July 01, 2003

Bust a CAP

Excellent article by Kevin A. Hassett and Robert Shapiro on how the European Union's "Common Agricultural Policy," or CAP, is one of the main factors blocking African economic development:

The average person in sub-Saharan Africa earns less than $1 a day. The average cow in Europe -- thanks to government subsidies -- earns about $2 a day. And therein lies a tale of the power of European farm interests, and the weakness of African economies.

A burgeoning volume of economics literature argues that the largest factors stunting African economic development include not only disease, drought, warfare and mismanagement, but also the European Union's "Common Agricultural Policy," or CAP. Why? Because the EU's policy has spawned subsidies and tariffs that have richly rewarded European farms and swollen European food output, while depressing world food prices and undercutting African exports.