October 03, 2005

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Agricultural Subsidies are Lame

I read a bleeding-heart article, penned by Peter Mandelson in the Guardian newspaper today, about how European agricultural subsidies have helped developing countries. What rubbish. Mandelson's argument is that there are countries in the West Indies that depend on preferential treatment from Europe to sell their bananas.

But that totally misses the point that so many aspects of the liberalized world economy have seen revolutions in pricing benefiting both producers and consumers everywhere - but the Third World outside of China, Southeast Asia and India has been mostly missing out. Why? Because the simple economic theory of comparative advantage has been grossly perverted to make it cheaper for American farmers to make many products than farmers in Africa or South America. Let us hope that the Hong Kong meeting of the Doha round will finally bring this miscarriage of justice to an end. This one move, more than any other, may be the proverbial fishing rod for the developing world.

The European countries have always crowed about the high percentage of their GDP they donate to the developing world. But if they cancelled all that aid and just got rid of their agricultural subsidies instead, those countries (not to mention the European consumers) would be a lot better off.

posted by HK Dave on 10.03.05 at 10:06 AM in the


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Daily links October 2, 2005
Excerpt: Simon World says "Agricultural Subsidies are Lame." I agree most strongly.
Weblog: Beijing Lives
Tracked: October 3, 2005 11:17 AM


Effectively the EU robs Peter to pay Paul - and at the expense of the European consumer. Their preferential subsidies and market access for ex-colonies is just guilt money for past misdeeds under colonalisation. Not only is it unfair, it has no logical justification. As a counter example, South Korea (an ex-Japanese colony) has prospered immensely without preferential access to Japan's markets.

posted by: Simon on 10.03.05 at 10:51 AM [permalink]

Of course the dirty little secret is that countries like China (always happy to criticise the West for shafting the developed world) have begun directly subsidising their farmers as well to the tune of billions of yuan. The refrain inevitably is similar "we need to protect our farmers and our food security, we can't rely on the global market for food, but must be self sufficient".

posted by: dylan on 10.03.05 at 11:07 AM [permalink]


I could not agree more. Agricultural subsidies (by Europe, Us, and all others) hurt all but a very small agricultural minority. And, most sadly, much of this damage falls upon the heads of third world people throughout Asia and the world.

posted by: Steve on 10.03.05 at 11:12 AM [permalink]

Sorry Simon, Dylan and Steve, but I did a blogging no-no - I added to the original post. I did so because I was late catching the bus this morning and had to leave out a few of my thoughts in the rush.

Having said that, I totally agree with Simon that liberal, bleeding-heart sentiments make Europe keep up with sanctimonious donations while screwing both their own consumers and developing countries. Justifying agricultural subsidies by saying that it helps a few developing countries that wouldn't be able to compete against other developing countries on a level playing field is just silly.

Dylan, that's really interesting about China upping their own agricultural subsidies. It seems to be in the fine tradition of other East Asian countries. Of course, it will be many years, I think, before China is able to brainwash its own people into believing, as Koreans and Japanese or Taiwan's people do, that their fruit, vegetables and water are the best...

posted by: HK Dave on 10.03.05 at 12:42 PM [permalink]

Dave -

That's not a blogging no-no, that's a time honoured tradition. Typically I mark any updates with a bolded "Update" and a time/date stamp. For example:

Update (16:05)

That way people know what's been changed. You can even edit the original post (I do if I find typos) without the update, but if you change the content of the original post, I'd make an update to let people know that, so they can re-read it.

It's real-time revisionism!

posted by: Simon on 10.03.05 at 05:57 PM [permalink]

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