Day: February 12, 2021

The EU’s ‘Farm to Fork’ Strategy Is Ill-Conceived and Destructive

There is ongoing disagreement between the popularly elected European Parliament and the executives in the European Commission over approvals of “genetically modified” (GM) crops, which are made with modern molecular genetic engineering techniques. In December, members of the European Parliament objected to authorizations of no fewer than five new GM crops — one soybean and four corn (maize) varieties — developed for food and animal feedstock. These objections follow dozens of others that have been made over the previous five years. (These are the same varieties that are ubiquitous in many other countries, including the United States.) A European Commission spokesperson has suggested that a new approach will be necessary to authorize such “genetically modified organisms,” or GMOs, in order to align with the new Farm to Fork Strategy, an agricultural strategy recently embraced by Europe:

“We look forward to constructive cooperation with the co-legislators on all these measures, which we believe will enable the achievement of a sustainable food system, including GMOs on which the EU feed sector is presently highly dependent.”

The latter part of this quote is, in fact, incomplete: There is extensive reliance of the EU on imports of both food and feed, of which a significant portion is genetically engineered. In 2018, for example, the EU imported about 45 million tons a year of GM crops for food and livestock feed. More specifically, the livestock sector in the EU depends heavily on imports of soy. According to Commission figures, in 2019-2020 the EU imported 16.87 million tonnes of soymeal and 14.17 million tonnes of soybeans, most of which came from countries where GM crops are widely cultivated. For example, 90% originates from four countries in which around 90% of cultivated soybeans are GM.

For a GM crop to enter the EU marketplace (whether for cultivation or to be used in food or feed, or for other purposes), an authorization is required. Applications for authorization are first submitted to a Member State, which forwards them to the European Food Safety Authority (EFSA). In cooperation with Member States’ scientific bodies, EFSA assesses possible risks of the variety to human and animal health and the environment. Parliament itself plays no part in the authorization process, but it can oppose or demand rejection of a new GM crop based on any whim, prejudice, or the bleating of NGOs in their constituencies. They have chosen to ignore the sagacious observation of the 18th century Irish statesman and writer Edmund Burke that, in republics, “Your Representative owes you, not only his industry, but his judgment; and he betrays, instead of serving you, if he sacrifices it to your opinion.”

GM crops have been shown repeatedly to pose no unique or systematic risks to human health or the environment. The policies articulated in Farm to Fork suggest a renewed interest by the EU in environmental sustainability but conveniently ignore that that is the essence of what GM crops can bring to the table. Numerous analyses, in particular those of economists Graham Brookes and Peter Barfoot, have demonstrated that the introduction of GM crops lessens the amount of chemical inputs, improves farm yields and farmer incomes, and reduces the need for tillage, thus reducing carbon emissions.  The indirect benefits from GM crops include empowering women farmers by removing the drudgery of weeding, and lowering the risk of cancer by lessening crop damage from insect pests whose predation can increase aflatoxin levels. Reducing crop damage in turn reduces food waste. GM crops can also improve farmers’ health by lessening the likelihood of pesticide poisoning, and GM biofortified crops can also provide nutritional benefits that are not found in conventional crops, a life-saving innovation for the rural poor in low- to middle-income countries.

The rift between the views of the European Parliament and EU scientific agencies such as the European Food Safety Agency (EFSA) shows no signs of healing. Bill Wirtz of the Consumer Choice Center predicts that trying to achieve the goals of the Farm to Fork strategy will have “dire impacts.” To address a legacy of environmental degradation, the EU proposes by 2030 to increase organic farming by 25% and reduce pesticide application on farmland by 50%. These plans fail to consider that pesticide use has sharply decreased over the past 50 years and that organic agriculture does not necessarily imply lower carbon emissions; often, the opposite is true.

Wirtz goes on to describe how slack compliance laws across the EU have made food fraud a viable business model. A significant proportion of this fraudulent organic food stems from international imports from countries, such as China, with a history of inferior quality and violation of food standards. However, he observes, increasing the surveillance and enforcement of food imports standards and rejecting those that are fraudulent could jeopardize current food security efforts, as well as the economy of the EU as a whole, given the EU’s substantial dependency on food imports.

The Farm to Fork initiative gets support from occasional specious articles in the “scientific” literature. An example is a paper published last December in Nature Communications, “Calculation of external climate costs for food highlights /inadequate pricing of animal products” by German researchers Pieper et al. The paper, which illustrates the hazards of meta-analyses on poorly selected articles, describes the use of life-cycle assessment and meta-analytical tools to determine the external climate-warming costs of animal meat, dairy and plant-based food products, made with conventional versus organic practices. The authors calculate that external greenhouse gas costs are highest for animal-based products, followed by conventional dairy products, and lowest for plant-based products, and they recommend that policy changes be made in order to make currently “distorted” food prices better reflect these environmental “costs.” They also claim that organic farming practices have a lower environmental impact than conventional, and for that matter, GM crops. They failed, however, to reference the immense body of work of Matin Qaim, Brookes and Barfoot, and many others, documenting the role that GM crops have played in furthering environmental sustainability by reducing carbon emissions and pesticide use, while increasing yield and farmers’ incomes. The omission of any reference to, or rebuttal of, that exemplary body of work is a flagrant flaw.

