Self Preservation

Le Monde of 29 July leads with a dis­cus­sion of a “report(link to Sapir report, PDF 1.6 meg)”: by a group of econ­o­mists chaired by Pro­fes­sor AndrZ Sapir (Uni­ver­si­ty of Brus­sels) that has detailed the nake­ness of the Euro­pean Emper­orto howls of deri­sion and denial from the Euro­pean Com­mis­sion and its entourage (e.g. “this(link to Agence Europe editorial)”: edi­to­r­i­al from Agence Europe—the self-appoint­ed mouth­piece of French agri­cul­tur­al pol­i­cy).
The Sapir report explains that the enor­mous eco­nom­ic resources put at the dis­po­si­tion of the Euro­pean Com­mis­sion are large­ly wast­ed on an agri­cul­tur­al pol­i­cy that is dif­fi­cult to defend on any ratio­nal eco­nom­ic grounds and on huge devel­op­ment sub­si­dies to ‘back­ward’ regions of Europe that have had no vis­i­ble eco­nom­ic effect. bq. With­in the cur­rent bud­getary lim­its, growth-enhanc­ing expen­di­tures on research, high­er edu­ca­tion and infra­struc­ture, as well as on insti­tu­tion-build­ing in the new coun­tries that will join the EU next year, can increase only if spend­ing on tra­di­tion­al poli­cies — chiefly, agri­cul­ture and region­al aid — is cut

AndrZ Sapir in the “Finan­cial Times”:

You might think that the debil­i­tat­ing effects of these boon­dog­gles would be as dif­fi­cult to hide as the impe­r­i­al nudi­ty. In fact, the Com­mis­sion spin machine reg­u­lar­ly fends off dozens of sim­i­lar aca­d­e­m­ic analy­ses. What has prompt­ed their spite on this occa­sion, as the arti­cle in Le Monde explains, is the fact that the report was pub­lished by the office of the Pres­i­dent of the Commission—Romano Prodi—who, like the Com­mis­sion­ers them­selves, is an un-elect­ed offi­cial. “A lit­tle dose of trans­paren­cy and democ­ra­cy”, as the Le Monde calls it, has prod­ded the impe­r­i­al pooh-bahs in the sen­si­tive organs of self-preser­va­tion. Charles Wyplosz, pro­fes­sor of inter­na­tion­al econ­mics at the Gene­va Insti­tute of Inter­na­tion­al Stud­ies and author of the Le Monde arti­cle explains—in Sapir’s defense—that there’s much that is scan­dalous but noth­ing that is new in the report’s cate­l­ogue of waste. bq. “What, basi­cal­ly, does the report say? That 80% of the Com­mis­sion’s bud­get is absorbed by region­al poli­cies and by the com­mon agri­cul­tur­al pol­i­cy (CAP) and that these two pro­grams are nuis­i­ble. What does the report pro­pose? To rede­ploy these funds to boost a Euro­pean econ­o­my that is drag­ging itself along with great dif­fi­cul­ty at a rate of growth too small to sig­nif­i­cant­ly reduce the lev­el of unem­ploy­ment” In Sapir’s defence, Wyplosz points out that the heads of gov­ern­ment of Europe in their Lis­bon sum­mit in 2000 iden­ti­fied as their pri­ma­ry objec­tive pre­cise­ly the need to escape from this eco­nom­ic bind. At that time they direct­ed the Euro­pean Com­mis­sion to to come up with a plan to make Europe the dynamo of the world econ­o­my. Even if you think the goal is a bit ambi­tious, says Wyplosz, you need to be ready to sac­ri­fice a few sacred cows in order just to move in this direc­tion. bq. “The [Sapir] report explains how and why the CAP is a cost­ly fail­ure. It has slowed nei­ther the reduc­tion in the num­ber of farm­ers nor the accu­mu­la­tion of prod­ucts that are unsold and unsaleable because they are too expen­sive. It blocks the devel­op­ment of agri­cul­ture in poor coun­tries, despite this being one of their few areas of com­par­a­tive advan­tage. It cos­sets the largest and rich­est farm­ers at the expe­nese of con­sumers and poor coun­tries. This diag­no­sis has been con­firmed by hun­dreds of eco­nom­ic stud­ies… bq. The idea [of the Region­al Funds] is to give [regions of Europe iden­ti­fied as ‘back­ward’] the funds nec­es­sary to improve their infra­struc­ture. These regions have been flood­ed with cement and bitu­men, but what has emerged in terms of growth? Mon­sieur Barnier (the Com­mis­sion­er respon­si­ble) cites one inter­nal study that proves that region­al growth has accel­er­at­ed. Unfor­tu­nate­ly dozens of oth­er stud­ies, con­duct­ed by impar­tial observers, find noth­ing of the sort.” Europe’s sag­ging growth and obese sup­port pro­grams are a sad state of affairs not only for Europe but for the rest of the world, too. We are all the poor­er when the world’s almost equal biggest econ­o­my fails to grow as strong­ly as it might.

Leave a Comment

Your email address will not be published. Required fields are marked *