[yorwba]

> It's true that individuals are all acting rationally

At least one party in the food market isn't acting rationally. The situation where food is produced in Ethiopia for consumption in Europe and food is produced in Europe for consumption in Ethiopia could equivalently be solved by keeping the food in its country of origin and everyone saves on transport costs.

But maybe the Ethiopian "food" was just something like coffee beans which can't really feed a population, in which case there also isn't any problem with exporting them.

[bluGill]

That is a simplistic argument that ignores trade. Sure Ethiopia could grow it own food: cut down the coffee trees (bush?) and plant something else. What you are missing is that those foods that would replace the coffee tree don't grow as well in Ethiopia as coffee does.

Both Ethiopia and Europe would be worse off for your plan. Ethiopia because instead of the profit from coffee they subsistence farm something that doesn't grow as well. Europe because they don't have coffee and they get even more of the crops they already grow too much of.

Now some have pointed out that the profit from Ethiopian coffee might not got to Ethiopia. That might be true (I don't know), but even if so, Ethiopia retains more money than if they quit exporting coffee and the profits.

[vkou]

This is all well and good as long as Ethiopia can buy more food then it could have grown in those coffee fields.

Unfortunately, it also puts it at the mercy of forex rates, collapse of their monoculture, food shortages in other parts of the world causing rising food prices, any disruptions in foreign trade... Any of those things go south, and now you have millions of starving people. Sitting on a pile of coffee beans.

Why do you think the US government pushes billions of dollars into agriculture subsidies? Wouldn't it be so much cheaper if it just imported all of its food from abroad - where farmers get paid ~$1/day, instead of $6/hour.

There's a simple reason - it's because it doesn't want food riots, caused by some factor outside of their control. Nothing brings about regime change faster then the price of bread. [1] No well-ran country wants to be dependent on food, or oil imports.

Ironically, these same agriculture subsidies are what cripples agriculture in other nations - they can't always compete with Uncle Sam's subsidies.

[1] Just ask Mubarak. Or the Romanovs.

[sanxiyn]

> everyone saves on transport costs

These things became more common in the modern world because transport costs fell so low that it doesn't matter in most cases.