In all this trade talk let's not forget that we're rich because we're free

It starts like this:

At the end of last year, a news story was published with huge implications for ‘international development’: a drop-off in commodity prices through 2016 dashed hopes that the world’s poorest countries could escape extreme poverty by the end of the decade.

The story raises a critical question directly linked to what Brexit will mean for countries of the global South and the reality of what ‘free trade’ and protectionism mean in the context of economic development – a reality brought into sharper relief in recent weeks by a long-running spat over trade at the G20 and Liam Fox’s focus on signing tariff-free trade agreements around the world.

And then goes rapidly down hill. The thing that beats me is why people who tell me that they 'care' about the world's poorest are so trapped in the belief that more open trade is making the 'world's poorest countries' less well off. Let's start with the facts:

The world’s achievement in the field of poverty reduction is, by almost any measure, impressive. Although many of the original MDGs—such as cutting maternal mortality by three-quarters and child mortality by two-thirds—will not be met, the aim of halving global poverty between 1990 and 2015 was achieved five years early.

The main reason for this wonderful decline in world poverty is the recognition that open markets, more free trade, property rights and good economic governance are the necessary prerequisites for reducing poverty. Bear in mind that the natural state of humankind is grinding poverty. Up to around 1700 - a little earlier in Holland - nearly everyone lived and had always lived in what we'd describe today as absolute, abject poverty. Since that time, courtesy of us recognising that if you allow people to prosper by innovation the whole of society benefits, average incomes in the UK and other developed nations have risen - in cash terms - by a factor of at least sixteen. If we take account of what that innovation means - the thousands of things that make our everyday lives better ("dentistry" as P J O'Rourke put it) - then that factor of sixteen is truly much higher.

Now free trade isn't the reason for that growth in our living standards (nor, for that matter, is the shocking colonial exploitation of the 100 years from roughly 1850 to1950) but it is one of the things that contributes to the, sadly belated, opportunity for those countries that missed out on the first economic revolution to secure the sort of living standards even the poorest in Britain enjoy. And much of it will be about those institutional reforms, the list of things governments shouldn't do, enabling people to do business (again - property rights, good economic governance, free markets). But trade matters and the more free that trade the better.

So we don't want this sort of nonsense:

But the UK must go further. Brexit trade policies will do little for longer term economic change in the South unless poor countries can export processed or manufactured goods with similar preferential schemes, or, conversely, use tariffs to shield emerging industries from international competition. On top of this, the Northern-led agenda of using trade deals to privatise public services and grant corporations legal powers to sue states outside national jurisdictions offers little in the fight against poverty.

I agree the UK must go further and absolutely agree that the sort of protectionism that forces developing countries into exporting raw produce rather than processed goods (as I once asked, 'why aren't we eating Ghanaian chocolate bars?') is a bad idea all round. But the next part - tariffs and import substitution - is a return to the days before 1980, before the dramatic drop in the world's poverty, before the triumph of what's now called neoliberalism. And being able to go to an independent court for arbitration is a protection not an affront to liberty - without giving people and businesses the power to challenge government there is no check on arbitrary decisions by that government.

I also agree that 'trade deals' and especially bilateral trade deals are not free trade. Indeed the fact of the 'trade deal' between two governments (or groups of governments) is a reminder of the degree to which trade is not free. For sure a lot of so-called trade deals are really about regulatory harmonisation (sweetened by public procurement bungs in both directions) but they do not represent the ideal of allowing, in a well-governed economy, people to trade freely. This means, since trade is about consumption rather than production - imports not exports, allowing people to purchase the things they want with their own resources from whoever, wherever they wish.

Over the past 40 or so we've not talked much about trade. There has been occasional bits of political posturing about the 'balance of trade' and a great deal of macho talk about 'the global race' and 'competition' between nations but not much about actual trade. Or indeed the fact that it is nonsense to, for example, argue for a ban on live animal exports without realising that there's no difference between taking a truck load of sheep from Canterbury to Cannes or from Basingstoke to Aberdeen (at least not for the sheep). And a thousand other examples of how doing business - buying and selling, securing mutual benefit, adding value - shouldn't be different if the supplier is in Ulan Bator or Uttoxeter.

The result of us not talking about trade is that people begin to believe this sort of nonsense (completely unsupported by economic history):

...this obscures the fact that rich countries only pursued free trade after they ascended to the peak of the global economy; they used protectionism to ensure that domestic industries grew ahead of being exposed to competition, before “kicking away the ladder” they used to get to their dominant positions.

Not only does this line not make sense (if protectionism worked then there was no ladder to kick away) but it really isn't true. In the UK you only have to look at the 30 year long row over fixing grain prices with Corn Laws or the rows about 'Empire Preference' to see that there's nothing new at all about political arguments between mercantilists and free traders. And most of the time - witness steel, food, cars, even second-hand washing machines and old clothes - the protectionists, the mercantilists, win the argument.

Brexit really does mean a chance to do it differently. I appreciate that the absolutist position (remove all the tariffs on stuff we buy) may be correct in theory but we should remember it also removes the opportunity for reciprocity by governments - takes away a little of their power. Meaning it won't happen. But, since most of the barriers to trade are regulatory (or outright bans as is the case with much of European trade policy), the presence or otherwise of tariffs is pretty marginal - we lose a little by scrapping them but it allows us to get focused on improving economic governance in developing countries by helping them improve their standards of regulatory enforcement and compliance.

Free trade is a very good idea but the regime we have in world trade today is not free trade. We're a lot better than we used to be - the GATT Agreements and their child, the World Trade Organisation, helped make this the case as did the growth in international regulatory co-operation spawned by GATT - but the focus remains on the inter-governmental fix, on grand folk meeting in summits to decide whether or not some women somewhere will be allowed to sell you cocoa powder, knitted comfort blankets or large amounts of steel. If we can change this then we'll have a more free, more happy and above all richer world - all of it.

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Quote of the day - on Trumpish economics and free trade

Shared from Don Boudreaux at Cafe Hayek - the riposte to Peter Navarro, Trump's economics advisor from George Selgin, Professor of Economics at the University of Georgia:

Thank goodness that, being more enlightened than in the past, we no longer will tolerate, much less provide a public forum to, such uncouth bigots as still persist in accusing the Jews of trying to take over our economy and subvert our way of life by lending us money on better terms than our fellow gentiles can offer. No sir. We have advanced well beyond that. We now devote op-ed space in the New York Times to uncouth bigots who blame the Chinese for trying to take over our economy and subvert our way of life by selling goods to us for less than what our own manufacturers can offer.

There are two things I take from this 'neo-mercantilism': the first is that, from my experience at least, there are plenty of Trump supporters who still cling to that old Jews taking over the world shtick - this, as it happens, is something they share with a lot of Jeremy Corbyn supporters (up to the substituting of the word Jew with Rothschild or Zionist).

