(Originally appeared at Reuters Opinion on October 25, 2012. Written with Yaneer Bar-Yam.)

Spikes in grain prices are regularly blamed on oil shocks, droughts and emerging markets’ hunger for meat. The real culprit in the three bubbles-and-busts of the last five years, however, isn’t the weather. It’s financial speculation.

The Midwest drought this summer, the worst in a half-century, produced a bumper crop of profits for derivatives traders like Chris Mahoney, the director of agricultural products for Glencore, the world’s largest commodities trading firm. Mahoney noted during one August conference call that tight grain supplies and the resulting arbitrage opportunities “should be good for Glencore.”

They’ve been a disaster, however, for the world’s poor.

More than 40 percent of grain futures can now be traced to financial institutions, which nearly doubled their commodity bets over the last five years – from $65 billion to $126 billion.

During that time, food prices have bubbled and burst twice – leaving millions of people to go hungry and stoking global unrest – before climbing to new heights this summer. Corn prices soared 65 percent between June and July alone, the same month the World Bank’s food price index recorded its highest rise ever, breaking the previous record set in February 2011.

What’s fueling this stunning price fluctuation is financial speculation. Our research team at the New England Complex Systems Institute built mathematical models to test possible explanations for the price spikes of 2007-2008 and 2010-2011 – including all the above, in addition to the rise of ethanol production. We could replicate a rise in prices but couldn’t explain the bubbles and crashes. When we added speculation, the model fit precisely.

When it comes to food, our faith in markets is contingent on their ability to match supply and demand at prices that benefit farmers, while ensuring the greatest number of people can afford to eat. Speculation in grain futures knocks these prices out of equilibrium. During past bubbles, for example, bountiful harvests piled up in silos because grain was too expensive for consumers to buy. This grain accumulation eventually bursts the bubbles after a year or more – the time elapsed between harvests.

While Americans will likely only feel a pinch of drought-fueled speculation this year – the Department of Agriculture projects a 3 percent-4 percent rise in food prices next year – the situation is more dire in the developing world. Those living on less than a dollar per day already spend most of their income on food.

The price bubble of 2007-2008 led to food riots in more than 30 countries, including Mexico’s “tortilla riots” and the overthrow of Haiti’s government, before prices peaked again in February 2011, during the Arab Spring.

The current bubble is behind the fresh protests in Haiti, where food prices have gone up 40 percent since the election of President Michel Martelly last year. In eastern India, mobs robbed government granaries.

Hunger and revolutions have always gone hand-in-hand, of course – the latter is what happens when you let them eat cake but the people have no bread. But at which point do prices pass the point of no return?

Our research has found that food riots are most likely to occur when the Food Price Index, compiled by the United Nations Food and Agriculture Organization, rises above 210.  It’s currently 216.

Recognizing the dangers of food speculation, six European banks – including Commerzbank, Germany’s second largest – this summer removed agricultural products from their commodity funds altogether. Wall Street, however,  has not been so accommodating.

Last month a federal judge vacated tough new rules designed to rein in commodity speculation that would have taken effect Oct. 12. The rules would have closed loopholes and instituted new position limits that would cap the number of derivative contracts a commodities trader could hold, in the hopes this would dampen volatility and prices.

But Judge Robert L. Wilkins channeled Wall Street’s objections when he questioned whether these rules were appropriate or necessary. In his decision he quoted Michael V. Dunn, a former commissioner of the Commodity Futures Trading Commission, who had doubted whether “excessive speculation is affecting the market.” Dunn once declared, “at best position limits are a cure for a disease that does not exist, or at worst it’s a placebo for one that does.”

CFTC Chairman Gary Gensler has vowed to push ahead with the rule – including the possibility of appealing. Commissioner Bart Chilton meanwhile has proposed drafting an “interim final rule” that would appease Wilkins’ objections and could be instituted quickly. “Position limits are simply too important,” Chilton said earlier this month in a speech at the U.N. Food and Agriculture Organization headquarters in Rome.

