EurActiv - Letters to the Editor

Sir,

Regarding ‘EU regional policy budget will decline, says France‘:

“Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes and a tolerable administration of justice.”

Adam Smith, 1755

As regards the relative merit of structural funds and the development of Eastern Europe, I would argue strongly in favour of the sentinment expressed in the quote above. We are (or rather, Brussels is) too quick to claim a victory and say the development of the former Soviet bloc resulted from the money wisely invested by the benevolent West.

This confuses correlation with causation – an example of the post-hoc fallacy. The fact that an event (the growth of the East) happened after a specific input (investment by the West) does not neccessarily mean that it was in fact caused by that input.

We are far too quick to patronise the East and say it was ‘our’ money that ‘did it’. Rather, it was surely Eastern European dynamism, entrepreneurial spirit, hard work and access to the single market (read: free trade) which brought the region towards convergence with the West.

Put simply, once the conditions above were filled (peace, or rather, the removal of the threat of war; liberalised taxes, in the style of the Washington consensus; and a movement towards the consistent application of the rule of law), the region grew quickly.

The countries which have fulfilled these conditions to the greatest extent (Czech Republic, Slovenia) have developed furthest and fastest. Other examples abound. Deng Xiaoping reformed China in 1978; Chinese growth was exponential from 1980 onwards. India was reformed in 1991; a similar result ensued from 1992 to the present day.

On the CAP:

Slightly under 47% of the EU budget still goes to agriculture.

In 2010, this is scandalous. It seems to me extremely hypocrytical that we laud ourselves as ‘the largest provider of development aid in the world’ (see EuropeAid, DEV, etc.) when we refuse to do the one thing which would truly help the developing world: abolish our agricultural subsidies and open our markets to developing world agricultural exports.

Europe is passing from the secondary (manufacturing) to the tertiary (services) sectors of the economy; the developing world (and notably Africa) is still stick in the primary sector (the export of natural resources, and particularly agricultural products).

As we are so often told, Europe is the largest market in the world. To open this market of half a billion rich consumers to the millions of poor farmers around the world would do more to reduce global poverty than a thousand ill-conceived strategies, initiatives or ‘development days’ (per diems and hotel expenses, anybody?).

But we will not do this of course, because ultimately we could not care less about third world poverty and development. We like to say we do, to pretend we have a niche between China and America. Our actions prove otherwise. This is Realpolitik, if you are feeling generous; Orwellian double-speak, if you are honest.

Incidentally, a final note: since the CAP accounts for one half of the EU budget, and France gets one fifth of the CAP, then one tenth of the hundreds of billions of euro that the EU spends annually goes to French farmers. There are slightly over half a million farmers in France. They are therefore 0.1% of the European population, or one European in a thousand. And yet, by some political miracle, they get 10% of all EU money. They share money 100 times greater than the size of their constituency. In a democracy, is it possible not to think this is wrong?

M Naughton

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Comments

  1. Wow, where do I begin?

    You seem to take the entire period of post-Soviet Eastern European economic history and simplify it to a few lines. You argue that the idea of EU structural funds helping aiding eastern European economic growth is a post-hoc fallacy – yet you offer no evidence to the contrary. You then give a list of unprovable eastern European characteristics (hard work, entrepreneurial spirit) that, throughout time, have been given to almost every people on the planet. Yet, again, you have no evidence of causation, exactly what you derided the original argument for! In fact, the only tangible reason for economic growth given is the existence of the EU free market – meaning it was ‘The EU that did it’ (albeit not through structural funds).

    You then make comparisons with India and China to show that it is using the tenants of Adam Smith that offer economic growth – yet you again offer no causative evidence! And to suggest that the Chinese justice system would be acceptable to Smith is highly debatable.

    You then turn your generalising eye towards the CAP. Again, I do not disagree with your conclusion, but you offer nothing new and certainly no evidence. You deride it using the development argument and the example of the French farmer. Both of these have been made time after time after time. You are opposed to the CAP. I am opposed to the CAP. Most people are opposed to the CAP. This naturally presents two questions. Why does it still exist and how can we get rid of it? You do not even touch upon either.

    All of this leaves me wondering, what on earth was the point of this letter?

  2. Critizing CAP is easy. The best defence comes from the brilliant historian Eric Hobsbawm:

    “The French, and to a lesser extent, the Germans, have always fought to maintain huge agricultural subsidies. Not only because farmers hold an important voice in politics, but also because they genuinely believe that the decline of independent farming (how inefficient and incompetitive it may be), the loss of landscapes, would at the same time lead to a loss of tradition and national character. Whatever economic arguments there may be, there are things in life that should be protected.

    Would a country seriously consider to tear down the Cathedral of Chartres, or the Taj Mahal, and replace it by a luxury hotel, or a shopping and convention center, if this -through tourist traffic – would offer a higher net contribution to the GDP?

    Posing the question is answering it.”

  3. Spot on Dirk. The case for the wide public benefits provided by small farmers and which go largely unrewarded, has been made. Farming is hard work and often inefficient. How do we define efficient? Is it in terms of food production, management of the countryside, tourism, contributing to the local rural economies socially and economically, or all and more? I suspect that detractors of the CAP are focussing on production in its narrowest sense. Agriculture in EU terms has broadened over time into rural development.

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