Secondly, we have got trapped in popular myth-making over imports. Popular opinion thinks it is a bad thing for places somewhere else in the world who can make stuff cheaper than us to be allowed to sell that stuff to us. The argument is wrapped up in stuff about protecting jobs, supporting "emerging industries", and supporting business. The idea of trade has become some sort of international sales push where we try to flog loads of our stuff to foreigners on the back of things called "trade deals". The idea that open trade is mutually beneficial seems to have been lost in our discussions. No-one is saying that trade isn't something negotiated by governments but something freely entered into by individual people and companies.

More than anything else, it is this lie- that trade is a zero-sum game at which we can win or lose - that allows for the malign politics of isolation, protectionism and import-substitution. As a result Trump, Farage, Corbyn and Le Pen are able to exploit a population stuffed by all the media with nationalist myths of sinister foreigners doing us out of our fair share. If we lose the idea of trade - open, free and fair - we risk moving to a new dark age where international power goes to the men with the biggest sticks and where the ordinary consumer pays more for lower quality goods because those men haven't finished waving those sticks yet.

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Abolishing the Corn Laws again - the case against 'food security'

It's not every day that you read an article saying that it was a mistake to repeal the Corn Laws:

The situation created by the British vote to leave the European Union is momentous for UK food. It is on a par with the Repeal of the Corn Laws of 1846 when Britain decided its Empire could feed it, not its own farmers.

The point about the Corn Laws was that they existed for the sole reason of keeping grain prices high so as to sustain marginal British agriculture. With the expected effect of making food prices higher:

The high price caused the cost of food to increase and consequently depressed the domestic market for manufactured goods because people spent the bulk of their earnings on food rather than commodities. The Corn Laws also caused great distress among the working classes in the towns. These people were unable to grow their own food and had to pay the high prices in order to stay alive.

By opening British farmers up to competition, the repeal of the Corn Laws resulted in cheaper grain and, therefore, cheaper bread (and beer). We forget, however, that the main justification for the corn laws wasn't landowner self-interest but the belief (at the end of a long war and a series of poor harvests) that what we'd now call food security was more important than open trade. At the heart of the food security concept is the idea of self-sufficiency.

My concern is that the security of food might get lost in the debacle. The UK must not let that happen. Food stocks are low in a just-in-time economy, an estimated three to five days’ worth. The UK doesn’t feed itself. It has dropped to 61% self-sufficiency, Defra reported last month.

Now leaving aside how the UK being self-sufficient in food is compatible with membership of the EU, let's ask instead what the consequence of self-sufficiency might be - here Professor Lang's article is helpful. The consequence - a policy aim in the professor's world - will be more expensive food:

Part of the challenge now is the UK’s love of cheap food. This was the legacy of the Repeal of the Corn Laws which sought cheap food for workers. Cheapness as efficiency is still central to the neoliberal project today, as Michael Gove stated in the referendum campaign. But in food, cheapness encourages waste and makes us fat. Good diets are too expensive for the poor.

Again, we'll ignore that Professor Lang also tells us in his article that Brexit will make food more expensive, and ask instead whether there is any practical basis for deliberately making food more expensive (for there surely isn't any moral basis). We'll note the negative impact on the economy from people spending more of their income on food - a huge and unnecessary opportunity cost. The main - probably the only - case is a health one:

The researchers found that healthier diet patterns—for example, diets rich in fruits, vegetables, fish, and nuts—cost significantly more than unhealthy diets (for example, those rich in processed foods, meats, and refined grains). On average, a day’s worth of the most healthy diet patterns cost about $1.50 more per day than the least healthy ones.

The problem here is that we have to accept the premise - Diet X is healthier than Diet Y - and to agree that there is a reason for government to intervene in food pricing (for example by making grain more expensive). And to understand just how much more expensive. Plus of course, we have to agree with the researchers that the price differential is so substantial remembering that these are extreme measures - the 'most unhealthy' diet set against the 'most healthy' diet.

So instead we get food policy planning that uses the idea of 'food security', on the assumption that there is a genuine threat to the supply of food meaning that, in the worst case, we get food riots. Indeed, Professor Lang thinks these are on the way because of Brexit:

But given that the WTO rules are “the lowest common denominator” and the Codex Alimentarius is determined in meetings that are “dominated by big business and lobbies [making] the EU look like the most democratic organisation in the world”, this is far from ideal. The result would be food riots, says professor Lang.

The agricultural sector is very keen (especially the bit that actually owns the land) to get this idea of food security high up on the agenda when food is discussed. It is the biggest justification for the continuance of agricultural subsidy post-Brexit and for the sorts of high-tariff models loved by the EU, USA and Japan. We should be resisting such a model (subsidy plus tariffs) since - as we can see from the corn laws experience - the result is more expensive food acting as a drag on the economy to the benefit of a tiny proportion of the UK's population. Smaller even than you think:

Each year we’re seeing a further concentration of benefits in the hands of fewer,
larger landowners, who seem to use their subsidy cheques to buy up more land and more subsidy ­entitlements,” Jack Thurston, the co-founder of farmsubsidy.org, told the Scotsman. “Most people think farm subsidies are there to help the small guy but we’re seeing it’s quite the reverse. The bigger you are, the better your land, the more public aid you get,” he said.

So we've a system of support (as, unintentionally, Professor Lang shows) not far removed from those 19th century corn laws. We know also that the main impact of subsidy comes in raising land values meaning that those agricultural subsidies and supports are doing little or nothing to maintain food security but represent a straight transfer of money from the taxpayer to the owners of agricultural land.

We should explore whether there is a model that works rather than promising to stay in the warm bath of subsidy after we've left the EU. Perhaps starting by asking how New Zealanders can grow onions that sell in a Kentish farm shop for the same price as locally grown onions. And why those Kiwis can produce lamb, ship it to the UK, sell it for less than British producers and make a profit:

New Zealand is the largest dairy and sheep meat exporter in the world, and a major global supplier of beef, wool, kiwifruit, apples and seafood. New Zealand-grown produce feeds over 40 million people, with 7,500 animal products and 3,800 dairy products going to 100 countries every month.

All of this without any subsidy:

New Zealand agriculture is profitable without subsidies, and that means more people staying in the business. Alone among developed countries of the world, New Zealand has virtually the same percentage of its population employed in agriculture today as it did 30 years ago, and the same number of people living in rural areas as it did in 1920. Although the transition to an unsubsidized farm economy wasn’t easy, memories of the adjustment period are fading fast and today there are few critics to be found of the country’s bold move.

So ask yourself a question. Do you want the sort of protectionist, subsidy-hungry food security that sucks up over £10 billion each and every year. Or an agricultural sector that contributes to a growing and successful economy? For me food security isn't about self-sufficiency but is about diversity and choice - we're more at risk if we've only one supplier of grain than if we've 50 suppliers. Yet the advocates of policy based on food security still argue that protectionism, trade barriers and expensive food (plus rich landowners) is the way to provide that security. The argument we thought we'd won back in 1846 when those Corn Laws were scrapped is still here today and we have to make the case for open trade in food all over again.

