Thursday 29 October 2009

... and then they came for the farmers.

From The FT:

The plan [to subsidise French farmers], which the French president described as “unprecedented” in scale, consisted of €1bn ($1.5bn, £905m) in subsidised loans and €650m in cuts to land and energy taxes and social charges...

... the farm plan is the latest manifestation of the president’s transformation – through the financial crisis – from free-market reformer into full-throated state interventionist. He has already proposed government aid packages for car manufacturers, small companies, the newspaper industry, young people and banks...


Why stop there?

Why not subsidies, soft loans and tax breaks for small and medium-sized businesses; restaurants; tourism; property developers; 'high-tech' companies; start-ups; and for businesses that 'create' new jobs?

Why not increase salaries for public sector workers and increase State pensions? Why not add tax credits to dividend income and cut tax rates on savings accounts to 'encourage saving'? What about goodies for the film and TV industries, protectionist measures for 'national champions' like, er, Danone? how about grants to first time home-buyers to help them onto the ladder?

You could keep going for ever, by taxing everybody a bit more and subsidising a bit more and then taxing a bit more ad infinitum. Every time a privately-owned business collapses under the weight of all the extra taxes, you can say "See! Free markets and private enterprise don't work!" and then nationalise the f***ers.

It's all well and good blaming governments for their tendency to increase in size, but this is what people want!

13 comments:

sobers said...

As a farmer I find it hard to defend agricultural subsides (other than on a pure personal benefit basis). I therefore ask myself why they still exist, in so many countries, especially urbanised ones where the farming vote is very small.

The only thing I can see that keeps politicians (and civil servants) from axing them is that in such urbanised societies we are very far removed from our food sources. So any instability in supply (which would be much more likely under a toally free market production system) would have dire consequences for social stability.

We saw food riots in poorer nations last year when prices rose, and people who spend 50%+ of their incomes on food could not buy it. Imagine the scenes in the UK if supermarkets we running low on food. Panic buying (which of course only makes the problem worse), queues, fights, even looting could very easily occur. People will soon take to the streets if their stomachs are empty.

I think our leaders realise how close to social upheaval we would be in such conditions, and are loath to be the ones to get caught having to deal with it, or be held responsible for causing it.

So every new govt probably looks at abolishing subsidies, and gives up because the consequences of getting it wrong are so dire.

AntiCitizenOne said...

Well then it would be better to subsidise the stockpiling of food rather than the land it's grown on.

Steven_L said...

"This is what people want"

And we get the leaders we deserve.

James Higham said...

Well, they do in France. they wish to live on clover without having to do anything for it.

dearieme said...

About Danone: why does their cherry yoghurt taste better in France than here?

Mark Wadsworth said...

S, thanks for input, but I think AC1 nails it. In short term, stockpiling must be way to go, in medium term we could easily be self-sufficient in food if we accepted a more boring diet, ate less meat and had more than 1% of people working on the land.

SL, indeed.

JH, but only so many people can live off subsidies and EU largesse. And that happens to be France. Everybody else has to pay.

D, because they are only 'national' champions, but middle-tier on the international stage, perhaps?

bayard said...

"JH, but only so many people can live off subsidies and EU largesse. And that happens to be France. Everybody else has to pay."

Which is presumably why the French invented the damn thing in the first place.

Why does nobody ever look at New Zealand where they abolished subsidies without any social unrest? OTOH the EU can't do it because of the French and as a member state we appear to have neither the balls nor the will to do it unilaterally.

Mark Wadsworth said...

B, I believe that UKIP's agriculture expert, real life farmer and giant among men, Stuart Agnew MEP has favourably mentioned NZ once or twice.

silicone breast implants said...

I thinks that people's wishes coming true. A number of people are in favor of this.

sobers said...

@bayard: NZ has only a smallish population and an economy that is still based on agriculture to a large extent. It produces predominantly livestock and livestock biproducts - sheep, cattle, butter, cheese. These sort of products are much more fixed in ability to be produced than grains and vegetables, as the latter is very weather/pest dependent, and animal production much less so.

So NZ has a large surplus of food for export, which is in (fairly) fixed supply. So it is unlikely that they could ever fail to feed their population. Also they benefit from more stable grain prices caused by subsidies elsewhere, so to some extent they get a free ride.

If all agricultural subsidies were abolished, then initially everything would go on as normal. The only difference being that there would be inherently more risk of instability of supply in the system. Eventually the conditions would arise that led to global production falling, and prices spiking 2 or 3 times current levels.

You could stockpile food, but only longterm stuff, like flour, sugar powdered milk, canned goods etc. You can't store fresh meat & milk, veg, eggs, etc for very long, not without very expensive storage facilities, and you'd have to get rid of it all at various intervals if it wasn't used.

I still don't think any govt would want to be the ones responsible for the general public having to queue like 1970s Russians to get their ration of State provided food. Not least because nowadays a large proportion of the population wouldn't know what to do with basic food products, as they normally eat only fast food prepared for them by someone else.

Mark Wadsworth said...

Sobers, the way I see it, UK agriculture is 300,000 people working on 50 million acres, that's an average of 160 acres per person, so it must be highly automated/mechanised/efficient and AFAIAA, the UK is about 70% self-sufficient in food anyway.

(That article also says that we import a lot from the Netherlands - a country more densely populated than ours!).

But when I go to my sister's allotment, I see that the amount of food produced per square yard is ten times what you grow on a farm, only it is incredibly labour intensive, so not commercially viable at current wages/market prices for food.

Ergo, if the shit really hit the fan and food prices went up, we could easily be self-sufficient in food - the break-even calculation shifts and we'd have half a million or even a million people working in agriculture (two per cent of working afge population) who could increase the amount produced by 50% or 100%.

As you say, livestock is not the best use of land but it is not so prone to good and bad harvests; we still have the North Sea to fish in (if we had the courage to fight off the Europeans); potatoes and flour keep for several months; we can become accustomed to a more mundane diet (see if I care, I love egg and chips) etc.

I worry about lots of things, but not food security.

sobers said...

Absolutely, the UK could be 100% food sufficient, given a year or so to gear up production, give everyone an allotment etc. But its not immediate, which the shortages would be. There is very little fat in the system, computerised ordering and just in time deliveries etc mean that if something went wrong somewhere unexpectedly, the shelves would quickly be bare in Tesco, and things would escalate rapidly. Like the petrol blockade of a few years ago.

Put it this way, I worry enough about these sort of things even now to have a store of long life foods in my cupboard that would feed me for 3 months, in a very basic way. I reckon thats long enough in a crisis for the govt to organise something to replenish supplies. I don't want to be one of the masses fighting over cans of beans in Tesco carpark, if the worst happened.

Mark Wadsworth said...

Sobers, ta for further info.

"I worry enough about these sort of things even now to have a store of long life foods in my cupboard that would feed me for 3 months, in a very basic way."

In a roundabout sort of way, you seem to agree with AC1's comment above. Maybe we should all do this?