I can just picture the Egyptian Fox News ticker: “Pharoah appoints foreign-born Viceroy. Phony famine fears will drive taxes through the roof, killing off the years of plenty.”
The modern Republican party would never have agreed to Joseph’s plan. Even if they believed the evidence of Pharoah’s dream, a free-market approach would have been preferred. Individuals who believed Pharoah’s prediction would have saved during the years of plenty, and profitted during the years of famine. Why should government be involved?
It is not clear what caused the famine in Egypt. While a famine in Canaan could have been caused by drought, Egypt had a reliable water source in the Nile. Was there a plague, causing field to lie fallow due to lack of labourers? Why is it not mentioned? Locusts? Some plant disease?
Let’s imagine that the years of plenty brought on a bubble in asset prices. People mocked Pharoah’s dreams, and imagined that things could only continue to go up. Home prices get out of proportion to the populace’s ability to pay. Suddenly, they hit a Minsky Moment, and everyone realizes they are over their heads in debt. Credit freezes up, and farmers can’t get seed money. Unemployment soars, the fields lie fallow, and soon people are hungry. (Sound familiar?)
Whether the famine was supply-side or demand-side in origin, Joseph’s example teaches us the important role government has in smoothing out the ravages of the business cycle. Saving a surplus during the years of plenty and spending during the lean years is an ancient formula, backed by modern economics since the Great Depression. Unfortunately, it has been forgotten by too many modern-day policy makers.