As a result, there is a very strong near-term possibility that hundreds of millions of people in the Middle East, Africa, and Asia will starve. Even where starvation does not kill directly, political unrest and food wars may do it.
Wait, is this like a 0.1%, 1%, 10%, or 50% possibility? Does this account for how international governments will likely respond to wheat export decreases? (I did a quick search on Metaculus, no results)
Taking this idea seriously, it'd be worth sitting down and figuring out what we can personally do to avert outcomes as bad as hundreds of millions starving.
Articles about the fall in wheat exports face another Molochian problem. The ones that say that a massive decrease in grain exports will lead to famine are shared widely. Articles that include the context that most wheat is produced and consumed locally, so exports are a small proportion of global wheat production, are boring articles about boring price movements, so they aren't shared widely.
World grain production is 760 million tons per year. Russia exports 35 million tons per year (4.6% of total wheat production), and Ukraine exports 24 million tons (3.2% of total production). Losing three quarters of those exports will be a supply shock of the size we see about once or twice a decade (though it's usually due to a drought).
(btw I'm not accusing Eric Raymond of alarmism; I thought the grain decrease was a big deal too, until I happened across a Twitter thread explaining the details. Update: I found the thread – it's by a crop scientist. I'm not sure why her figure for Russian wheat as a percentage of world production is lower than what I found.)
Those are interesting figures and I thank you for them, but I think they underpredict the impact.
First, there's no reason to believe we'll keep as much as a quarter of Russian and Ukrainian wheat production. Peter Zeihan says Ukraine will be a net wheat importer for some years, and I've found him to be pretty careful and non-alarmist about claims like that.
Second, don't forget the phosphate problem. As long as Russia can't sell its phosphate because it's been sanctioned out of SWIFT etc., 40% of the normal feedstock for fertilizers is out of play. This is going to push up prices and hit productivity seriously in a lot of wheat-growing areas that aren't in the war zone. (As usual, the US will be far less impacted than most other places - we have large domestic phosphate reserves.)
Let me try to ballpark this based on your figures. I'll steelman the case for low impact by choosing a low guess for the decrease in wheat yield due to not having phosphates, let's say 40% . I know this is low because a lot of growing areas have tired soil that barely produces at all without fertilizers. Multiply this with the lost volume of Russian phosphate exports and it looks like world wheat production takes a 16% hit. Add that to the 8% from the lost wheat exports and we're down 24%.
That's best case. It's more likely the impact is worse, producing a century-scale shock.
As long as Russia can't sell its phosphate because it's been sanctioned out of SWIFT etc., 40% of the normal feedstock for fertilizers is out of play.
Russia produced ~13 million tons of phosphate in 2020[1]. This is ~5.8% of global phosphate production (and <1% of global phosphate reserves). This is significant; this is not 40%[2].
Compare the following quote: "According to industry analysts, the rated capacity of global phosphate rock mines was projected to increase to 261 million tons in 2024 from 238 million tons in 2020[1]"
This is ~23 million tons increase in 4 years, or an increase in global capacity of ~5.75 million tons / year. Russia suddenly dropping entirely from global production would be losing ~2.3 years of growth, which doesn't immediately sound catastrophic. Significant, yes. Catastrophic, no.
I got the 40% from one of Peter Zeihan's talks. I don't know where he got it from, but I have yet to catch him in a clear error on statistics I know how to check.
That's fair about wheat import/exports – I don't quite follow this guy's estimate of only a 75% reduction in wheat exports from Ukraine and Russia, and plausibly it could be a lot worse.
The phosphate problem must depend on elasticity of phosphate supply (and a little of demand, though I checked and less than 10% of phosphate is used for non-agricultural industry, so there's probably not a lot that can be substituted from other uses). I found conflicting accounts of whether Russia was the largest phosphate exporter, but like wheat, it's not the largest phosphate producer. It produces about 13 million tons of phosphate, 5.6% of the world total, so I don't find that immediately alarming – maybe it's not too hard to increase phosphate mining by 5%? I wasn't able to quickly find out how much of Russia's production that it exports. I also couldn't quickly find anyone giving an estimate of phosphate supply elasticity.
This paper says "Between 1961 and 2014 there have been two instances when the global phosphate rock prices spiked, in mid-1970s and 2007–2008 (Fig. 3a). Both events are linked to an economic trigger. The first instance was during the first oil crisis, and it was driven by the increase in energy prices (Mew, 2016). The second one is attributed to a combination of oil price increase, higher labour costs and insufficient mining capacity (Scholz et al., 2014)."
