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Thursday, November 20, 2008
Agricultural Reform in the EU
Farm subsidies are almost criminal in the way that they hurt developing nations. Farming is the one industry that most of these countries have a comparative advantage. By creating price controls and subsidies, developed countries are stripping them of a market. If the "Western World" is to blame for African or South American poverty, this would be the primary reason for that blame.
Europe is the worst. Agriculture plays such a huge role in their history that they cling to it in a nostalgic sort of way. As if farms today are at all like the peasant communities of a long dead era.
This is why I was shocked that the EU is taking steps to liberalize their agriculture industry. They are dropping milk quotas (phasing them out) and they are getting rid of some of the subsidies. They are, however, giving subsidies directly to rural communities. Exactly what that entails I'm not sure, but at least it is a step in the right direction. I am encouraged that reformers are seeing this as a first step and not a final victory.
Hopefully the EU will realize that farm subsidies and protectionism ultimately raise prices. If they don't care about those starving in Africa, then hopefully they care about their own hungry citizenry. It is, after all, the poor that are hurt most by higher prices.
Posted by Hugh MacIntyre on November 20, 2008 in Economic freedom | Permalink
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