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Free range chicken isn't healthier or more sustainable. It's just tastes better and costs more.

I'm prepared to accept that free range chickens taste better. I also know that the way those chickens are bred means they cost a whole lot more than the chickens produced in batteries or other intensive farming methods. But this argument is wrong:

Despite the fact that sustainable poultry production systems deliver huge benefits to the environment and public health, the producers using these methods have no option but to compete on an unlevel playing field. Worse, we are paying for the damage caused by industrial food production in hidden ways, through taxes, in the form of misdirected subsidies from the common agricultural policy, through water pollution clean-up costs and through national health service treatment costs.

Firstly there's no evidence that intensive farming is more damaging to the environment than traditional or organic methods. In fact the reverse is true - traditional and organic methods are less environmentally-friendly:

Agricultural economists at UC Davis, for instance, analyzed farm-level surveys from 1996-2000 and concluded that there are “significant” scale economies in modern agriculture and that small farms are “high cost” operations. Absent the efficiencies of large farms, the use of polluting inputs would rise, as would food production costs, which would lead to more expensive food.

So far from there being an environmental benefit from moving away from agricultural intensification, the reverse is true - if we want a less polluting agriculture then intensification is the right choice. This is quite simply because that supposedly "sustainable" system is less efficient. We get expensive food and a more damaged environment.

The public health issues are equally misplaced. There is no evidence at all that organic methods are healthier than methods using modern pest control or fertilisers. - it's just that all those healthy looking chickens scuttling about in feels give us the impression that eating them will be healthier.

So when the Sustainable Food Trust tell you their methods are healthier and have less environmental impact they aren't telling you the whole truth. And, when they call for the system to be skewed to support their methods, what they are doing is making you pay more for food with the only benefit going to the organic farmers' bank balances.

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What links Peter Hitchens, John McDonnell and Donald Trump?

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The answer is a hatred of free markets, free trade and free enterprise plus a belief that the solution to our supposed economic problems is economic nationalism. All these fine men promote nationalisation, speak of the evils of foreign investment, and play to the fears of workers about foreigners, big business and the bankers.

I considered heading this article with some like "In which Peter Hitchens goes full Fascist" but that would be a little polemical. Hitchens has, for over twenty years now, conducted a one man hate fest directed at the Conservative Party. On more than one occasion he has used his pulpit to pray for the Party's destruction so it must be a cause of deep and personal pain that this organisation he despises so much got it self elected with an overall majority in the UK parliament.

It shows:

I am so sorry now that I fell for the great Thatcher-Reagan promise. I can’t deny that I did. I believed all that stuff about privatisation and free trade and the unrestrained market. I think I may even have been taken in by the prophecies of a great share-owning democracy.

And more along these lines, not based on any actual facts or anything as mundane as research, just Hitchens' absolute belief that the Conservative Party and all its works is a thing of great evil. So what we get is an advert for Hitchen's Conservatism - one essentially indistinguishable from that of Donald Trump. It's a sort of admission of defeat, a belief that inside a cosy little barrier built from tariffs, bans and protections we will be reborn as a 'great nation' filled with horny-handed sons of toil bashing away making things. I can see the posters lifting the spirits of our nation now, images of those workers looking to a noble future arm in arm with their families.

Britain, for the Hitchens of this world, is crying out for a new direction - a New Party - that rejects globalisation, foreign investment, free trade and the idea that running a restaurant is as noble a pursuit as pouring molten steel from British blast furnaces. The world conjured up by Hitchens and Trump is a dystopia where foreigners, drug dealers, shadowy businessmen and venal politicians conspire to do down the decent, honest working men of Britain and America. It is a fearful place where only a powerful state with a strong leader can protect what little is left of our greatness.

This is the dark side of conservatism, the place where nationalism and a sense of national injustice push aside the hopeful and aspirational conservatism that yearns for people to be free, for them to be able to make their own choices and live their own lives. This is the consequence of an obsession with security - national security, community safety, energy security, food security, local resilience - that acts only to justify the longer reach of the state, that fools people again into thinking that our telephone services before privatisation was in any way at all better than the service we enjoy today.

This is the world where the intervention of government in industry, supposedly driven by some sort of 'industrial strategy', is determined by political considerations, by the imminence of elections and the influence of union barons or the media. Billions of our taxes are splurged on bailing out industries, mountains of tariffs are built and, before we know it, prices are being fixed and markets set in stasis with the result being decline, poverty and economic collapse.

It'll look so fine at the start as Hitchens' New Party winds back the liberalisation of the Thatcher years. Vital national industries are defined, plans and strategies are written, solid, broad-bottomed men are set onto the boards of the industries - Great Britain is reborn. And then it doesn't work - small exporting manufacturers close because they can't compete, the higher taxes needed to pay for the intervention mean less investment and billions of foreign investment gets relocated to places that are more friendly, more likely to provide a return on those billions.

It's easy to talk of a lost age of 'making':

A journey across the heart of England, once an exhilarating vista of muscular manufacturing, especially glorious by night, turned into archaeology. Now, if it looked like a factory, it was really a ruin.

But this covers over the deeper truth - that we are so much richer and happier than we were when those industries were booming. It's a myth that we are poorer for the loss of dirty, unpleasant dangerous jobs down mines, in foundries and in factories. We are not poorer - the children of those workers are mostly doing better paid and safer jobs of offices and will live to be 80 or older rather than dying painfully in their sixties of industrial diseases. Even Hitchens reluctantly hints at this betterment with his talk of luxuries, better coffee and better restaurants.

These are not fripperies but things that - in Hitchens' golden age - used only to be there for the rich and powerful. The miners, steel workers and factory hands of that age of glory didn't have a decent car (if at all), never went to restaurants and couldn't afford a foreign holiday. Today's equivalent worker has all those things plus a bewildering array of new stuff - smartphones, digital TVs, ice-makers, microwave ovens, power tools and fridge freezers. And their children - our children - will be even richer, having things we can only imagine right now.

But we'll only get those things if we cling to the revolution for which Ronald Reagan and Margaret Thatcher are rightly praised - free trade, free markets and the celebration of free enterprise. Building walls - real or regulatory - isn't a route to poverty not a salvation. And economic nationalism - whether it's sold to us a 'socialist' by a Labour shadow chancellor or 'conservative' by a Daily Mail columnist - always, everywhere, gets worse results than the free trade it forces out.

The evidence from approaching four decades of neoliberalism, of our embracing a global economy, is that it has led to the biggest, sustained improvement of well-being in human history. To throw all this aside to indulge in an orgy of self-pitying nationalism would be an act of monumental folly. Yet that folly is just what Peter Hitchens, John McDonnell and Donald Trump are offering.

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The strategic maple syrup reserve isn't in the interests of producers or consumers

Do we really need a maple syrup strategic reserve?