This chart shows up-to-date phosphate prices. It would be the one to watch to see how bad the phosphate shortage is getting. It shows a big spike in 2008 – about three times the current price. I don't remember phosphate shortages in 2008 news, nor mass starvation, so I think we're probably okay with prices under three times the current price.
I should have said 40% of the feedstock for exported fertilizer. I also should have explicitly noted that because a lot of wheat is still produced locally to where it's consumed, the famine risk is limited to places that are dependent on wheat imports.
Unfortunately there are plenty of those. And they are generally places that are poor by other measures as well, making coping with economic shocks more fraught.
Your argument that 3X current phosphate prices is tolerable seems sound. On the other hand, anything that has to be mined has inelastic supply because the cost of the capital equipment - and in many countries the cost of the regulatory approvals - is so high.
See also my sibling comment at https://www.lesswrong.com/posts/CLXkgEerPi9MpJCem/moloch-and-the-sandpile-catastrophe?commentId=rsJMhBmsQjxZhZLHL
Russia dropping entirely from the phosphate market would be wiping out ~2.3 years of projected growth. Significant? Yes. Catastrophic? I don't think so offhand.
I don't know how to quantify the risk. I believe it's serious because (a) global economic analysts like Peter Zeihan say it's serious, and (b) it's difficult for me to construct a plausible scenario in which that many tons per wheat a month becoming unavailable doesn't cause famine somewhere. The risk would be especially acute in places like Egypt, Bangladesh, and Japan that combine a large population with a shortage of arable land - but while Japanese are wealthy enough to meet rising prices in the grain markets and get by, Egyptians and Bangladeshis are not.
The risk would be especially acute in places like Egypt, Bangladesh, and Japan that combine a large population with a shortage of arable land
Egypt (particularly the Nile delta) was the breadbasket of the ancient Mediterranean world. Why does it now have a shortage of arable land? Is the deal that it's a fertile area, but small in proportion to the modern population sizes?
Also, too, what is near-term? Supply chain disruptions are currently causing shortages, but new shipments from India and other exporters should arrive within a month or two, which probably isn't long enough for people to literally starve to death (since wheat isn't literally 100% of calories, I'd Fermi estimate that a poor resident of North Africa could physically survive for about 3 months with zero wheat consumption by being hungry and eating a little bit more of whatever other food is available)
Vernor Vinge described a version of this in A Deepness in the Sky. I agree it's an important topic and don't recall anyone else talk about it until now, or anyone talk about it in a non-fiction context, so I'm glad to see this post. From Vinge's novel:
“The flexibility of the governance is its life and its death. They’ve accepted optimizing pressures for centuries now. Genius and freedom and knowledge of the past have kept them safe, but finally the optimizations have taken them to the point of fragility. The megalopolis moons allowed the richest networking in Human Space, but they are also a choke point. . . .”
“But we knew—I mean, they knew that. There were always safety margins.”
Namqem was a triumph of distributed automation. And every decade it became a little better. Every decade the flexibility of the governance responded to the pressures to optimize resource allocation, and the margins of safety shrank. The downward spiral was far more subtle than the Dawn Age pessimism of Karl Marx or Han Su, and only vaguely related to the insights of Mancur Olson. The governance did not attempt direct management. Free enterprise and individual planning were much more effective. But if you avoid all the classic traps of corruption and central planning and mad invention, still—“In the end there will be failures. The governance will have to take a direct hand.” If you avoided all other threats, the complexity of your own successes would eventually get you.
I read that though Ukraine/Russia produce 25% of the world exports, this only amount to 0.9% of the world's wheat produce, as most of it just isn't exported. Whether or not these exact numbers are correct, it's still a distinction we should make in order to think clearly about it. If the numbers are about right, we should just expect the prices to rise a bit. I don't how many people would starve as a result, but probably not hundreds of millions.
Self-organized criticality in a sandpile refers to what happens when the sandpile reaches maximum stable height. Adding more grains of sand on top is canceled by landslides, and the landslides can be of any size.
Apparently the claim here is that multi-agent systems governed by efficiency will get into an analogous condition, of overall stability punctuated by transient breakdowns of arbitrary size.
