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This is odd. The poor spend relatively more on food. If anything redistribution to the poor should mean more imports of food.
You might argue that the main problem is not food but fuel and that the poor have no cars and hence use less fuel. But then simply cutting subsidies or raising a tax on fuel would solve the problem.
by oliver on Mon Jul 15th, 2013 at 06:29:40 AM EST
[ Parent ]
If your CA deficit is driven by luxury imports (BMWs, TVs, etc.), then redistribution from rich to poor will drive down your CA deficit.

If your CA deficit is driven by food and fuel, then redistribution from rich to poor will drive up your CA deficit. OTOH, if your CA deficit is driven by food and fuel, then failure to redistribute from rich to poor is liable to get you a new constitution.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Jul 15th, 2013 at 07:12:48 AM EST
[ Parent ]
Yes, that is why in food surplus nations, where the local poor primarily eat domestically produced food, it seems highly unlikely that redistribution would do anything other than improve the Current Accounts balance, since the propensity to import of the wealth is clearly greater than the propensity to import of the poor ...

... while with food deficit countries like Egypt, its not so cut and dried, and even if the balance is in the positive, the impact will still be substantially muted by the netting out of the increase food consumption of the poor.

You'd at the very least want to accompany it with programs to increase in domestic production of foods that are aspirational consumption items by the poor.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Tue Jul 23rd, 2013 at 12:43:35 AM EST
[ Parent ]

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