Yes folks there really is a strategic maple syrup reserve and it's in Quebec. It's not there for the benefit of the maple syrup producer but rather as a buffer to control market prices. This all lives with the Federation of Quebec Maple Syrup Producers, a government-sponsored cartel created in 1990 to fix the price and 'improve the marketing' of maple syrup. It's not universally popular even among the producers it's intended to protect:

Backed by the Canadian civil courts, the federation has the monopoly for selling Quebecois maple syrup on the wholesale market, and for exporting it outside the province. It sets the price for how much it pays producers, and it charges them a 12% fee per pound of syrup.

Producers are only allowed to sell independently a very small amount of syrup, to visitors to their farm, or to their local supermarket. And then they still have to pay the 12% commission to the FPAQ.

"We don't own our syrup any more," says Mrs Grenier, who calls the federation the "mafia".

Unwilling to put up with this state of affairs, Mrs Grenier and her husband have in recent years been selling their maple syrup across the border in the neighbouring Canadian province of New Brunswick.

In scenes that could come from a Hollywood drugs movie, they load barrels of syrup on to a truck as quickly as possible, and then race it over the border line under the cover of darkness.

The couple are breaking the law, but say they are fighting for the right to sell their syrup for a price - and to customers - of their own choosing.

Unsurprisingly the results of this cartel are two-fold - first there's folk like Mrs Grenier who want no part of it and smuggle the syrup out of Quebec and second other people in other places start to produce more (and cheaper) syrup:

Quebec has long dominated the maple syrup scene, holding some 80 per cent or more of world production in years past, partly by maintaining a strictly enforced supply-management, marketing and quality-control system. But aggressive U.S. rivals have made inroads, reducing the province’s market share to an average of 72 per cent over the past three years, said Paul Rouillard, deputy director of the 7,300-member federation.

And the projections are the Quebec will carry on losing market share to US (and other Canadian) producers. Dear readers this is always the result of protectionism and price-fixing. Maple syrup might not be oil or grain but the same rules apply.

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If you want a healthier, wealthier, happier Europe then vote to leave. I will be.

The actual referendum is still a long way off. So far as I'm aware there's not yet a firm date so we can assume that it will be, as promised, in 2017 - probably on the same day as that year's county council elections. Despite this distance, the arguments for leaving and remaining are being rehearsed by the two sides.

As we'd expect much of the argument - from both camps - is focused on scaring people. The 'leave' camp - or at least the UKIP-inspired part of it - is playing big on borders and migration taking advantage of the current situation where hundreds of thousands of Syrian and other refugees have decamped themselves onto mainland Europe. Linked to this is the very familiar "we can win back our country" rhetoric wrapped around the £15 billion cost of our membership. These are familiar arguments that have sat in the heart of the anti-Europe case for decades. Along with frowning talk of 'sovereignty' and 'our own laws', these positions have gone as far as they can to secure a base for leaving the EU - and, as polls show, it's not enough.

For the 'remainers', the scaremongering is different. It ranges from out-and-out lies about the number of UK jobs "dependent on EU membership" and misinformation about trade through to the very effective repetition of Jim's dad's advice to his remaining children - "And always keep ahold of nurse / For fear of finding something worse". The EU - or rather the altogether friendlier 'Europe' - is established, organised, operational and secure. Outside its walls are lions just waiting to gobble up the unsuspecting independent nation. An important thread in all this is now 'security' - leaving the EU means we'd be more exposed to terrorism, cross-border crime and, the new favourite bogieman, Russia.

A political dialogue based on scaring the pants off people isn't helpful for all those people who prefer a positive debate and who want the political system to focus on how we can all become healthier, wealthier and happier. And my botheration with the European Union is that it's entire mission is now to protect the health, wealth and happiness of those who already have health, wealth and happiness. Or at least a job.

Greece and Spain have been recording the highest figures, with overall unemployment over 20 per cent and youth unemployment around 48 per cent.

In the wider, 28-country European Union, unemployment also remained unchanged for a second month in a row in August at 9.5 per cent, with more than 23 million people out of work.

We skim over those numbers. But they're saying that half of young Greeks and Spaniards don't have work - and it's not much better for Italians. Indeed, since the employment isn't evenly distributed, there are parts of these countries where there is quite literally no work at all. We can talk about 'world recession' and seek to blame international capitalism or the USA but the problem of unemployment in the EU is here to stay and is a direct consequence of policy decisions made by the EU leadership:

According to European Central Bank's own calculations, the near 11pc unemployment rate is here to stay. Even in an optimistic case, it will only fall to 9pc in 2020 when the eurozone's economic slack has been used up, according to the IMF.

Most Europeans - even most Spaniards, Italians and Greeks - will probably be OK. They'll have their health, wealth and happiness protected but the EU intends to do this at the expense of those 23 million folk without a job.

Beyond Europe's boundaries - a place the EU looks on with ever more protectionist panic - the approach is to hector, lecture and do backroom deals. Yet at the same time the EU operates its own protectionist systems - mostly at the expense of poorer nations:

The economic efficiency costs of allocating additional resources to the farm and food sectors amount to some €38 billion, with the EU15 supporting more than €34 billion in allocative efficiency costs. Although the cost of distortions in the new Member States (NMS) is smaller, they are expected to increase as direct payments are phased in. Parts of the costs suffered by the EU are compensated by an improvement in its terms of trade in the order of €17 billion, at the expense of the EU’s trading partners, especially from Latin America.

Put simply, the Common Agriculture Policy (for all that the worst aspects of this policy have been reformed) continues to distort international trade and competition in agricultural goods - and it is producing nations in Africa, Asia and Latin America that pay over half the price of that distortion. Healthy, wealthy and happy farmers in France, Germany and Britain are kept that way at the cost of the health, wealth and happiness of farmers in Paraguay, Tanzania and Vietnam. Moreover, these policies don't benefit us EU 'citizens' either - we pay the other half of these costs in higher prices and higher taxes.

Indeed, the EU systematically abuses trade rules to advantage domestic producers (never consumers - always producers):

The European Union and its 27 member states generated more than a third of the policies identified by the study, and 93 percent of them discriminated against foreign competition, a slightly higher proportion than in Japan and the United States.

European and Japanese discriminatory policies were also the most "selective", with more than two-thirds specifically targeting particular firms in the domestic market.

A tally of the 10 most affected sectors in each of the seven economies revealed that - in varying concentrations - all of them used policies that either discriminated against foreign competition or selectively favored domestic firms.

And the economies that resorted most to discrimination tended to rely most on policies where the WTO rules were weakest, such as bailouts, trade finance, and investment incentives - in 84 percent of cases in the EU.

For all its talk of trade deals and such, the EU is profoundly opposed to open trade - hence the preference for such deals as the Transatlantic Trade and Investment Partnership (TTIP) rather than for free trade and the removal of market distorting subsidies. And remember that we - the European consumer - will pay for these distortions. For the sake of protecting inefficient basic industries, we are paying a huge price in high prices, high taxes and high unemployment.