Could I see an argument for this? A causal explanation, in terms of specific properties of economic organizations? Surely efficiency-driven supercriticality isn't the only reason why big interconnected systems might exhibit interconnected failures at scales from small to large.
The reason it happens this way is that in a multi-agent economy with reliable trade, reserves against disruption get interpreted as wasteful and competed out. Investors seek the higher returns from companies that cut that below-the-line cost and plow the savings into capital goods or other things that can increase future revenues.
For example, Just In Time delivery swept the business world because investors and managers optimizing for profits began to see warehouses full of inputs as places that were costing money, not making money. JIT eliminates that inventory, but it relies on the assumption that you can always collect your inputs from suppliers just before you need them.
This was continuous with a century-long trend of vertically-integrated manufacturing dis-aggregating into contract networks, which made total sense as long as transaction costs kept dropping.
Another way to look at it is this: As long as communications and transport are getting cheaper and more reliable, profit maximizers will try to use them to replace more expensive goods, including storage space. Since food is perishable, the advantage of not buffering it in warehouses is exceptionally high. Which is fine until the cost gradients reverse and JITting your food from overseas gets expensive, at which point you can be in a heap of trouble.
Is efficiency-driven supercriticality the only reason for interconnected failures at all scales? No. Is it an important driver, perhaps the single most important one under modern conditions? Evidence points to yes. Worked example follows: embedded electronics for automobiles.
This is an example of how even ordinary fluctuations in demand for non-perishable goods (something much less disruptive than a war) can cause cascade failures in a system that's supercritical due to insufficient buffering. In 2020, automobile manufacturers reacted to a COVID-induced collapse in demand for their product by letting their contracts with the chip fabs making their car electronics go un-renewed - assuming that once demand picked up they could buy the chips again at the same prices.
When they went back beginning in later 2021, they discovered that (a) the chip fabs had converted the idled capacity to higher-margin products, and (b) they hadn't warehoused enough parts to keep making cars until they could buy line capacity. The consequences rippled down the chain towards consumers as a bunch of availability and price shocks, nearly wrecking several manufacturers and damaging a legion of related service businesses.
Took them a lot more money to get production reestablished than it would have to keep their piece of the fab capacity running through the slump. The recovery isn't done yet, and business schools are already treating this as a textbook case of the management stupids
See also the economic effects of the Great East Japan Earthquake (2011).
https://en.wikipedia.org/wiki/Aftermath_of_the_2011_T%C5%8Dhoku_earthquake_and_tsunami#Economic_impact
Pre-industrial societies were chronically vulnerable to famine because all staple food production was local and could be disrupted locally.
This is a detail of world modeling that (a) is obvious once said and (b) I had totally missed.
This'll have significant effects on my models of a lot of complex systems. And on what kind of life I work on building.
Thank you.
Maybe I'm stating what is now obvious, but this applies to shortages of other outputs as well.
Think of potential producers for a good as a portfolio of options, one or more of which is exercised when you need to actually have it. You want to have multiple options available to reduce your risk that no producer will be able to deliver
When the cost of transportation is high, production has to be local to you, so it is more likely that all your options have correlated risks. As the cost of transport drops it gets possible to pick up options from producers further away, so the risks de-correlate. Trade networks get larger.
But that's not all good. Transport disruption is always a risk in trade, even when it's very local. But as trade networks get larger and the transport network has more moving parts, coordination issues increase.
Also, you're trading decorrelation of risk for the possibility of becoming critically dependent on suppliers far away from you. Which brings us back to my original post.
The fascinating question is whether a more resilient but overall smaller population, which spends more of it's energy on local food production, is actually PREFERABLE to the current world of cyclic efficiency and destruction.
To a great degree, this is the question behind the repugnant conclusion in the small.
I can add that Kremlin is using it in their propaganda. Previous years many Kremlin supporters said: "The West cannot make against us anything significant because they depends on our oil and gas and they want to get money from us selling some goods to us". And now some people say something like that: "Ok, they imposed some sanctions, but they cannot impose really heavy sanctions".
I mean that some agents can abuse a situation with many mutual dependencies like that.
