Friday, 27 November 2009

Wine riots and the economy

Margaret Thatcher isn't popular among those of the liberal/left persuasion. In fact, she's pretty unpopular in popular culture generally. Her policies towards the miners in particular have been attacked as heartless and engendering the destruction of a way of life. As a child of the 80s I am ambivalent. I understand that the law of a free economy should be one that does not support unprofitable businesses. Supply should equal demand. Etcetera.

So why do I feel a twinge of sympathy for the Languedoc winegrowers on protest in the south of France? I have little time for their vandalism, but only because it's so pathetic. Others get their nickers in a twist about this. They smashed windows in a supermarket and a bank. Well, anyone who loves food has little sympathy for supermarkets and banks...well, banking isn't the world's favourite profession right now.

A lot of people feel they are wrong to protest about a guaranteed income, much as the miners might have been wrong to strike back in the 80s. On Twitter Jancis Robinson said of the protesters: 'They really do think we all owe them a living'. A comment I admit to also sympathising with. After all, why should EU farmers be subsidised for producing food and drink we don't need? It's the law of liberal or free economies that we should not have to prop them up. We shouldn't be interfering with it by supporting this over-production.

Well, this prompts a few questions. Is not asking people to buy locally-sourced food, in season, not interfering? If we took away all subsidies for EU produce, wouldn't we end up destroying hundreds of thousands of livelihoods across the member states? Do you, for one second, believe the USA (the bastion of liberal and free trade) does not do what it can to protect its own farmers against overseas competition?

And surely, a removal of subsidies should mean increased competition, and thus a better product? Or does increased competition mean a cheaper product, not necessarily a better one? I'd argue for the latter.

It's very easy to dismiss, offhand, protesters and picket lines. Especially when it consists of ten farmers standing 'round a brazier, enjoying a day off. But carrying our love of a free trade market to its logical conclusion, you are forced to pushing a lot of people into misery.

In Europe, it seems, much of my taxes go to being squandered by MEPs in Brussels (I'd love, for example, to see their accounts published in much the same way as MPs' expenses were revealed in the UK). I don't mind some of that keeping a few more grape-growers in business.

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Wednesday, 29 July 2009

Spare a thought for the CRAV

Of late, we have been quick to denounce any of form violent action. Although I agree with Orwell that dictatorships (and democracies for that matter) can stand peaceful protest until the cows come home, people can get hurt. Although in most cases nowadays (ref. G8), it’s the police that do the hurting.

So we are quick to condemn the CRAV, or protesting French winemakers, for acting with violence in reaction to what they see as unfair prices. They want better prices for their wines so as not to be driven out of business. Even in Bordeaux, we have little sympathy with the Bordeaux and Bordeaux Superieur producers who complain that barrel prices of €750 are barely enough for them to break even. They say they're not getting enough help.

It’s the law of the market, of the free market, we say, deal with it.

Read this (published today in New Zealand's National Business Review):

Some wine companies are exporting Marlborough sauvignon blanc in bulk to clear large wine stocks, the Ministry of Agriculture and Forestry says.

"Continuing down this path may affect the longterm future of the industry," said MAF economists.

"This risks damaging the value of the premium Marlborough sauvignon blanc brand," said MAF director-general Murray Sherwin.’

Essentially, New Zealand is telling its own producers not to go for lower prices, trying to shore up value against the market trend.

Now, the NZ government can say what it likes – it doesn’t change the overall economic picture – but you have to wonder if the French government would be so active in trying to help the industry. Would it step in to stop supermarkets trying to cut prices? I have to be honest here, and say it wouldn’t do toss.

So why do we accept the NZ government’s attempt to try to keep value in its wines, why do we accept that so much 1st growth wine is dumped into their second wines, why do we accept that most of the world’s diamonds are dumped at sea, and at the same time insist in the face of the CRAV that they must accept the vagaries of the financial market?

(Picture from the Associated Press)

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