Tuesday, June 19, 2007

Viticulture and Capitalism

Does the EU Commission in Brussels trust capitalism? For all the anti-capitalist bleating about beastliness of capitalism, the kernel of European economics is undoubtedly capitalist, no matter how diluted. Yet if you look at an industry that is of special local pride to Europeans, such as wine, you wonder if their leaders truly believe in such concepts as risk and reward or profit and loss.

The European Commission--which is the executive branch of the EU--is on course to approve a proposal to reform the heavily subsidized, minutely regulated European wine business. The general response from Europe's wine belt has been to resist calls for liberalization, in the name of tradition, culture, and the "soul" of wine. The opposition is not about money—not least because the commission has made it clear that it is not cutting funds from the 1.3 billion euro wine budget.

Here in Freiburg the local supermarket shelves are loyal to locally grown wines, regardless of their quality or price. When I trained through France last week the vineyards of Strasbourg were teeming with wine production. Wine production is almost everywhere in Europe. But France receives most of the budget from the CAP, (which in turn is 40% of the entire EU budget!) I love French philosophy, but stuck-up French vintners are truly a national peculiarity. They will bitch in disgust if they have to serve an ounce of wine from the German-side of the Rhine River. A generation ago, these wine growers would not even drink wine from the next village. But now this protectionist bourgeois industry must face the reality that Europe and the world will demand an honest price from them, and perhaps might not pay for their long-time subsidized wine. Sarkozy is of no help because he's a French nationalist, and will help "protect" the French vintners from price demands of capitalism.

But with socialist wine production under the CAP, half of the wine budget pays for wine that is never even bought on the market. That's 1.5 billion liters of wine surplus that is never consumed, and Europeans call this the great "wine lake" of France. A
Free Wine campaign will be a wise decision if it takes place, because right now this industry, while the most subsidized, is also the most complicated. There are rules for nearly everything. (Try reading all the .pdfs in that link and try to figure out exactly how one is supposed to grow the grapes, how to sell the wine, etc.) Mariann Fischer Boel, the (Danish) agriculture commissioner at the EU, says on her website that “there is more tension in wine than I have seen in any other agricultural product.”

And all this time the French and Luxembourgeoissie believe the wine industry is so complex that this only means it requires state oversight to be “properly managed”. Both countries profit enormously from viticulture and wine-related industries, such as wine tourism. At least Luxembourg sells nearly all its wine. French wine
au contraire is often left stagnant on the market. Why not liberalize and allow the best and profitable wine producers to continue producing? Perhaps that will mean more wine from Luxembourg on the market. Nay! Something will stop the ironically anti-capitalist Europe from embracing this prospect.

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