They are. But if the rule that’s eventually passed is to be more than the placebo Dunn fears, it will be necessary to close the loopholes added to the bill to appease derivatives traders – who instead sued to have it overturned.

The proof will be in seeing if speculation actually decreases. Current volumes are three to five times higher than what’s necessary for the smooth functioning of the markets, according to our research. At a time when the U.S. corn harvest is expected to be less than annual consumption, we can’t afford to gamble with our food.

Yaneer Bar-Yam is the president of the New England Complex Systems Institute, an independent academic research institution in Cambridge, Massachusetts. Greg Lindsay is an affiliate of NECSI and a visiting scholar at New York University.

(Originally published in WSJ magazine on October 27, 2012.)

THE WORK OF 48-YEAR-OLD JEANNE GANG may at last herald the end of the starchitect era. The founder of Chicago’s Studio Gang Architects puts more faith in her raw materials–and the purposes they can be put to–than in the pursuit of iconic shapes or the mind- bending possibilities of computer-aided design. That’s not to say her buildings aren’t expressive in form. The rippling concrete balconies of her 82-story skyscraper, Aqua Tower, flow in gentle undulations. But they’re also functional: Their shape disrupts gales off Lake Michigan, allowing residents to sun themselves eight hundred feet in the air.

Gang designs slowly, buying time to consult her team of ecologists, hydrologists, artists and engineers. She also delves deeply into the limits of her materials, first exploring their physical capabilities in her Wicker Park studio, then allowing their attributes to dictate her projects’ form. Gang is the rare architect who loves nature and tall buildings, classical techniques and new technology. She sees herself not as an artist, but as a dot connector, a problem solver. Her other Chicago works include the Nature Boardwalk at Lincoln Park Zoo, which inserted a wild urban habitat adjacent to the city’s Gold Coast, and plans for Northerly Island, which will transform the former Meigs Field airport into a waterfront park with a reef. Among her most recent projects are a proposal to reverse the flow of the Chicago River to restore its polluted banks, and reimagining suburbia in “Foreclosed: Rehousing the American Dream,” an exhibit at New York’s MoMA this spring.

Gang receives the museum treatment herself this fall with “Building: Inside Studio Gang Architects” at the Art Institute of Chicago (September 24–February 24, 2013). It isn’t a retrospective–Gang is young by architecture’s standards–but an intimate snapshot of “a practice that’s just hitting its stride,” she says. The same is undoubtedly true of Gang herself, who last fall was named a MacArthur Foundation Fellow–the first architect to win the so-called “genius” grant in more than a decade. “Gang is setting a new industry standard,” the foundation remarked about its pick. Translation: These times call for buildings that are inexpensive, beautiful and sustainable.

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On October 1, Minnesota Public Radio asked me to discuss China’s mega-urbanization efforts along with the University of California’s Harrison Fraker. Will China makes the same auto-driven mistakes American did fifty and sixty years ago? Probably, I said. Full audio of our conversation is below:

(Originally published at Fast Company’s Co.Exist on September 10, 2012.)

Honduras is set to play SimCity for real, albeit without the economist who devised the rules of the game. Last Tuesday, the government signed an agreement with private investors led by Michael Strong—a libertarian entrepreneur and close associate of Whole Foods co-founder and CEO John Mackey—to construct a city-from-scratch in one of at least three special development regions (“las Regiones Especiales de Desarrollo” or “REDs”) scattered around the country.

REDs possess the legal right to establish—or outsource to foreign governments and companies as necessary—their own hospitals, schools, judges, and even police, all independent of Honduran law. The first is for profit, and if its founders have their way, it will look and feel a little like the Mosquito Coast’s answer to Austin.