But all this can be reformed can't it? Isn't it just this sort of problem that David Cameron is trying to get resolved with his country-hopping?

I'm happy to be persuaded otherwise but the most likely answer to these questions is simply 'no'. The institutions of the EU are wedded to slow growth, protectionism and managed trade. Without an existential threat to these institutions, there is no prospect of any change least of all any change that might lead to more transparent and open government. The European Commission is comfortable (and confident) in its protected place - access is limited for individual citizens with preferential access given to lobbyists, business organisations and NGOs. Indeed, the Commission uses its funds to develop Europe-wide lobby groups and to support campaigns to change EU regulations.

The idea that we can change this comfortable arrangement without threatening its continued existence is ridiculous. We have watched as the EU has been prepared to sacrifice the health, wealth and happiness of Greeks to protect its project - what makes anyone think they are different and that those same men won't watch you lose your job or your business so as to protect their position - their health wealth and happiness?

This is why we have to vote to leave - not for little England or national sovereignty or borders but for the sake of the health, wealth and happiness of Europeans and for our future prosperity. To do this we have to move on from the protectionism of the EU model, to focus on standards rather than barriers in trade, and to deal directly with international bodies rather than through the opacity of the European Commission. Britain leaving will force the EU to confront its vulnerability and to recognise that it no longer serves the mission of a better Europe, that it is a brake on progress not a route to the better world to which it aspires.

If you want a better future for Britons, for Europeans and for the World, voting to leave really is the only choice. Do it.

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Protectionism lurking in the guise of 'professionalism' - the elitism we expect from the Financial Times

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Hot on the back of this particular egregious misunderstanding of trade comes a further example - one that, as we find too often, festishises the 'professional':

We argued back in July for example that the way Airbnb actually differentiates itself in the hospitality market is largely by throwing amateurs at the professional hospitality market. Which is fine, if you don’t care much for professional hospitality. But it’s not so great if you do, because the service certainly doesn’t augment the availability of professional hospitality services.

Understand this my fellow peons, this person (writing in the elite's journal of choice, the Financial Times) has a problem with you being allowed to set up a business. Bear in mind that this is the sort of attitude that led to requiring interior designers to have a college degree. In a more free world this is known as protectionism and it's a tax levied by those who have control of something on those who don't. Oh, for sure there's lots of the usual excuses about safety, about consumer protection and about the traditions of whichever service we're on about.

The quote above attacks AirBnB because the people renting rooms aren't providing "professional hospitality services". The author goes on to tell us that AirBnB doesn't work out for some providers and that "there’s more to short-term letting. than just handing over keys on changeover day". Well blow me sideways, that's a real shock! But it completely (and I suspect - this is the privileged speaking here) misses the point which is that people have the opportunity to rent out a room in their home - indeed it does so by repeatedly talking about the market as if it's a holiday cottage business. Merely - the writer goes on to do the same with both Uber and the impact of driverless cars - reminding us that what we have here is a sniffy, snobby criticism of people (ordinary, regular people in the main who never read the Financial Times) who want to make a bit of cash to supplement their income.

For the readers of the Financial Times - who are either wealthy or the employees of wealthy businesses - the idea that someone might prefer a stay that's a bit rough and ready rather than very expensive "professional hospitality services" is difficult to comprehend. But if you're a travelling student, an artist or just someone who want to see the world on a budget such accommodation is a godsend. What this writer is doing is pushing the idea - loved by the sort of big hotel chains who advertise in the FT - that somehow these low-cost, private lets are a threat to civilisation rather than something that's challenging the presumptions built into "professional hospitality services".

It's called protectionism and it makes us all poorer. And anyhow amateurs are awesome.

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Quote of the day - on 'buying local'

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It is widely held that, by some feat of magic, buying stuff at higher prices because it is 'locally-sourced' or 'independent' represents a coherent regeneration strategy. We're told that this approach builds something called 'resilience' and that the 'local multiplier' means that, as a result of this local spending, we are all richer and wealthier (as opposed the the more prosaic truth that the owners of those locally-sourcing independent business are richer and wealthier whereas us consumers are poorer and less wealthy).

Courtesy of the Samisdata blog comes the defining truth about the nonsense of this idea (at least in economic terms). A tad sarcastic but oh so accurate:

In olden times, armies would lay siege to cities to cut them off from outside trade. The strategy forced the city to “buy local” until it was so prosperous that everyone was too rich and lazy to fight. (Rocco Stanzione)

All this transition towns, localism and such like is quite simply protectionism given a different name. And the only beneficiaries of protectionism are the protected businesses. No-one else benefits.

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"Bloody foreigners" is a lousy case for leaving the EU - I fear this will be the core of the 'out' campaign

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European immigrants who arrived in the UK since 2000 have contributed more than £20bn to UK public finances between 2001 and 2011. Moreover, they have endowed the country with productive human capital that would have cost the UK £6.8bn in spending on education.

Over the period from 2001 to 2011, European immigrants from the EU-15 countries contributed 64% more in taxes than they received in benefits. Immigrants from the Central and East European ‘accession’ countries (the ‘A10’) contributed 12% more than they received.

There are very good reasons for leaving the European Union. And, right now, that is how I expect to vote come the referendum. This doesn't mean my mind is closed on the matter but rather that any renegotiation has to produce some really big changes for me to vote any other way. But in saying this I want to be pretty clear that my reasons for opposing the EU are not about 'sovereignty', 'nationhood', 'British values' or any of the usual tosh we see rolled out by some opponents. Nor is my opposition based on the fact that lots of great, hard-working people have come to make their home in Britain.

My opposition to the EU is for the following reasons - it makes us poorer, it is unaccountable, it restricts my liberty, and it prevent Britain from having any real influence over trade or international business. I'd also add that - as we see with Greece - the EU is undemocratic and authoritarian caring little about anything except the stability of its polity and certainly nothing for the ordinary citizen.

The EU is a protectionist ramp, something that only serves the interests of a limited number of producers rather than the mass of the population. Yet we line up enthusiastically behind its protectionism - cheering as Cornish Pasties are protected and nodding sagely at the continuation of subsidies for unsustainable upland farming. Here's an example from Tate & Lyle:

Tate & Lyle Sugars said its production has fallen from 1.1m tonnes of sugar to about 600,000 since 2009. The company said the slump began when the EU began scaling back its market regulation of beet sugar rather than the cane sugar that the firm imports.

“If we carry on down this route it puts our business and the jobs here under real threat,” said Gerald Mason, head of T&L Sugars in the UK. “We see the Government’s renegotiation as the once-in-a-lifetime opportunity, the last chance if you like, to keep what’s left.”

He said EU regulations are the “single biggest impact on our business”. The EU is unleashing Europe’s beet farmers in 2017 by removing a production cap, in a move that is expected to push down prices 15pc by 2020. Farmers will be subsidised to counteract this drop, while cane sugar imports continue to face tariffs of up to €339 (£246) per tonne.

