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Source link: http://archive.mises.org/6863/nationalizing-the-wine-industry/

Nationalizing the Wine Industry

July 17, 2007 by

Since we know the monstrosities associated with government buildings, monuments, and state-built cars, surely then, we can imagine a Europe with a nationalized wine industry. viognier.bmp Don’t laugh; the European Union’s top agricultural official is wanting to do just that. EU Farm Commissioner Mariann Fischer Boel thinks that the state can spend money and market Europe’s wine “more efficiently” than the private producers. The EU government already distorts the market for wine by directly subsidizing its wine producers and setting rules for production.

Though myriad subsidies are already provided to wine producers, the Commissioner’s plans “originally called for winegrowers to give up some 12 percent of their vineyards in an ambitious plan to cut the most inefficient plots of land.” So while subsidies have caused the overproduction of low-end wines and have skewed consumer demand, new subsidies will produce yet another mismanagement of resources. Wine producers are fighting back against these cuts in vineyard production, and all the while they are complaining about the meager intra-EU marketing subsidies that are to be provided to them for the coming year.

So the battle is between the state and the private producers, with the producers rejecting what they consider to be implausible demands over the way they ply their trade. Yet their own demands are voluminous, and always, they center around the notion of “what’s in it for me?” Then of course, the ability to be able to shrewdly direct the booty toward its most advantageous uses is exactly why the wine producers of Europe do not dislike central planning. They just want a few seats of their own on the planning commission.

{ 11 comments }

bill, Wine Drinker July 17, 2007 at 9:06 pm

Well this is good for the USA as we get very high quality wine at subsidized prices. I guess it is good for the wine makers too. But not good for the Eurozone tax payers as they get hosed.

Lenny July 17, 2007 at 10:34 pm

I can attest that China is doing its part by importing plenty of “bottom-end” French wines for its Karaoke bars….

Niccolò July 17, 2007 at 11:14 pm

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NNNNNNNNNNNNNOOOOOOOOOOOOOO!!!!!!!!!!!!!
NNNNNNNNNNNNNOOOOOOOOOOOOOO!!!!!!!!!!!!!
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NNNNNNNNNNNNNOOOOOOOOOOOOOO!!!!!!!!!!!!!

TokyoTom July 18, 2007 at 3:23 am

Karen, while I profess no expertise, your post seems rather at odds with other reports, that seem to indicate that the EU’s proposals are a far cry from a “nationalized wine industry” but rather in general a needed step towards liberalization towards a coddled industry with rather high barriers to entry:

“Given current trends, excess wine production is expected to reach 15 percent of annual production by the end of this decade – which would mean an enormous burden for EU coffers. The Union already spends around half a billion euro a year just getting rid of surplus wine for which there is no market.

“Under its reform package, Brussels suggested shrinking the bloc’s wine industry and grubbing-up 200,000 hectares of vineyards as well as scrapping aid linked to surpluses.

“On the other hand, Brussels would lift current restrictions on planting rights from 2014 and allow competitive wine producers to expand their production.”

http://euobserver.com/9/24491?rss_rk=1
http://europa.eu/rapid/pressReleasesAction.do?reference=SPEECH/07/489&format=HTML&aged=0&language=EN&guiLanguage=en
http://www.forbes.com/facesscan/2007/07/13/wine-mariann-boel-face-cx_ll_0705autofacescan02.html?partner=rss

Regards,

TT

Karen De Coster July 18, 2007 at 5:54 am

TT,

Perhaps you mmissed the part, that I mentioned, where the EU Farm Commissioner Mariann Fischer Boel thinks that the state can spend money and market Europe’s wine “more efficiently” than the private producers. And perhaps you overlooked my mentioning that the central planners are looking to further distort an already heavily-subsidized industry through more interventionist proposals. Perhaps you overlooked that I specifically pointed out the awful portions of the EU’s proposal, as was the purpose of this post. For every batch of “liberalized” proposals you purport, there are myriad non-free market gimmicks within. So perhaps you should blog on what interests you.

TokyoTom July 18, 2007 at 7:20 am

Karen, I confess to have found your post interesting and spurred to further inquiry. I’m also suffiently dense that my personal inquiries left me more rather than less confused.

