COW(ard) DIEM

Sitting in class today, a strange thing occurred to me: Whatever was said about comparative advantage, geographic advantage and factor pricing, Europeans are a little odd. Rather than swear by sound economics evidence, we’d rather swear by the cow. And I mean that quite literally. European countries often come off as big proponents of the developed world helping the developing world. However, that’s only true until the subject lands on…. well, cows (and a lot other but much less offensive and interesting things). For good measure (and as an excuse for posting this picture), I want to make sure we all know I am talking of an actual cow. One of these:

The European Union and individual countries within the union, subsidize Europeans cows to an almost unimaginable extent. In fact, Europe spends $1 billion per day. That’s half an American stimulus package a year, spent on subsidizing cows (well, in reality we subsidize farmers who raise cattle)! To put it into perspective, that’s about $2.20 per cow, per day. If you are familiar with the World Bank’s poverty line, you’ll know that it is well above the absolute poverty line. In fact, according to this report from the bank, in 2005 2.561 billion people lived for less than $2 a day. Twenty two of the world’s countries don’t even have minimum wages that high – not to speak of the nonexistent minimum wage in every informal sector around the world. According to a New York Times opinion piece, if Europeans stopped subsidizing its cows (or managed agriculture better), it could pull 140 million of those in absolute poverty out of the misery. I don’t mean to offend anyone, but you have to be a cow to not figure out what’s the right move. At the very least, if Europeans don’t manage to rectify this, we are a bunch of cowards.

                But what are we so afraid of? It’s not like the cows will strike and leave us without meat and cheese (because that would cause real trouble). It’s not like the farmers will strike either. If they do, we’ll have the opportunity to buy American, Argentinian or some other delicious meat, or maybe we’d develop a taste for camel milk. What might be a consequence are lower cattle production and more expensive cheese, but the outcome might be quite favorable: there would be free land everywhere across Europe. In a time of food crisis that might not be such a bad thing; according to some estimates, whereas one hectare of land can support 2 persons per year when used to raise cattle, that same space can be used to grow corn, wheat or better yet rice and yield enough food to feed 20 people. I’m pro letting the market take care of the allocation of farm land – if people are willing to pay 10 times more for meat calories than they are carbohydrate calories. But we shouldn’t eat more meat because some special interest group somewhere believes it to be in the welfare of farmers that we pay their cows more than we are willing to donate to the developing world. Those who benefit are a very narrow group of farmers in Europe who are afraid that their industry will collapse if we don’t collectively pay for them to maintain their lifestyle.

It is not just about cows, of course. Corn and cotton in the US are similarly protected, and it should be common knowledge that some African nations would be lining up to supply cotton at market rates if they were allowed to compete with American growers. It is worth it to keep in mind that not only is the cost of subsidy put on domestic consumers, but more often than not, what we do to keep a few comfortable at home, could keep scores more comfortable abroad.