One doesn’t have to be a left-wing activist to recognize that these are challenging times for Asia’s poor, many of whom are struggling with increases in the prices of food and energy. The tragedy is that while governments give plenty of lip service to helping the poor, this is largely a crisis of their making, and the attempts to ameliorate have only made it worse, imperiling social stability.

True, there are many contributory factors, including the rise of Asia’s own middle-class consumers, who are eating more meat and purchasing their first cars. But it is difficult to see how such dramatic changes in world markets could have been caused by a steady increase in demand, especially when there has not been a supply shock.

Rather we must look outside of the usual sources of supply and demand to see the root causes. One culprit is the U.S. Federal Reserve, whose loose monetary policy has squandered the dollar’s credibility as a store of value. As a result, speculators on commodities are betting on the currency’s continuing decline.

If we are about to see a repeat of the 1970s inflation, something which could still be avoided, then there is money to be made by being ahead of the curve. And since Asian countries have largely tied their currencies to the dollar, they are importing the Fed’s inflation and speculation of its acceleration, which hits the poor especially hard and will require painful tightening to bring under control.

In Indonesia, as Tim Bulman, Wolfgang Fengler and Mohamad Ikhsan write, the nation should be a net beneficiary of high energy prices, but an inflexible system of subsidies has squandered this resource. The rich derive most of the benefit from subsidies, while social spending is squeezed.

Huang Jikun, Qiu Huanguan and Scott Rozelle explain that the food market in China and the world has undergone a sea change, as the expectation that food prices would gradually decline, formed by the experience of the last century, is being overturned. Government incentives have created lucrative opportunities to grow feedstocks for the biofuel industry, rather than grain for human or livestock consumption. The reaction of governments to the consequent rising prices has prevented the market from working.

Will higher prices cause a loss of faith in Asia’s governing elites? As Dorothy Solinger, Arthur Brooks and Charles Wolf offer different views on the consequences of China’s dramatically growing inequality. If there’s one issue to watch in 2008, this is it.

H.R.