Thursday, September 25, 2008

Talking of the Yongle Emperor

Been looking at the numbers for grain stocks and inflation last few days which brings us back to the yongle Emperor again. The government’s announcement back in April that it would step in to control prices of staples to ensure supply and affordability was meant to reassure consumers. Since then, what with the French, earthquakes and Olympics nonsense dominating the news agenda, food inflation and the possibility of stricter controls slipped down the Zhongnanhai totem pole of importance. Of course when it comes to statements about price controls exciting the people we’ve been here before in 1989 when the government’s handling of price controls was certainly one of the issues that led up to the Tiananmen Square demonstrations. But puzzling the problem of subsidies can take you back further.

Back in the 1400s Beijing’s largest rice market was the Dongjiangmishi at East River Alley where the old Legation Quarter (or what’s left of it in between the usual Stalinist monstrosities and now the vandal Handle Lee’s attempts to ruin it with his bonkers ideas of restoration) is now located. The Yongle Emperor created the market and reopened the Grand Canal to supply it. The government back then hoarded rice in massive granaries in the middle of the city and then subsidised prices to keep it low. They also only parcelled it out to needy vassal states and provinces when politically expedient to do so. All of the original warehouses are gone now but subsidies and hoarding remain as does supplying vassal states as when deemed politically necessary – i.e. these days meaning grain supplies to North Korea.

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