30 July 2007

Starting a drug habit

It's a tragedy that even developing countries like Brazil are subsidising the biofuels industry. As if they have no more pressing problems than expensive fuel. This policy is environmentally questionable, socially inequitable and will be financial nonsense as well. Like other perverse subsidies it is a short-term, televisual response to a set of long-term, global problems. How do such policies get made? Their stated objective sounds reasonable, at first hearing: to encourage local industry while giving a push to something green. But the real objective is to make life easier for agribusiness. Lobbyists for agribusiness the world over know this. They are the real beneficiaries of the farm policies that have done so much to depopulate the rural areas of the rich countries, to denude their countryside, to transfer wealth from food consumers to landowners and large corporates, and to hobble the food-rich developing countries on their path to prosperity. Brazil and the other Latin American countries should have learned from the west's mistakes.

Under a Social Policy Bond regime such corrupt policies would probably fall at the first hurdle. Few governments would get much support if they had openly to admit that their expensive subsidy programmes have one objective: to enrich the large agribusiness corporates. Instead, policy goals would be expressed in terms of outcomes for real people. A useful discipline, but one that evidently does not have to be followed by the Brazilian Government.

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