mr Jacks writes that these episodes seem to correspond to periods of rapid industrialisation and growth, producing an upswing in prices as soaring demand faces supply constraints, followed by a downswing as slowing growth meets expanding supply. Mr Jacks identifies major supercycle starting points in the 1890s, 1930s, and 1960s; followed by peaks in the 1910s, 1950s, and 1970s (around the time Messrs Ehrlich and Simon were preparing the bet); and endpoints in the 1930s, 1960s, and 1990s (the period at which Mr Simon was declared the winner)....MORE
...As reported by The Economist May 16, 1846, the British House of Commons had repealed the "Corn Laws", eliminating the tariff on imported wheat, the day before. Corn in this usage is not maize but rather is generic for grain. Prime Minister Peel won the battle but lost his premiership, the quote of the day was "Peel and repeal."...Go ahead, click that Economist link, I'll wait.
See also:
The End of Cheap Food- What was Old is New Again AND: Profiting from Politics
Food will never be so cheap again
Dylan Grice (then at SocGen) disagreed:
Société Générale's Dylan Grice-"Commodities: ‘Their Expected Long-Run Real Return is 0%’"
While I noted:
I get a bit intense on the subject of human ingenuity, adaptability and innovation. In a 2008 post, "Solar: Peak Gallium? Indium?" I closed by saying:
You know how this ends up?Later Jeremy Grantham went all doom and gloom on us:
We'll figure something out. That is really the only claim to fame of Homo Sapiens, singular and collectively.
But, it's a pretty good one.
The End of Cheap Commodities (or not)
I should add that prices of foodstuffs are down from the date on that last post and down considerably from their 2008 highs.
Both Grantham and Grice appeared in "Commodities: 'The Case for Human Ingenuit'":
“When you buy commodities, you’re selling human ingenuity.”
Dylan Grice on why investing in commodities for the long run is a bad idea (SocGen Cross Asset Research, December 2010)
“This faith in the human brain is just human exceptionalism and is not justified either by our past disasters, the accumulated damage we have done to the planet, or the frozen-in-the-headlights response we are showing right now in the face of the distant locomotive quite rapidly approaching and, thoughtfully enough, whistling loudly.”
Jeremy Grantham on why the world is facing a paradigm shift on commodities (GMO Letter, April 2011)
