the great crusade: fat cows and the dilettante economy

Here's that post with a few kind words for the Common Agricultural Policy I warned you about:

Did you know that every cow in Europe eats cream pies from a golden platter, while African children chew their own eyelids to survive? Or something to that effect. That at least is the connection made between the Common Agricultural Policy and African Poverty.

Now the CAP does help produce the agricultural surpluses that get dumped in Africa. And of course, it’s part of the generally protectionist regime that prevents more African agricultural products coming to Europe, though the big multiples seem to have no problem in sourcing and importing fruit and vegetables from Africa. But it doesn’t force African markets open. Those measures come from elsewhere. And why pick on the cows? Why not pick on the swine? Do you realise that Europe spends fifty squillion Euros per day on every politician while each African child has to make do with toenail clippings?

The implication behind the “pay Africans not cows analogy” is that the CAP diverts money that would otherwise be spent on aid. However, I’ve seen no actual proposal to that effect. Linking the CAP to African poverty has more to do with gaining the moral high ground in the EU’s endless rounds of backbiting than it does with anything going on in Africa. It’s currently the most fashionable pretext for France bashing. And it diverts attention away to the kind of trade rules that allow for the exportation of butter mountains, wine lakes and so on.

Now I’ve no idea of the exact extent and nature of what the CAP subsidises. One of its major faults in the eyes of the commentariat seems to be that it falls on the wrong side of the divide between good and bad subsidies. Good subsidies are hi-tech and knowledge-based. They come with suffixes that follow hyphens. They tend to involve giving money and tax breaks to enterprises and areas of knowledge quite capable of finding private capital on the grounds that these prepare us for the rigours of globalisation. They often involve subsidies for already comparatively wealthy people.

Bad subsidies tend to involve giving money to poorer people. They involve unfashionable sectors like manufacturing, or – yuck – agriculture. Like we’re a bunch of peasants or something instead of the izzy-wizzy-let’s-get-busy-internetty media nodes that make little Tommy Friedman come in his pants. They tend, so it is supposed, to shield people from the rigours of globalization.

Now as a completely untrained non-economist, it seems to me that the idea that developing knowledge-based industries as a means of generating well paid jobs in an era of globalization is complete and utter bollocks. Taken together, India and China have the largest aggregation of smart people in the world. They’re not going to be satisfied with screwing manufactured things together for the rest of us while we do their thinking for them. And globalization works by means of labour arbitrage at all levels. Their smart, knowledgeable people are competing on cost with our smart, knowledgeable people, and head to head they’re always going to win.

Now it seems to me that what you have to look for here is what jobs are non-tradeable, and to means of making non-tradeable jobs attract higher wages than driving vans and stacking shelves. And the key to that is at least partly in satisfying cultural peculiarities, minority pastimes and niche tastes.

That’s why the CAP does make a certain amount of sense, or could do if it was adapted to supporting the kind of agriculture designed to satisfy these peculiarities, pastimes and tastes. Does it uphold a system whereby France produces 250 varieties of cheese, or whatever the amount that De Gaulle said? Well, why not? And why not make it the full 500? And chuck in a load of wine, foie gras, cassoulet and the rest of it. This stuff constitutes a comparative advantage, assuming you can develop the market for it. It certainly makes more sense than herding a great mass of indifferent eighteen year olds through mediocre courses in mediocre colleges.

All this has wider implications. Instead of encouraging people to acquire skills liable to global competition, why not get them to acquire tastes that can only be satisfied locally and the skills to satisfy them? And why not make this a matter of general economic policy. We might ask, for instance, how the levelling of taste promoted by mass market major retailers actually inhibits our ability to respond to globalisation through damaging the comparative advantage gained from diversity of tastes. Like I said our tastes are pretty much the only thing not subject to global competition.

While we’re at it, scrap the Arts Council, throw the money into schools and produce a generation of school leavers prepared to pay their own money to watch Shakespeare or sing along to the Opera. Teach the little buggers to turn a decent sentence and cook a decent meal. It's been said that we're "entertaining oursleves to death". I say make it an objective of education to turn out pupils capable of entertaining their peers and the rest of us well enough to get paid for it. There’s a famous bit in Thucydides where the Syracusans agree to release any Athenian prisoner who can recite some really good Greek poetry. Let’s make something like that a condition of university entrance, for any course. Forward to the dilettante economy!

Comments

[Robin Grant]

Jamie - NOOOOOOOO!

The implication behind the “pay Africans not cows analogy” is that the CAP diverts money that would otherwise be spent on aid. However, I’ve seen no actual proposal to that effect. Linking the CAP to African poverty has more to do with gaining the moral high ground in the EU’s endless rounds of backbiting than it does with anything going on in Africa

You are missing the point completely. Here's a good summarry of the sensible argument against agricultural subsidies.

[john b]

Another relevant point is that overwhelmingly, it's rich agrobusinessmen (not struggling hill farmers) who benefit from CAP subsidies.

