One sign that a politician is in trouble is that even when the he tries to put himself in a statesman's role and suggest important changes, the impact is diverted by some sort of prank or junk news. This is undoubtedly how French president Nicolas Sarkozy felt when his press conference outlining policy for the G-20 was sidetracked by a hacker who invaded the French President's Facebook page and impersonated a resignation announcement for 2012.
Obviously, despite the unfavorable polls that currently show almost any Socialist party rival besting him in the 2012, Sarkozy has other plans. He made two major proposals at the press conference. The first called for the imposition of a so-called Tobin tax on foreign exchange transactions designed to curb currency speculation.
The late James Tobin was a Nobel laureate in economics who proposed such a tax in 1971. Tobin argued that if a tax was imposed on foreign currency transactions, it would eliminate the incentive for currency speculators who were willing to move huge sums of money in order to reap substantial profits from minor currency fluctuations. This, argued Sarkozy, would promote economic stability. The beneficiaries of the tax would be 3rd world countries who could use the revenues to extricate themselves from poverty.
The second proposal -although here the French president is definitely in uncharted territory - is for some regulation of commodity markets. Sarkozy blames the speculators for the spike in food prices. "Shortage fuels speculation and speculation fuels shortage." If money markets could be regulated, argued Sarkozy, why couldn't the same be done with wheat or soybeans? This would assist stability by preventing food riots.
The idea of regulation appeals strongly to French voters on both the left and the right as they are accustomed to state intervention. Other potential backers of Sarkozy's ideas are Asian countries with sizable populations and high food bills. China has experienced a 9.6% rise in food prices this year that plays a major role in its 5% inflation rate.
Sarkozy, however, met with some pushback from Charlie McElhone, economics and trade manager for the Australia's National Farmers Federation. The Australian effectively fired a shot across the bow of the proposals by arguing that the removal of trade barriers would be far more helpful than the proposed regulation, even assuming it could be done.
In effect, McElhone was calling out the European Union and its Common Agricultural Policy designed to subsidize and sustain agriculture within the European Union. France, with an influential agricultural sector, has stubbornly resisted changes to the policy that keeps out cheaper competitors such as Australia and the United States.
Another reason for higher food prices is the use of grains in the manufacture of fuels. This practice has received government subsidies. In other words, opponents of Sarkozy's proposals can be expected to argue that regulation is the problem rather than the solution.