We the taxpayers of Europe are paying more for our sugar than we need to do because more efficient sugar producers in places like Jamaica and the Dominican Republic have a huge tariff slapped on their product so as to ensure that beet farmers in Europe are protected. Worse still us taxpayers then subsidise those beet farmers because they are making less money now the EU lets them produce more. We get taxed for the privilege of having more expensive food.

Every UK government since 1979 has promised to 'reform' the Common Agricultural Policy. And loads of tinkering with the policy has taken place since - quotas replace tariffs, one subsidy replaces another subsidy, and some farmers get paid regardless of whether they actually do any farming. And, I guess, it's not a huge deal for most of us most of the time.

But think for a second about those polices. Add to this the policy of distributing agricultural surplus in the form of food 'aid'. Plus anti-dumping rules that mean cheaper solar panels are excluded (what sort of contribution to saving the planet is this). And the negotiation of bilateral agreements that are designed to serve those protected industries at the cost of economic development in Africa and Asia. Not only does the EU make Europeans poorer but it also makes Africans and Indians poorer too (and, as an aside, more likely to take huge risks coming here on leaky boats).

Half of what the EU does is about maintaining this protection - it is the central purpose for much of its bureaucracy and the primary purpose of most lobbyists in Brussels and Strasbourg. The other half of the EU is doing what it calls "harmonisation" - making sure that our rules don't give any advantage to home producers within the single market. And the trend has always been for that harmonisation to be upwards - adding regulations in places where there are none rather than reducing regulations where there are too many.

Finally there are some very bad reasons for leaving the EU. I will repeat again that my opposition to the EU is not about migration. Indeed, if anything about the EU is worthy of celebration then it is the fact that I can go and ply my trade anywhere across 27 countries without daft restrictions and constraints (unless of course I'm a ski instructor wanting to work in France). As can people from right across the continent - including a load who come here and contribute to the success of our economy.

What worries me is that, rather than making the very strong case that Britain will be richer and happier outside the EU, we'll end up with a load of scaremongering about foreigners coming here or foreigners buying up our businesses, or foreigners making our laws, or foreigners over-ruling our courts. Were that the only argument for leaving the EU I would be voting to stay in. It isn't so I'll most likely vote to leave.

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Multiplication and economic growth....

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Tim Worstall reminds us that there's something of a problem with the Keynesian multiplier:

And if we look closer at this, and we find that the relationship is actually only one to one, then we’ve a disproof of the central Keynesian contention. Which is that a rise in government spending (when in recession, when there’s unused assets lying around) increases GDP by more than the increase in government spending. We were certainly in recession, government spending certainly changed, but if GDP only changed by the amount of spending change then that’s a disproof, not a proof, of the central Keynesian claim. 

But the myth is widespread - if you look at the work of many in the field of local and regional economics, the idea of the multiplier is absolutely central to the presumed effectiveness of the policies they propose. Now I appreciate that Worstall is making a different point (essentially the arithmetic is just arithmetic never scientific proof - the biggest problem with much of macroeconomics) but we still need to remind ourselves that the multiplier is something of a myth. It's a myth when it's observed that government spending increases GDP by the amount of government spending (i.e. there is no multiplier) and just as much a myth when it's used to justify some sort of localist quasi-protectionism or that government procurement contributes to economic growth.

My concern is that this approach to public spending results in more expensive local services (the only reason for the quasi-protectionism is that non-local supplier may be cheaper) without any real evidence - other than arithmetic - that there is any economic benefit to deliberately making prices higher. Indeed, most of the time in economics we'd rather prefer prices to be stable and not determined by the arbitrary (or protectionist) choices of government.

The same applies for the local high street. Because supermarkets are more efficient, their prices are (mostly) lower than the prices in the precious independents on the high street. If we regulate and tax so as to penalise supermarkets for being more efficient all we do is to make prices higher for the consumer. And because such price rises fall most painfully on the poorest, such regulation and taxation is highly regressive (rather like duty on booze and fags - but that's another story). All those trendy folk talking about 'resilience' and 'sustainable high streets' are, when you boil it down, calling for the prices of basic everyday goods to be higher so the greengrocer on the high street isn't undercut by the supermarket.

Thus, to return to the multiplier, any benefits that might come from money circulating more in the local community are more than absorbed by the higher prices. And this is before we consider the opportunity costs of government spending. We simply can't presume that simply spending the money has more economic impact than either lower borrowing or lower taxes (or both). As has been observed:

"From where to people find the means to purchase consumption goods, other than production?"

Even if we accept that there is some local impact, it is limited by several factors (ones that NEF ignore in their LM3 model). Since the biggest cost for most businesses is wages, we have to start by noting that around 40% of that cost go straight back to the government in tax. And, after this, other significant costs - utilities, fuel, transport - aren't retained within the local community either. If our assessment is on consumers then we should note that their biggest costs (tax, rent or mortgage, utilities and transport) aren't retained locally. What the advocates of local multipliers are arguing is that the economy will be transformed by the redirection of part of the cost of groceries - in reality this is an utterly insignificant effect even assuming inefficiencies haven't wiped out any gain.

At the heart of all this work is a keen urge for the public sector to feel it is contributing - by its very existence - to economic growth and not just on a pound for pound basis (which isn't really growth) but as a stimulus to the economy. The problem is that, between protectionism and opportunity cost, any benefits that might arise from the multiplier are lost - and this assumes there are such benefits in the first place.

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Jay Rayner, millionaire food snob, tells poor families their food is too cheap...

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It has become something of a trend - millionaire cultural lefties popping up to tell poor folk that they are paying too much for stuff. The other day it was Vivienne Westwood railing about capitalism while charging over a grand for a handbag. Now it's 'masterchef judge' Jay Rayner - the doyenne of Guardian-reading food snobs - who is telling the poor they should pay more for their dinner:

Families need to pay more for food and have become 'far too used to paying too little', Masterchef judge Jay Rayner told MPs today.

The food critic and author told a parliamentary committee that food was too cheap to support British farmers.

He said: 'We pay too little. We're far too used to paying too little. And the only way we have at our disposal, I think, to secure a robust food supply is by investing in British farming and that does mean consumers pay more and look for that label.'

Rayner even explained that food poverty was nothing to do with real poverty:

'Yes, we do need to pay more for food but if you focus on a thing called food poverty then you're not going to be looking at the bigger picture involving the whole population.'

So we're to have more expensive food because British farmers can't compete with farmers somewhere else in producing the cheap food that people want to buy. And Rayner - who has no qualifications on this matter besides having a famous mum and a cushy job being paid by newspapers and magazines to eat overpriced restaurant food - latches on the familiar set of supposed concerns - the size of the supermarkets, the concept of 'food security' and some sort of wibble about sustainability.

