What Should Be Done About Food Crisis?

I answered a readers question about – What should economists do about a food shortage?

Basically, economists face a choice between advocating a free market solution and advocating government intervention to overcome market failure in agriculture.

Agriculture is a notoriously difficult market to leave to market forces. Because supply and demand are inelastic, weather conditions can cause big changes in prices.

There is also a difference between the response in the short run and in the long run.

If people are starving it is no comfort to say, in the long term the shortage will encourage extra supply. Next year is too late. At the same time, there is a danger that the wrong kind of government intervention can further distort the market and undermine market based initiatives to overcome shortages.