Jul 2013

Free Trade, Subsidies and the CAP

There’s a post over at the Liberal Conspiracy blog that’s getting a bit of attention today. It’s called Why are UKIP silent supporters of the biggest EU rip-off of all? and it is primarily an attack on the hypocrisy of the UK Independence Party (UKIP).

UKIP, it seems, are quite unequivocal about their support for the European Common Agricultural Policy (CAP) and wish it to continue making large payments to farmers. And yes, given the stated aims (and general attitude) of UKIP, this does represent an interesting hypocrisy – one that appears to demonstrate UKIP’s allegiance to class above principles. Whether you agree with the principle of the CAP or not is irrelevant; it clearly represents a centralisation of power in Europe. Dishing out almost 50 billion a year makes it powerful. It’s enough to torpedo the economy of a small nation after all. The CAP should be against UKIP principles. They should be lobbying hard for its abolition (even if they believe food production should be subsidised, they should surely want it done by the UK government).
That they are not lobbying for the abolition of the CAP may well be because the CAP currently benefits, to a disproportionate degree, those who least need it… the wealthy. Where small farmers are being supported by the CAP – and yes it does happen – the argument is more fuzzy, but when the 8th richest man in Britain is being subsidised by the citizens of Europe to the tune of almost a million euro per year, clearly something is wrong with the system. The benefits – to the citizens of Europe – of giving a million euro of their money to the Duke of Westminster is surely vastly outweighed by the benefits of giving 100k each to ten struggling small-hold farmers. If you’re going to spend limited funds on subsidising food production, then do it properly. Otherwise just be honest and call it by its real name… theft.

The ultra-wealthy have gamed the system, and they have bought the support of – not the individual political parties, though they come with it – but the entire modern mainstream political system. Which is why a political party that all but defines itself by its opposition to European power can support those aspects of European power that unambiguously redistribute wealth from the bottom and middle to the top.

But what about The Principle of The Thing!?

Yes indeed. The principle of European food production subsidies… what about it? I have heard right wing ideologues argue that the CAP represents a distortion of the free market and should be abolished entirely. I’m not going to address that argument right now. The people who make it are fools. The citizens of Europe can distort the markets any way they damn well please. The citizenry is not subject to the market. It is subject to them.

On the other hand, there is the “global development” argument against the CAP. The Overseas Development Institute (anyone know how reliable these people are? I have a basic distrust of organisations that call themselves a “leading think-tank”, and an initial flick through their website revealed an awful lot of fluffy management-speak and PR waffle, but very little of substance) published a short paper in which they argue that the CAP could be damaging agriculture in “developing” countries. And while they admit that the damage can’t be quantified without further research, the fact that the CAP budget far exceeds the annual total value of African food exports does give a person pause for thought. And when you couple that with the fact that the African continent is a net food importer, you can’t help but think that the CAP might be giving European farmers an advantage that their African counterparts simply don’t have access to.

And while the sophisticated right-wing ideologues might claim that’s actually a restatement of their argument, they’d be wrong about that. One argument states that “distorting markets is primarily wrong, because free markets are in principle the best way to run things”. The other argument states that “distorting markets is not necessarily wrong, but in this specific case it may be because it might be causing some people to go hungry”.

The latter is a valid argument. The former is a dangerous delusion.

The trouble is though, I think the latter argument is a good deal more complex than it appears to be… as is so often the case. And this additional complexity gets lost when people on the liberal left shout about starving children in Africa and people on the neoliberal right insist that everything would be so much better if we’d only allow the market to be free*.

Of course, first there’s the issue of just how much of the CAP actually goes to the already wealthy. I genuinely doubt that the Duke of Westminster’s land is any more productive than it would be if he wasn’t receiving that million euro prize from Europe’s citizens for owning so much land. And realistically, I doubt he’d need to charge any more for his produce if he wasn’t receiving that money. If anything is distorting the market in the case of the Duke of Westminster, it’s his own vast fortune. A free-market argument for high wealth taxation? Not that they’d ever admit it.

So there’s that… if the CAP is truly an instrument of wealth redistribution within Europe (from poor to rich) then it’s unlikely to be affecting global trade all that much. Which, weirdly enough, suggests that those most concerned with overseas development may well want to abolish the CAP, but if that is unachievable then at the very least prevent any reform from which the European citizenry could derive benefit.

Here’s the thing though… I feel strongly that the CAP should be reformed precisely with that goal in mind. And yes, even if that distorts global markets. This probably puts me on the opposite side of the fence to almost everyone discussing the CAP right now, bar small scale farmers (of which I’m not one, by the way), but fact is, I’m not a supporter of the principle of global free trade. I believe very strongly that the essentials for life should be produced as locally as possible. Yes, the scale of modern population centres makes that vastly more difficult than it’s ever been. In some cases, impossible – the island of Britain would probably have some difficulty feeding itself if all food imports were to stop tomorrow for example. But that doesn’t mean we should abandon the principle completely.

Food shortages and poverty in large areas of Africa and other “developing” countries need to be addressed as a matter of urgency. But it should not be done at the expense of European self-sufficiency in food. Let’s everyone get self-sufficient and then we can trade our surpluses in a sustainable manner; I have no problem with that. But if subsidies help ensure food production thrives in Europe, then that seems like a damn fine use for our collective wealth. Of course, we need to ensure the subsidies are targeted at those smaller farmers to whom it would make the biggest difference. Giving our money to multi-millionaires is just bloody stupid. And I hope it goes without saying that we should also be helping our global neighbours achieve thriving and sustainable food production for themselves. It’s just so important on so many levels.

Helping others achieve sustainable self-sufficiency is a moral obligation. Ensuring we achieve it ourselves is just basic good sense.

* I can actually recall using the “but there’s no market for starving children” argument back when I briefly dallied with libertarian capitalism in my teens. As a political philosophy for a grown adult, it’s a distressing state of affairs… but it’s a useful enough way-station on the path to a fully rounded intellect I guess.

Posted in: Opinion