The REDs are the brainchild of Paul Romer, the New York University economist who has proposed building “charter cities” as a solution to endemic poverty. Romer believes that importing sound laws and policies into small corners of badly run countries will help leaders reform their governments from the inside-out. Honduras certainly qualifies—the original banana republic is still grappling with the political fallout of a 2009 coup while cocaine traffickers have pushed its murder rate to the highest in the world.

In early 2011, aides to Honduran president Porfirio Lobo invited Romer to the capital of Tegucigalpa to make his case to Congress. Within weeks, Congress passed a constitutional amendment granting Lobo’s government the power to create and administer the REDs.

They won’t be built in Romer’s image, however. The Lobo government has instead signed a deal with the MKG Group, a consortium of investors led by Strong that intends to spend $15 million to begin building basic infrastructure. It appears Romer was never consulted.

On Friday night, he published an open letter to Lobo asking that he not proceed with the formal appointment of a five-person “transparency commission” to oversee the RED, of which Romer would be chairman. In effect, he is asking for permission to resign from his own creation. Lobo’s aides told The Guardian that Romer is overreacting, and that nothing can go ahead until the Honduran Supreme Court rules on the project’s constitutionality—which may take anywhere from a week to a decade.

With Romer having second thoughts, the spotlight shifts to Michael Strong, who I met with in February to discuss what his version of a RED would look like if it were actually built. At the time, it seemed unlikely—a few weeks later, Lobo’s chief of staff Octavio Sanchez told me point-blank in the presence of Romer’s deputy that Strong would never receive the legal right to run a RED—but he was optimistic.

Prior to starting MKG, Strong co-founded a movement named FLOW (“Freedom Lights Our World”) and wrote an entrepreneurial manifesto with Whole Foods’ John Mackey. More recently, he joined the board of the Seasteading Institute (whose founder, Patri Friedman, has started his own for-profit company with the stated aim of building cities in Honduras) and co-founded the Free Cities Institute, a think tank based at the Universidad Francisco Marroquín in Guatemala. (UFM, which I visited last spring, has a library named after Austrian economist Ludwig von Mises and a bas-relief of Atlas shrugging at the entrance to its business school.)

While Romer imagined his charter cities as Hong Kong circa 1950—filled with sweatshops beginning the long, hard climb to cleaner work and better pay—Strong envisions something closer to Bangalore-meets-Austin, with locals working in Spanish-language call centers and business-process-outsourcing (BPO) shops while jump-starting a local software industry with an influx of Americans.

“I’ve spent a lot of my life in places like Austin and San Francisco—cultural and creative hotbeds,” Strong said. “One of the people I know is a Honduran software entrepreneur who would love to have a much more robust ecosystem for software companies in Honduras. But in order to get software guys to go down to there, you need cool restaurants and music places. They’re not going to go if it’s factories and so forth.”

While Strong readily conceded this aim was “aspirational,” he insisted that locals were much more receptive to clean work for good pay than a wholesale expansion of the maquiladora sweatshops, which mainly produce textiles. He also plans to recruit a number of educational institutions—including vocational and charter schools (which he has founded in the past)—to create “an education enclave.” “Good education institutions increase land value, and they’re a huge attractor,” he said.

In the short run, however, MKG will focus its efforts on building affordable housing and attracting employers to the first half-square mile of the city, which will begin construction sometime in the next six months. Strong told the AP last Wednesday that tenants have yet to sign on, but that he and his [undisclosed] investors hope to have two or three within 18 months.

While MKG may have been awarded the first RED, it certainly won’t be the last project of its kind. Congressional president Juan Hernandez told the AP that two other sites have already been chosen—one in the Sula Valley in northern Honduras, and another in the south—but the agency tasked with implementing the RED has at least 10 potential sites under consideration. The question now is: Who’s next?

Why in the world would Marie Claire Italia excerpt Aerotropolis? Well, it has nothing to do with me. The talented photographer Giulio Di Sturco is presently in the midst of shooting a series with the same name, on location in several cities mentioned in the book – in this case, Seoul/New Songdo, Hong Kong and Bangkok. I was fortunate enough to be asked by Marie Claire’s editors to fill in a little text around his images.