Food security is simply protectionism rebadged - we invent scary stories about how somehow we'll not be able to feed ourselves because of all that cheap food made somewhere else in the world and use those stories to justify trade barriers, protectionism and subsidy. Then, because the Asians and Africans who could produce all that fabulous cheap food don't due to protectionism, all Jay Rayner's pals on the Guardian and Channel 4 wangle trips to see the poor black people and to explain why evil western capitalism has condemned them to an eternal struggle against absolute poverty.

Let's be clear. Cheap food is a good thing. There is nothing at all that is wrong with you and me not having to pay as much to put food on the table. It is gross and immoral for rich people like Jay Rayner to say to poor people that they should have less food because they'd rather protect a few uneconomic farmers. Rayner has never had to make the choice between putting the heating on or having a meal - yet he wants to force that choice onto still more people. And Rayner isn't scratting on a Zambian farm hoping that the rains don't fail so he can feed his family - the other sort of uneconomic agriculture that the protectionism he espouses acts to sustain.

Rather than Rayner's snobbery and environmental protectionism, we should embrace the opportunity of cheap food - break down the barriers, encourage mass production and deliver nore people the wonderful benefits that come from cheap, abundent food in fantastic variety that we (mostly) enjoy in the UK. Above all can we stop saying - on clothes, on food, on energy - that making it more expensive is a good idea. It really, really isn't.

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Procurement and local protectionism - how 'progressive' procurement will make communities poorer

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Writing in New Start (the house journal of the Centre for Local Economic Studies, CLES) Matthew Jackson, the Centre's associate director sets out his argument for using local government procurement to do something other than securing the best price and quality for the goods or services procured. Matthew wants local protectionism:

For me, there is too much about using local government procurement to achieve efficiencies and to mitigate the impact of the cuts as opposed to advocating a progressive new future around local government procurement being used for local economic and social benefit.

This is, essentially, consultant-speak speak for finding ways round the strictures placed on procurement by the EU and Westminster governments. Rather than the commissioning and procurement process being about securing efficient and effective public services, Matthew wants to stretch its purpose to encompass the usual litany of 'progressive' politics:

Procurement should not be a narrow corporate function restricted to local government, nor is localism its primary concern. It sits at the heart of what we want and need from our public services in the future.  Of course it needs to focus on efficiencies, but effectiveness in supporting growth, addressing poverty and inequality and creating great places is the real prize.

The problem here is that these things often conflict - so which gets priority.  If using a large multinational guarantees quality and a lower price does that get the nod over the less reliable and higher cost local supplier? Matthew doesn't answer this question except to suggest that somehow we rig the procurement process.

There should therefore be a defined understanding of the key considerations of what an effective purchase is, regardless of whether it is being undertaken by central government, local government, an NHS Trust or a private business. Of course cost should be a key factor, but so should providing a great future role for our public services, as well as fairness, equality, and the opportunity to create local employment and develop local businesses.

Sadly these weasel words will infect local government leaderships, they'll cluck around the wise words of Matthew and his ilk and they'll fail to realise that the losers in all this are the very local people CLES claim their protectionist model will help.

The only way in which the model can work is for procurement costs to be higher than they would be in a system driven by seeking to maximise efficiency. And that means one of two things - either fewer services delivered to local people because more money has gone on procuring those services than was needed. Or higher taxes meaning that local people have less money to spend.

All this talk of 'fairness' and 'social benefit' coming from local protection is, quite simply, a deception typical of 'progressive' policy-making. The real result is worse government, fewer services and higher taxes.

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A reminder of the effect of protectionism...

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Amidst all the nannying fussbucketry about sugar, I stumbled on a consequence of making the evil white stuff more expensive:

In the 1980s when the US price of sugar was pushed as much as four times higher than the world price there were many smuggling schemes if not actual sugar-runners. In our textbook, Modern Principles, Tyler and I discuss one scheme where Canadian entrepreneurs shipped super-sweet iced tea to the United States where the “tea” was then sifted and the sugar resold. 

Bans, tariffs, price-fixes - all the things so beloved by the fussbuckets - are just a recipe for cheats and criminals to thrive.

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In the 1980s when the US price of sugar was pushed as much as four times higher than the world price there were many smuggling schemes if not actual sugar-runners. In our textbook, Modern Principles, Tyler and I discuss one scheme where Canadian entrepreneurs shipped super-sweet iced tea to the United States where the “tea” was then sifted and the sugar resold. - See more at: http://marginalrevolution.com/marginalrevolution/2014/01/is-the-sugar-quota-justified.html#sthash.FHa9wuS7.dpuf

More protectionism with a foodie spin...

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Prosecco - lovely stuff and, as appears to be the case with almost every sort of food and drink subject to protectionism:

EU Common Market Organisation reforms take effect on August 1, 2009, and the inter-regional Prosecco DOC and the Prosecco DOCG will be folded into the new PDO Protected Designation of Origin appellation system.

That's right, if you're not in North East Italy they're going to go for you if you have the cheek to use the term "Prosecco" - despite the fact that "prosecco" is the name of the grape it's made from and has nothing specific to do with the Veneto. Just as the Cornish Pasty is just a recipe and champagne is just a process, prosecco is just a type of grape.

All this is a bit tough on the Croatians who have been using the grape - 'prosek' - for just as long as the Italians but to make a sweet dessert wine rather than a light fizz:

In a vaulted cellar on the pine-clad island of Hvar, Andro Tomic pops a cork on a bottle of his beloved prosek wine and pours a generous glass.

The amber-coloured dessert wine holds a special place in the hearts of Croats, particularly those along the Dalmatian coast, but it is about to face the full wrath of the Brussels bureaucracy.

The European Union has ruled that prosek is too similar in name to Italy's prosecco and that after July 1, when Croatia realises a decade-old ambition of joining the EU, it can no longer be sold as such. 

So much for protecting traditional local produce! The EU justify is like this:

They say there is a danger that consumers could be "misled" and could inadvertently buy a bottle of Croatian prosek when in fact they were looking for light, fizzy prosecco. 

Of course, it's not about this really at all, the Croats have been making prosek for 500 years alongside that sparkling prosecco without the need for special protections. And, I'm prepared to guess that the number of people who've confused the two is pretty low - somewhere close to zero.

The beneficiaries of these rules aren't artisan producers, they are large industrial concerns - the prosecco equivalent of Ginsters - that can secure higher profits through securing a PDO.

It's just protectionism given a foodie spin.

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So folk who read the Guardian want poor people to stay poor?

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Or so it seems:

But in the case of quinoa, there's a ghastly irony when the Andean peasant's staple grain becomes too expensive at home because it has acquired hero product status among affluent foreigners preoccupied with personal health, animal welfare and reducing their carbon "foodprint". Viewed through a lens of food security, our current enthusiasm for quinoa looks increasingly misplaced.

There's the clue - "food security". You think that's all about people staying alive, about ensuring supply and such important stuff don't you? You're wring - food security is all about keeping peasants as peasants. Indeed, this is the problem with that Andean agriculture:

Averaging $3,115 (£1,930) per tonne in 2011, quinoa has tripled in price since 2006. Coloured varieties fetch even more. Red royal quinoa sells at about $4,500 a tonne and the black variety can reach $8,000 per tonne. The crop has become a lifeline for the people of Bolivia's Oruro and Potosi regions, among the poorest in what is one of South America's poorest nations.