[jamie]

Hang on. I wasn't saying that the CAP as currently constituted shouldn't be changed, especially when it comes to subsidies that promote dumping and prevent the access of cheaper agricultural goods from Africa and other parts of the developing world. But the idea that all agricultural subsidies in Europe automatically damage Afirca, as the Guardian article Robin linked to states, just doesn't hold up. It's cotton that the Malians want to sell us, not runny cheese. The point I was trying to make is that there's comparative advantages worth exploring within agriculture, not just between agriculture and other forms of production.

[Robin]

More here - Farm subsidies that starve the world (I'm not avoiding the argument - I'm just busy!).

[roger]

I think there's a strong case for changing a system which:
(1) Applies tarifs on the agricultural produce from poor third-world farmers coming into Europe; and
(2) Dumps produce on global markets outside Europe at below cost thereby destroying third-world agriculture.

In fact all the European countries agreed to move away from that system, and have implemented measures so that farmers now aren't subsidised based on volumes of produce but on being custodians of the land. From 2007 the actual subsidies to the pre-2004 accession countries will be cut. This was agreed as a first step towards changing a system which plays a large role in creating global inequity.

Now suddenly, when challenged on her budget rebate, Britain says, fair enough but CAP must be completely reformed first.

I don't know about anyone else but I think I know the sound of shifting goalposts. If France, Germany and whoever were to agree to this it would lead to a wholescale collapse of the European farming industry. This would lead to economic and political fall-out across the EU (including the UK) and could not be in anyone's interests. Methinks Blair cooked up a proposal which just had to be refused. And it seems to have worked: instead of debating whether Britain should still have a rebate and what that rebate should be we are left talking about how Blair stood up to that nasty frog Jack She-rack, and that horrible hun Gerr-hard Shrewder.

[Robin Grant]

and more here - Scrapping the Common Agriculture Policy

[dsquared]

Jamie is righter than he thinks about this. Robin's first linked article gives the game away; the two main countries which suffer as a result of the CAP at present are the sugar producers of Brazil and Australia, and Brazil is not a third world country (nor is Australia according to the CIA handbook but that might be a mistake).

"Dumping" is a complete red herring in this context. Call me Eddie the Economist, but it cannot be bad for someone to sell them cheap food. You don't "destroy agriculture" by selling cheap food, because land doesn't work that way. Comparative advantage cuts both ways; if the EU can sell you grain cheaper than you can grow it yourself, then the rational thing to do is to grow mangetout. Which is why this is what they do in places like Kenya, Zambia and Zimbabwe.

It is at least possible that "if the CAP were removed, African food exports would double" (though I have never seen Oxfam back up this particular order-of-magnitude claim with any remotely convincing analysis), but the vast majority of this increase would be Malawian cane sugar production. Malawi is not a particularly poor African country and one that really should not be concentrating even more resources into its politically powerful sugar industry (particularly not when it would be competing head to head with Brazil and Australia, and in a market which had just lost a huge government subsidy through the CAP).

In most European agricultural markets where African primary producers compete head-to-head (remember that some of the biggest African agricultural exports are things like coffee and cocoa which are not grown in the EU), African producers are able to supply products free of tariff, into the price-supported market. This is a huge benefit to the very poorest countries and the people talking about "Scrap the CAP" very rarely discuss what they might propose to do to replace it. About ten years ago this was a very sensible campaign but a) all of the big improvements have already been made and b) the project has been largely be co-opted by a lot of big commodity producer interests. The current state of this campaign is that it is a UK attempt to reduce the size of the EU budget, supported by some very ropey economic analysis indeed and greenwashed by a bunch of NGOs that should know better.

[dsquared]

Erratum:

the vast majority of this increase would be Malawian cane sugar production

Of course I exaggerate. But it is true that most of the increase would be in soft-commodity exports with little added value, and that it would not be distributed in a way that would be at all likely to compensate the very poor states which currently benefit from the preferential access regime.

[Jarndyce]

_it cannot be bad for someone to sell them cheap food_

It can if the country you're selling to has neither the capacity nor flexibility to accommodate unemployed farm sector workers into other areas of a (non-existent) economy. Which is surely the point - not that removing the CAP would allow developing countries to concentrate on food production for the next 50 years, but that increasing exports now would allow them to take the first, easy step on a realistic course of development.

Overall, the removal of the CAP 'price subsidy' (in effect from EU taxpayers to urban dwellers in LDCs) is probably a price worth paying.

[dsquared]

It can if the country you're selling to has neither the capacity nor flexibility to accommodate unemployed farm sector workers into other areas of a (non-existent) economy

But which African economy (indeed, which economy anywhere) is in this position? Zambia certainly isn't; it's a big copper producer and copper prices are currently through the roof. Most other African nations also have industrial sectors. In any case, why would the agricultural workers be unemployed? The EU does not dump many kinds of food these days; it doesn't dump high-margin vegetables, or flowers or tobacco, or coffee or cocoa, or anything much except grain and butter (and not very much butter these days).