How The Rice Market Blew Up Due To Fear And Hoarding

Planet Money looks at the global screwup in the rice market in 2007 and 2008:

Nothing is more basic and simple than food. Yet it comes to us courtesy of a long, complicated supply chain that spans the globe.
That chain delivers food cheaply — but it can break. Four years ago, it blew up in most spectacular fashion, affecting hundreds of millions of people who rely on rice for sustenance. That crash — the great rice crisis of 2008 — was a true disaster for some of the poorest people in Asia and West Africa.
And the most frightening thing about it is that no one can guarantee that it won't happen again — because the decisions that created it were all, somehow, perfectly reasonable.
  This crisis started with a simple cost-saving decision in India.
The Indian government decided to buy more rice for its food distribution programs, instead of wheat. (Wheat was really expensive at the time.)
To make sure there was plenty of cheap rice on hand, Indian officials made it illegal for most Indian rice to leave the country. In October 2007, they blocked exports of all non-Basmati rice.

The whole article is fascinating, but it seems surprising that people can be surprised that rational, personally beneficial decisions can ruin markets.  I'm pretty sure Keynes and numerous other folks have trod over this territory for years.  What is the paradox of thrift, but almost the exact same thing.  Sometimes, some player in the markets must do what seems irrational at the time, to break the cycle.  In the rice market, it was the U.S. allowing the Japanese to sell the rice the W.T.O. makes them buy off of the U.S. 

I'm sure the conservatives will blame all this on government interference, but if there is one thing we know, it's that business does just fine screwing up the markets.  Also, this is my last public radio agriculture post of the day, I swear.