[UPDATE 9/7/12:] Kept in the dark by his Honduran partners, Romer has published an open letter to Honduran president Porfirio Lobo asking him to effectively dissolve the transparency commission of which Romer is chair. He’s asking for permission to resign, in other words. On to the next failing state!

[UPDATE 9/5/12:] The government of Honduras has signed a deal to create the world’s first charter city, although not with Paul Romer. Instead, it has signed an agreement with the for-profit MKG Group, which will invest $15 million in its “model city.” The Associated Press reports two other cities will be created as well, presumably at least one of which will be built along Romer’s lines.

*

Fast Company was kind enough to republish my feature on Paul Romer’s charter cities in full. (It originally ran behind the paywall at Next American City back in May.) The story ran last week in three parts – collect them all:

1. Can Importing Well-Run Cities Into Poorly Run Countries Lift The World From Poverty?

2. How Do You Make A City From Nothing?

3. Are Charter Cities The Cities Of The Future?

(This story originally appeared at Co.Design on August 21, 2012.)

How much would you pay to work from the same office as your best client and several hundred of your closest friends, collaborators, and competitors? Five hundred dollars a month for a desk? Thirty-six hundred dollars for an office? Dror Benshetrit, the Israeli-born, New York-based industrial designer, would like to know. In September, Benshetrit plans to move his 10-person Studio Dror to the top floor of WeWork’s flagship location in SoHo, where he intends to open WeCross, a 13,000-square-foot shared office and coworking space stocked with 200 hand-picked architects, animators, model makers, and video editors, all drawn from the ranks of his past (and potentially future) collaborators, and all paying for the privilege.

The benefits of this arrangement are clear for Benshetrit, whose typical projects—including housewares for Target, luggage for Tumi, an island off Abu Dhabi, and even his own geometry—span multiple disciplines. “We’re trying to revolutionize the cross-disciplinary office,” he says, by “bringing the people we’re already collaborating with closer, in the physical sense.” He compares it to being back in school at the Eindhoven Design Academy in Holland: “When you have a lot people nearby who can help you with lots of different things at once, that’s not exactly a disadvantage.”

But what do the prospective tenants stand to gain? They can’t and won’t be expected to work full-time on Studio Dror projects because they’re not employees. They’re part of what management consultants would call Benshetrit’s ecosystem, i.e., the far-flung network of interdependent collaborators he has unusually elected to bring under one roof. What’s in it for them, he says, is serendipity—whether that means exposing them to each other’s mutually beneficial projects, or the flashes of inspiration that only come from face-to-face contact. “Every time I meet with my designer friends, there’s always this really interesting exchange,” says Benshetrit. “It’s reproducing that creative energy I’m really excited about.”

He is designing the space itself, with a layout modeled on WeWork’s own offices and coworking spaces on the floors below. Initial sketches depict Studio Dror occupying one corner of the floor while glassed-in offices for as many as a half-dozen occupants ring a large room filled with open desks, all painted white. “We’re trying to make a very clean, very simple environment that promotes these casual interactions between people,” Benshetrit says.

Now it’s just a question of convincing his collaborators that sharing an office is worth the price (which isn’t out of line with similar, albeit less curated spaces). The first invitations were dispatched a few weeks ago, “and in an ideal scenario, we’re hand-picking them from a very deep pool—the people we collaborate with now, and new talent as well,” Benshetrit says. “Either a few hundred, or maybe even a thousand people will say ‘I want to be part of it.’ We don’t know what deck of cards from which we will get to choose.”

I’m proud to announce that in additional to my already eclectic interests, I’ve been invited to join the New England Complex Systems Institute (NECSI) as an affiliate “engaged in public communication and research.” (I’m basically the homeless man’s version of Cormac McCarthy, the novelist who performs a similar role for the more famous Santa Fe Institute.)

