This silly Guardian article [via Samizdata] repeats the Oxfam nonsense bandied about during the Cancun talks. The agricultural subsidy attacked this time is sugar.

It is difficult to find anything in the European Union more perverse than its continuing subsidy of sugar. It fails every test miserably. It is economic madness since the EU is shelling out hundreds of millions of taxpayers' money - that could be used to reduce its growing budget deficit - to grow crops at a loss that could be better grown elsewhere. It is immoral because subsidies prevent poor countries from growing sugar that would create hundreds of thousands of jobs. It is also unhealthy because it is encouraging the subsidised output of a product that the World Health Organisation, courageously - in view of the vested interests attacking it - says we should be cutting back on.

The idiocy of the piece derives from the intellectual failures of Oxfam, which is consistently ignorant of both economics and ecology.

The economic idiocy stems in part from the failure to distinguish between a production subsidy and a socio-environmental subsidy. Only a production subsidy which rewards production levels above local consumption and so supports export of surplus production harms the world economy. Subsidies designed to support European rural society by providing an equitable income to farmers and which reward them for land stewardship rather than high production are very different. CAP subsidies are undergoing this evolution as a consequence of Fischler's reforms.

A second aspect of Oxfam's economic idiocy is alluded to in the article.

Sugar producers, with twisted logic, use Brazil's low cost of output as a reason for retaining subsidies on the grounds that it will not be really poor countries benefiting, only the medium poor.

Indeed. Developing countries will not benefit at all since the 'middle class' countries such as Brazil that have the wealth to engage in industrial agriculture for export markets will be the only ones able to capitalize on the market.

Brazil is currently destroying rainforest in an amount equal to the land area of Belgium every year to grow soybeans for export to Europe. The last thing the planet needs is further increase in Brazilian agricultural products for export to Europe. The last thing Brazil needs is further investment in the production of low value commodities. They do not aid development, they support the modern equivalent of the old European slave colony in which land barons grew wealthy at the expense of slave labor. What is worse in some ways is that industrialization of agriculture deprives even the slaves of jobs. They are replaced by machinery leaving them to starve in the favelas surrounding cities, living off the pickings of refuse heaps.

It's past time to out the nutters at Oxfam, The Guardian and their fellow travelers that understand neither economics nor ecology well enough to divine the global consequences of the deranged policies they advocate for parochial political advantage.

It is bizarre that European governments reconciled, albeit reluctantly, to call centres being subcontracted elsewhere will not let go of sugar output which, left to market forces, would long ago have migrated to the third world.

That they fail to see the difference between outsourcing call center jobs - comparatively good jobs that support an educated work force - and production of low value agricultural commodities which destroy jobs as well as ecologies is revealing. They really don't have a clue how anything works and are utterly incapable of formulating or advocating useful policies.

The simplest solution would be to abolish all agriculture subsidies, even though it would, in the short term, hurt a minority of poor countries that might lose out to the likes of Brazil. Once exceptions are granted, then everything is up for grabs, and trade and talks would be dragged down by interminal bargaining. If complete abolition is deemed impracticable in the short term, then at the very least Europe should commit itself at once to the complete abolition of all export subsidies, direct and indirect. Apart from the huge relief it would bring to poor countries, it would also restore Europe's long-lost moral leadership.

More than half of developing countries are net food importers. One in six humans is food insecure. Population will increase by 3 billion in the next 30 years. Food production must double in that time to feed the extra three billion people and lift the existing billion above starvation level. Ecological pressures will be severe. There simply isn't enough land to double production even if the rainforests are destroyed. The idiotic nattering of Oxfam be damned, there are real issues that Europe and other developed areas simply must address. The short term, uninformed, narrow ideological posturing of destructive institutions such as Oxfam and The Guardian must be confronted and denounced.

CAP reforms are needed and other developed economies need subsidy reform as well, but the childish idea of eliminating them and let the devil take the hindmost is not reform, it is abdication. It is social vandalism. Entities such as Oxfam and The Guardian could be serving a useful purpose. They could spread good information about issues in agriculture, economics, ecology and demographics that would help policy makers develop useful policies to address current and near future food pressures. More's the pity that they are so criminally stupid.

» Not Swans, Loons from Crumb Trail
There are a couple of new M&M rants 1,2 dealing with agricultural subsidies.......[read more]
Tracked: April 19, 2004 05:03 PM