Sorry if I wasn’t clear, by my comment was a request for a little more explanation. I certainly did NOT miss your criticisms of the EU Farm Commissioner’s proposal – rather I noted that a quick look at descriptions of the proposal suggest that its chief aims are to reduce state subsidies to the wine industry that have led to overproduction and to respond to increased foreign competition by lowering barriers to entry. Apparently the proposal would also shovel new money at the industry as well by providing advertising money – that would be distributed to national governments – and by calling for simpler labelling that would also list grape varieties consistent with the standards of the International Organization of the Vine and Wine (OIV)). None of these initiatives appear to supplant local rules. http://www.winespectator.com/Wine/Features/0,1197,3375,00.html

If this is true, then it would seem that the proposal is a partial step in the right direction rather than a “nationalization” of a manipulative and pampered industry.

And if I’ve got it all wrong, then – since you brought the topic up – it puzzles me that you would rather chase away an interested reader than to be a little more helpful in providing the inside skinny on what’s going on.

But for now, I note your growl and have to say that I have exhausted my interest for now. I suppose others will want to jump in.

Speedmaster July 18, 2007 at 7:23 am

Very sad, they’ll never get it. ;-(

Person July 18, 2007 at 8:50 am

TokyoTom: I think it’s interesting that while you and I focus our comments on different topics, and seem to disagree on a lot of things, we’ve both noticed a tendency for harsh personal attacks against those who attempt to correct even the most basic facts. Let me just offer my sympathies.

Incidentally, I think the worst thing the government could do to the wine industry would be, not nationalization, which would preserve demand for wine, but rather, publication and promotion of blind taste tests which show that wines really aren’t all that different, and claims to be able to discern quality are largely illusory.

Karen De Coster July 18, 2007 at 9:51 am

Mr “Tokyo”:

You were actually quite clear in pointing out that what is of interest to me in the EU’s proposals, as versus what is of interest to you, are not merely two different things of one large and conflicting pie, but rather, I was “at odds with the reports” – which is a distortion of the facts.

Perhaps I didn’t point out to you clearly enough that my title is a quip denoting the fact that the European wine industry is *already* quasi-naionalized, without further ado, because of years of mass subsidies, state production rules, etc.

The EU’s subsidies have actually increased, not decreased. Add to that the fact that the state’s planners would also stomp out years of tradition – no matter how much the tradition has been influenced by subsidies in the past. We thus witness state control with wine producers being “paid,” via transfer payments, to allow more control through the appearance of some give-and-take. The EU has wine designations/labeling attached to strict planting and production rules that bans new planting, except under government-approved conditions. And, in addition, the Community Market organization (CMO) has been financing growers in regards to planting, production, and vineyard restructuring. Add to that the convoluted nature of wine export agreements and the France government’s Loi Evin regulations — which maintain a strict hold on the volume and nature of alcohol advertisements.

Thus the additional proposals would end certain subsidies as the central planners see fit, however, they would be shifted elsewhere, which is hardly a “move in the right direction.” Meanwhile, the French winemakers plead for more government “assistance” and decry interference in their traditions. This vicious circle of ending one transfer payment while grabbing more control elsewhere has landed the Euro wine industry in this quagmire of unremitting government planning over private interests that _do_ welcome the welfare, and in turn, these producers put up with most interventions. In reality, the whole industry is driven by rules, regulations, and complicated trade agreements. A free market doesn’t involve any of those three aspects of intervention.

So I disagree that trade-offs that end one subsidy to gain another regulatory decree is “liberalization.” The whole industry is and has been deeply imbedded in an ongoing standoff between welfare recipients (private producers) and government.

TokyoTom July 19, 2007 at 12:46 am

Thanks for the additional “flavor”, Karen.

I’m with you in believing the folly of government involvement in practically any industry. I just believe that it is important to point out the complicity/duplicity of industry in all of this, and that it is helpful to try to point to what incremental steps in the right direction are possible.

TT

TokyoTom August 27, 2007 at 1:02 am

France needs more wine entrepreneurs, and less state involvement, but the strident rent-seeking continues:

http://www.nytimes.com/2007/08/26/opinion/26boyd.html?_r=1&th&emc=th&oref=slogin

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