I’ve written before about NECSI’s work exploring the causes of the long-term run-up in food prices over the last decade, along more recent spikes in prices. While I hope to work with NECSI in exploring the underlying dynamics of cities (a hot topic these days) my first order of business was to help draft a primer on the drought’s effect on food prices, and why the world faces another food crisis – including starvation and turmoil on the order of the Arab Spring – unless the U.S. stops producing ethanol and starts reining in speculators now:

August 15, 2012 - The severe drought in the American Midwest, combined with misguided biofuel policy, threatens to trigger a global catastrophe. The worst U.S. drought since 1956, this summer’s high temperatures and lack of rainfall in the breadbasket means this year’s corn harvest will be the worst since 1995, the U.S. Department of Agriculture announced on Friday, along with the worst soybean harvest since 2003 [1]. Corn prices have risen 65% since June, while wheat prices have risen 50% from their low this spring [2].

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(Urban Design Review asked me to review Alan Ehrenhalt’s recently published The Great Inversion from the perspective of what it will mean for suburbia. The review is republished in full after the link.)

It figures that Tom Wolfe, while doggedly hunting facts for his fiction, would stumble upon the scene of what Alan Ehrenhalt calls “the great inversion” almost as soon as it began. In his 1998 novel, A Man in Full, Wolfe described Georgia’s Buford Highway as “six lanes of hard blacktop bounded by blasted heaths of concrete and hard-baked dirt” running through exurban Gwinnett County northeast of Atlanta. There, Wolfe spied “the Pung Mie Chinese Restaurant,” whose presence offered a hint of what was to come.

Gwinnett County’s population would soar from 588,000 in 2000 to 808,167 a decade later. The formerly quaint country towns and lily-white cul-de-sacs gave way to a majority-minority county, as first Hispanics, then Vietnamese, Indians and Koreans arrived in successive waves, bypassing Atlanta to join its fleeing African-American middle class in suburbia. Whites surged back into the city during the same period, nearly displacing its historically black majority.

This reversal spelled the end of American urban growth first described by the University of Chicago sociologist Ernest W. Burgess in 1925 – a downtown surrounded by rings of industry, then the immigrant and working class inner city, and finally wealthy suburbia beyond. Moving up the economic ladder meant moving out. Not anymore. “The exurbs will be ports of entry for newcomers and minorities who will either not be attracted to, or not be able to afford, life in the center of a metropolitan area,” Ehrenhalt writes in The Great Inversion and the Future of the American City. “This is what demographic inversion is about.”

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Smart Urban Stage (a Website sponsored by Smart car) recently asked me to contribute a question for its “Future of the City” series. I asked:

“How can technology make more efficient use of the buildings and resources we already have? The typical office is two-thirds empty during business hours, for instance, while most cities contain thousands of empty roofs, vacant lots, and fallow gardens. Rather than build new subdivisions or sustainable skyscrapers, how can we reuse, reorganize, share, and extend the lifespans of our homes, land, and possessions? What do we need – communities, trust, real-time information? – and can online tools create offline opportunities?”

The British collaborative consumption site Landshare replied:

It’s often the simple ideas that are the most effective. There is a term called ‘collaborative consumption’ which is layman’s terms means ‘sharing through technology’. It’s a movement born of the internet that allows people to recycle, reuse and distribute. Amongst the ideas in this collective include sharing power tools, bikes, parking spots, clothes, taxies and now gardens and urban spaces.

Landshare came about because of several reasons. In UK cities there is a huge demand to grow you own vegetables and become more self-sufficient. However the amount of allotments available in big cities has dramatically reduced over the past 50 years. Waiting lists for allotments has increased to 10 years in some parts of the country. Hugh Fearnley-Whittingstall was filming a series of River Cottage in 2008 when he helped renovate some derelict land and share it with a neighbourhood for them to grow their own veg. Soon after he realised that this kind of project could work nationally and Landshare was born in 2009.

You can read the entire thing here.