What surprises me about this is that I do not seem to be hearing much about the European Union's common agricultural policy (CAP). This policy, as it was explained to me at school, has its origins back in WW2, where most European nations were not self-sufficient on food and already dependent on imports. Then U-boats and navy blockades stopped all that and there were problems. The common agricultural policy was a deliberate policy of the EU to pay domestic farmers to produce food, even if the food ended up going to waste with no one eating it. This way when the next shock hit the domestic producers would still be going, regardless of international competition, as they were effectively supported by the state. The common agricultural policy is colossally expensive, in the Brexit referendum its cost was brought up by the leave campaign again and again. The war in Ukraine sounds like a situation where the good side of the CAP should shine bright. The EU's subsidy-induced butter mountains (food overproduction) should now have people who want it. But I have not heard much about this, maybe its playing a role in the background. Or maybe the policy is just garbage at achieving its stated goal?
It often feels good to slide down efficiency gradients, but they can have tragedies at the bottom. Scott Alexander taught us to name this problem: he called it Moloch.
There is war in the Ukraine. The world's largest wheat exporter, Russia, is fighting the world's fourth-largest wheat exporter, Ukraine. Russia's ability to get paid for its exports is under threat; Ukraine's production has been so badly hammered that it will likely be a net wheat importer for years. As a result, there is a very strong near-term possibility that hundreds of millions of people in the Middle East, Africa, and Asia will starve. Even where starvation does not kill directly, political unrest and food wars may do it.
Understanding how we got here is important. Bear with me, I will get to a rationality heuristic, but there's a story to tell first.
Pre-industrial societies were chronically vulnerable to famine because all staple food production was local and could be disrupted locally. Elites might import spices from the Indies but transport costs and risks were too high to allow long-distance food dependency to develop. This only began to change in the 1700s with the mass importation of sugar, tea, and coffee to Europe. Even though these were luxury goods that could have been foregone, one of the consequences of the trade was the first global war - the Seven Years' War of 1756-1763.
The globalization of food production took its next major step in the mid-19th century when the developed world became dependent on phosphate fertilizers to perk up tired soils. Minor wars were fought over literal birdshit - guano islands were a critical phosphate source. But the phosphate flowed; none of those conflicts seriously disrupted it. The life-critical consequences of phosphate-supply disruption got consigned to the bin marked "That Will Never Happen".
Then came the post-1945 Pax Americana, with the U.S. Navy guaranteeing global free trade. National economies went into a frenzy of optimization by seeking comparative advantages. Places where food production was expensive outsourced it to places where it was cheap. A population boom followed. Peaceful, steady global trade became life-critical to a large fraction of humanity in a way it had never before been in all of history. And nobody noticed this!
Nobody noticed this this because the Pax Americana was an actual pax - it successfully prevented major wars involving food exporters for 77 years. (The closest we came to an exception before 2022 was several brushfire wars between India and Pakistan.) Americans would have had trouble noticing it anyway since the U.S. is effectively food self-sufficient - we only import staple foods as a price-taker, not because we don't have plenty of domestic capacity to produce them.
But the Russo-Ukraine war has changed everything. It can and will screw up life-critical international supply chains - Russia is the world's largest phosphate exporter, too - but the U.S. can't stomp on the problem because Russia has nukes. Awkward...
I said I'd get to a rationality heuristic. Might look like we're far from one right now, but let's look more closely at what could have been done if anyone had seen this coming.
There's a answer pushed by various nationalist and populist types that says we should deglobalize, or should never have globalized in the first place. The problem with this prescription is twofold:
In both cases, the cost of being autarchic against shocks to the international food-supply chain is prohibitive. And even if you're forced through that knothole by something like a major war, once peace and free trade are restored, the slide down the efficiency gradient leads right back to globalization - and fragility.
This model predicts that the future will consist of episodes of stable trade and falling food prices punctuated by food-supply-chain shocks causing massive loss of life. If we're lucky, the stable episodes will be long and the catastrophes infrequent. We might not get lucky.
In the language of systems theory, complex adaptive systems want to be supercritical. Efficiency-seeking drives them to the sandpile catastrophe. This is not a happy thing to know, but it is an important thing to know.
If everybody knew this, and everybody knew that everybody else knew it, the way people plan for the future might change. It's probably beyond hope to expect democratic political systems to maintain more than token buffer stocks, but individual resilience could be valued and pursued more. Mormons keeping a year's supply of shelf-stable food in their basements might not be considered odd anymore, just normal.
It bears thinking on. Never forget that Moloch always lurks at the bottom of the efficiency gradient, pitiless, with "WHO SAW THAT COMING?" lettered around him in runes of fire and blood.