Sunday, October 5, 2008

Capitalism/Financial crisis tutorial Part 5

OK, now, having read the parts that I excerpted from Wikipedia about the Irish Potato Famine, now let me list the economic implications and "lessons that should have been learned" from this classic case study. I am not making any political points in this analysis as I am using this case study to show you the economic imperatives, the vital lessons, that are missed when people bog down in the English v. Irish, Protestant v. Catholic, upper class v. lower class dynamics. The same tragedy would have occurred if these decisions were made by contemporary executives of the same nationality as the victims.

1. Ireland had a healthy population that was sustained by fertile lands that were used for both pasturing (cattle) and agriculture.

2. The governing English decided to exploit the growing market (demand) for beef in England. Thus they took the pasturing land from the Irish and used it to cultivate supply of beef for the "free market" in England.

3. The Irish thus lost the ability to support their families through pasturing and had to become tenant farmers on small plots of allocated land. Each plot is so small that the only food that can be grown is the potato.

4. Thus the entire Irish population is dependent on one and only one food, the potato. It is as if all of America could only eat bread every day and no other food, and you had to bake your own bread based on wheat you grew in your back yard.

5. While all of Europe had periodic problems with the disease (called blight), only Ireland was entirely dependent on one and only one source of food, the potato. There was absolutely no alternative when blight destroyed half of the Irish potato crop.

6. An estimated one million of eight million total population slowly starved to death in Ireland and another one million fled, many coming to America.

7. Not only was the loss of population so extreme but it is long lasting, as even 150 years later, to this day, Ireland has never recovered from the impact of such a huge loss of life and breakdown of culture and society.

8. Notice that English were arguing for "laissez faire" (let the market adjust itself) economics. How can the market adjust itself when the one and only source of food was wiped out for an entire country? Using the example I mentioned, what would you, as Americans, do if you had to grow your own wheat in your backyards, bake your own bread, and eat only that one food, having no access to any other food, if then a disease wiped out half of the country's wheat? There were no stores in Ireland or alternate sources of food. So those who argued for "laissez faire" were basically giving the death penalty to Ireland.

9. Just like in modern times one cannot just "bring in some corn from America" to "tide people over the famine." If the only subsistence food structure is ruined there is no long term (and often no short term) solution to importing emergency food (though that obviously has to happen). Having a "one crop only" stricture upon Ireland was the destruction of capitalism in Ireland in the name of so-called capitalism aka "free market" in England.

10. True capitalism would have looked like this scenario. If the English developed a "taste for beef" and a home market demand, they should have invested in the Irish pasturalists who were raising beef for their own families and subsistence. As the English invested in the subsistence level beef farming in Ireland the Irish would quickly have built up a surplus of beef that could have been sold in the English market using capitalist principles.

So this is why this horrible tragedy in human history is a vital economic case study in addition to a political story. This is why the Irish Potato Famine used to be taught in schools (and well remembered in families) when I was a child. Schools used to teach these types of history to illustrate sound farming and economic principles in addition to historical human tragedies and political upheavals. However, modern agendas are so skewed that these events are no longer taught properly or at all, hence people of the past two generations do not understand what your average Joe and Mary knew just fifty years ago.

I hope you find this helpful. I'm sure that you will. Remember, true capitalism is investing in subsistence until there is a surplus, not manipulating the subsistence and putting in it grave jeopardy of economic risk based on cultivating market "cravings" and desire for excess profits. Like I said, the English should have invested in the subsistence beef production in Ireland until a surplus developed that then could supply the market using sound capitalist economic principles. And this is the very mistake that I see happening in much of the economic crisis today, and I will continue to offer tutorials and walk you through more examples, and offer remedies and suggestions (now that everything is a disastrous mess, maybe someone will finally listen to me, *lol*, except it's not really very funny and it never was).