Stockpiling for major disasters is a waste of time
Wednesday, December 21, 2016 8:01 AM
Advertising on talk radio and cable news is full of alarmist inducements to stockpile gold and food, rife with implications and predictions that the next economic crisis will feature food riots and a complete societal breakdown.
My critique of food storage, gold hoarding and the entire “prepper” phenomenon is grounded in both economics and scripture. On the economic side, history indicates that markets don’t just disappear during or after catastrophes – even severe ones – but rather they persevere and adapt toward providing those things that are most in demand, such as food. On the scriptural side, we have God’s sure and certain promises to provide our “daily bread” for the needs of body and His provision of the “bread of God, i.e., Jesus Christ, who comes down from heaven and gives life to the world” (John 6:33).
Recent tragic experiences in the U.S. – whether Katrina, Sandy or this year’s Louisiana floods – have revealed clearly that there are two major negative outcomes possible if a natural disaster strikes: 1. You are caught in the wrong place at the wrong time and become a casualty; or 2. you leave or are rescued and, after a perhaps extended period of turmoil resume your life, possibly having relocated. In neither case is long-term food storage or a gold stockpile going to be of much, if any, assistance. Food stockpiles are likely to become either inaccessible or damaged beyond usefulness in a tornado or flood, and relief efforts will have plenty of emergency supplies available for struggling survivors.
Historical experience indicates that economic downturns typically bring falling food prices. In the Great Depression, the value of the dollar rose and food prices crashed. In the U.S., the price index for “food at home” fell from a pre-Depression peak of 48.3 in 1929 to a Depression-era low of 30.6 in 1933 - a 36 percent drop. Even though mild price inflation resumed in 1934 with FDR’s abandonment of the (domestic) gold standard, food prices remained depressed below their 1920’s level for the entire Depression decade. Those holding cash were therefore well-positioned to continue feeding their families even if they faced unemployment, as 25 percent of American workers did by 1933.
It is true that basic foods and supplies can be hard to come by in the world’s most repressive, dictatorial regimes. Take Venezuela as a case in point, where the Chavez-Maduro version of socialism has literally resulted in bare shelves and riots. Basic food and supplies can still be had in Venezuela, however, albeit in underground markets at steeply inflated prices. Preppers might argue that forward-thinking Venezuelans would have been quite wise to have stockpiled food and gold in preparation for the present crisis. Perhaps so, but again I will argue that a cash hoard - especially in the form of a stable currency such as the U.S. dollar - would not only have sufficed to meet the emergency, but would have outperformed food storage and even gold in terms of convenience, portability, and financial returns.
The upshot is that the prospect of a disaster large enough to imperil food supplies is so remote as to not be worthy of your worry, not to mention your time and effort in contingency planning. If you think a disaster, or perhaps a combination of catastrophes, will eliminate one’s ability to buy food in some form of market system, you might as well prepare for a cataclysmic meteor strike or the implosion of the sun.
Tyler Watts, an adjunct scholar of the Indiana Policy Review Foundation and formerly with the Economics Department of Ball State University, is director of the Institute for Economic Education at East Texas Baptist University.