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June 30, 2005

Blair on CAP

So The Maximum Tone starts to make the right noises about reforming  or dumping CAP:

Tony Blair and Gordon Brown turned up the moral pressure on European leaders to scrap the £33 billion-a-year Common Agricultural Policy yesterday by saying that over-generous subsidies paid to EU farmers were perpetuating mass poverty in Africa.

As Britain's prepares to take on the EU presidency tomorrow, and with the G8 summit at Gleneagles coming up next week, Mr Brown said developed countries could "no longer ignore" the "hypocrisy" of a regime that distorted world trade and held back Africa's poorest nations.

Unfortunately he’s still got the wrong end of the stick. As has been noted elsewhere (in a comment here by Jarndyce, for example) the export subsidies are in fact a subsidy from the European taxpayer to the non-farming sector of the countries that consume the goods. They are not an unalloyed evil...the total effect on the recipient countries depends upon whether the benefits to that urban population are greater than the disbenefits to the farming sector. As they are largely rural and even peasant farming societies this may well be true but it is an empirical question, not a moral one.

There is a moral point to be made about CAP which is thai tt is bad for us. That 50 squillion (plus the further 100 odd squillion extracted in the form of higher prices) is the gang rape of the taxpayers by a small interest group, that 2-3% of the population of Europe that are farmers. We should simply stop it in the name of the 97 % that are not.

There is a reason why such logic is not used by a social democratic politician. If one set of subsidies are viewed in such terms, discussed as bieng simply morally wrong, then what happens to all of the other such subsidies? Those to other favoured industries, occupations, companies and individuals?

That there should be no such subsidies at all is obvious, but if we abolish them then what will politicians do if they don’t have sweeties to give out to those who support them? If by bribing being nice to politicians we get nothing back, why would anyone be nice to them?

Quite. And that’s the beginning of public choice economics.

June 30, 2005 in European Union | Permalink


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Before anyone jumps in and accuses me of going mad (not least for agreeing with Tim...), my point was that looking at the CAP in just trade theory terms is too simple. Trade theory would suggest that the CAP subsidizes urban dwellers in Africa with cheap food. But it ignores capacity: without local markets, agricultural trade and rural capital accumulation is stymied. Once you take into account path-dependency effects, I don't doubt that CAP is eeevil from an African perspective, too.

BTW, it's on precisely these terms that I'd justify some infant industry import protection for developing economies. You still haven't answered that point, Tim.

Posted by: Jarndyce | Jun 30, 2005 12:19:51 PM

I would already be happy if only the farm subsidies would be abolished, because they are the worst form of robbery we have at the moment. A kind of Dooh Nibor. (Tip: read it in reverse.) As we could not expect anything from conservatives in this regard, i have no problem relying on a social-democrat. And if using moral arguments - provided they were honestly held - could do the trick, why not?

Posted by: ivan | Jun 30, 2005 3:10:17 PM

Farm subsidies subsidise food production. They help stop famine. The free market was tried in the British empire was a disater with famine after famine. Africa should sibsidise it's own food industry.

Posted by: DIRTY EUROPEAN SOCIALIST | Nov 15, 2007 12:22:51 PM