Get this folks - rather than scraping a bare existence with subsistence agriculture those Andean peasants are making a decent living instead selling us rich folk trendy cereals. The tripling of the quinoa price is a huge boost to the Andean economy. It is a good thing - people in these places (assuming they can escape from their hideous socialist governments) have the chance to do something else with their time, to create new ideas, new businesses and new sources of wealth.

What these ridiculous, protectionists in the Guardian propose is that it's better for Andean peasants to scrat a subsistence living than for the economy of these places to thrive because we want to pay silly money for barely edible grain products. They would rather such folk starved to protect their precious misconception of peasant agriculture.

These ghastly lefties want poor people to stay poor. Probably so they can patronise them.

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Cheese smuggling or Why criminals like protectionism

A few of you, on hearing this story, will have grinned a little. Maybe even guffawed. After all cheese smuggling is funny, no?

Canadian authorities say two police constables helped smuggle more than $200,000 worth of cheaper U.S. cheeses and other foods across the border from Buffalo to sell to pizzerias and restaurants.

The Niagara Regional Police Service announced today that the pair, one of whom has been fired, were arrested and charged, along with a third man. Charges against the three, all from Fort Erie, Ontario, include smuggling and other customs violations.

The point, however, is that with a very long and pretty open border, the Canadians are daft to impose huge tariffs on imported dairy produce as well as a range of permits, licences and rules (not just on imports but on selling dairy in a different province). All to "protect" the dairy industry (at the expense of the consumer).

And, as this story shoes us, the big winners aren't the cowherds and milkmaids of Canada but a bunch of criminals (helped in this case by a pair of corrupt cops). Protectionism sounds good when politicians promise it to one or other special interest or in a sort of populist, "keep out the foreigners" campaign but when it's introduced it acts as a tax on consumers to the benefit of smugglers.

And you don't need to protect the dairy industry. Go look at New Zealand and learn.

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Does Laura Sandys realise what she's saying about food policy?

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Let us take her comments:

The Prime Minister is right to use the Olympics to focus on global hunger. But while the main focus of this summit must be to address the problem in poor countries, it’s important to remember that food poverty exists in every country – rich and poor – in the UK as well as Somalia. Food banks are emerging in our cities, and charities like Fair Share are becoming part of daily life in our most deprived communities. In 2010, public health officials calculated that malnutrition costs the NHS £13bn.

Now I'm not going to comment on the public health guffle in this quotation except to say that the last sentence is probably complete and utter tripe. Nonsense that will be repeated again and again until - like the lies about obesity and the misinformation about drinking - it becomes accepted truth.

But for now let us accept that all this is true and that Laura's later comment is also true:

We must increase food production and overcome our squeamishness to modified crops

If there isn't enough food then increasing production is the right thing to do. However, Ms Sandys then dredges up a load of protectionist nonsense that runs entirely counter to the need for greater production and lower food prices:

...our import levels – the largest in the developed world – expose us to currency volatility and export bans

It beggars belief that, having concluded that intensification, genetic modification and greater efficiency is needed to meet demand and reduce prices, Ms Sandys then proposes a measure that will cut supply and increase prices. This is the crass myth of "food security" that results in gluts and corruption in developed world agriculture while at the same time seeing thousands of Africans barely subsisting for want of markets for the products they can grow.

The idea of "food security" is just protectionism bundled up as something else. And protectionism is just a tax on consumers transferred to a selected group of producers.

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A "Grocery Code Adjudicator" won't save a single hill farm but will increase food prices for the poor

First my usual disclaimer when writing about food – I’m no particular friend or fan of supermarkets, I like high quality, artisan-produced food and am an enthusiast for the new retail systems of farm shop, farmers market and veg box. But I don’t believe that these systems should succeed because government has fixed things in their favour, I think it wrong to deny others choice because foodies like me can influence the agenda.

And, while I’m about all this, food production is not undertaken for the benefit of the producer but for the benefit of the consumer. I know it seems daft that we need reminding of this but we surely do – here’s Liberal Democrat MP, Michael Moore:

“Over the years, supermarkets have held our local farmers over a barrel and it’s time for this injustice to be tackled and for the farmers, who produce the food we all enjoy, to be paid a fair price for their produce.

“I am extremely pleased that as a result of Liberal Democrats working in Government, legislation will now be introduced this parliament to bring in a Groceries Code Adjudicator.

I note your quizzical look – how does this represent acting on behalf of the producer? Surely Mr Moore is targeting the rapacious supermarket, this won’t affect us as food consumers, will it? I guess that the answer is ‘yes’ – by raising prices (which is what Mr Moore means by a “fair price”) you raise costs to the supermarket, costs that will be passed straight onto the consumer. Unless of course, the supermarket can go and buy it somewhere else in the world where there isn’t a “Groceries Code Adjudicator” to beat them up over some random judgement of a “fair price”.

If the supplier cannot produce the desired product for the price that suits the customer – and remember that those supermarkets pressing down on suppliers to lower prices are doing so, at least in part, for our benefit – then one of two things will happen:

1.       The price will rise to allow the producer to cover his costs (this will happen where no-one or very few can meet the price demanded), or:

2.       The price will be met by someone in the market and the customer will be supplied

What the campaigners for a “Groceries Code Adjudicator” want to do is raise farm gate prices – to force supermarkets and food manufacturers to pay more:

Referencing the recent announcement of a cut of 2 pence per litre (ppl) in the price paid to dairy farmers for milk by four of the major processors: Dairy Crest, Robert Wiseman, Arla and Muller, which will exploit these farmers to the tune of up to £20,000 per year, Tim (Farron) praised plans for a referee, who will have the power to protect farmers.

Look at it this way instead, rather than this “exploiting” the farmer, it could just as accurately be described as “benefitting” the consumer. After all, that price cut passes through the production chain until it lands in lower food bills for ordinary people. Yet, as the advocates of the “Grocery Code Adjudicator” say, this proposal is:

...backed by all the major parties, and a draft Bill has been examined by two select committees. This means it should pass through Parliament quickly and without controversy.

I find it odd that, at a time when the economy is in a deep hole, when ordinary people are struggling to pay their way, where we even have reports of families being unable to put food on the table – at a time of hardship we are proposing to introduce rules that will result in higher food prices. And not just higher prices – after all us foodies already pay more for the posh stuff – but increased costs targeted specifically at the poorest in society.

And the saddest thing in all this is that the Grocery Code Adjudicator – whoever he or she may be – won’t stop the continuing decline in farm businesses and especially the sort of farm business championed by Tim Farron and Michael Moore. These proposals will be followed by further calls for more protection, more support and greater subsidy – and yet the industry will continue to decline, the farms will continue to consolidate and the nature of the business will continue to change.

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