The paucity of GM versus organic crop data discussed in the paper is also deceptive. Anyone unfamiliar with the role of GM crops in agriculture would be left with the impression that organic crops are superior in terms of land use, deforestation, pesticide use and other environmental concerns. Yet many difficulties exist, especially, for pest management of organic crops, often resulting in lower yields and reduced product quality.

There is extensive and robust data suggesting that organic farming is not a viable strategy to reduce global GHG emissions. When the effects of land-use change are factored in, organic farming can result in higher global GHG emissions than conventional alternatives — which is even more pronounced if one includes the development and use of new breeding technologies, which are banned in organic farming.

Pieper et al claim — rather grandiosely, it seems to us — that their method of calculating the “true costs of food…could lead to an increase in the welfare of society as a whole by reducing current market imperfections and their resulting negative ecological and social impacts.” But that only works if we omit all the data on imported food and feed, turn a blind eye to the welfare of the poor, and disregard the impact of crop pests for which there is no good organic solution.

It is true that animal-based products have costs in terms of greenhouse gas emissions that are not reflected in the price, that plant-based products have varying external climate costs (as have all non-food products that we consume), and that adopting policies that internalizing those costs as much as possible would be the best practice. Conventional farming often has significantly higher yields, especially for food crops (as opposed to hay and silage), than farming with organic practices. The adoption of agroecological practices mandated by Farm-to-Fork policies would greatly reduce agricultural productivity in the EU, and could have devastating consequences for food-insecure Africa. Europe is the major trading partner for many African countries, and European NGOs and government aid organizations exert profound influence over Africa, often actively discouraging the use of superior modern farming approaches and technologies, claiming that adoption of these tools conflicts with the EU’s “Green Deal” initiative. Thus, there is a negative ripple effect on developing countries of anti-innovation, anti-technology policies by influential industrialized countries.

Moreover, the EU even now imports much of its food, which as described above, has significant implications for its trading partners and Europe’s future food security. The EU seems to have failed to consider that continuing on the Farm to Fork trajectory will require endlessly increasing food imports, increasing food prices and jeopardizing quality. Or maybe they have just chosen to embrace the fad of the moment and kick the can down la rueAprès moi, le déluge.

Originally published here.

Oxfam’s miscalculations on global wealth

Oxfam regularly releases new reports on inequality and keeps getting it wrong.

So let’s revisit an older report to show how the next one is likely to be flawed once again — in an effort to avoid another needless European Parliament debate on inequality. The EU cannot allow itself to get stuck in an endless loop of ill-informed discussion on this issue.

Oxfam’s 2018 report claimed that inequalities are staggering. This was not the first time that the activists who made up the British NGO have shown their real talent: twisting reality to feed their political ideology, in defiance of any scientific rigour. Therefore, the question that arises is why continue to give echo to such people, whose nonsense is not without consequences, since it feeds the mistrust of the French towards their leaders and companies?

Oxfam had produced a similar document on inequalities, absurd in terms of the method, since wealth was calculated according to net worth, i.e. people’s assets minus their liabilities. Reading these figures, the attentive reader is left wondering, as most countries with developed economies allow considerable debt. But large material fortunes also have a large obligation, since this is how they feed their investments.

Similarly, a young graduate who has just found a job starts out with a low income and a substantial debt, which is, in fact, an investment in his or her potential future earnings. Comparing his situation to that of a low-income Chinese farmer with limited assets but little or no debt, using Oxfam’s methodology, the rural farmer far outstrips this indebted university graduate.

Let’s take the case study of France.

Oxfam’s report on CAC 40 CEOs’ incomes is riddled with comparisons, shortcuts, amateurism, and out of context figures. This context, however, is essential to a proper understanding of the economic issues raised. First of all, let us remember that the overwhelming majority of companies are VSEs and SMEs. These small businesses represent 99.9% of French companies and 49% of salaried employment.

The key figure revealed by this new report is that the CEO of a CAC 40 company earns 257 times more than a person on minimum wage. It reads: “In 2016 the average remuneration of CAC 40 CEOs was 4,531,485 euros. According to INSEE, the gross minimum annual salary was estimated at 17,599 euros, a difference of 257: 4,531,485/17,599 = 257.

Oxfam uses the average income of CAC 40 CEOs instead of the more realistic median income. The organisation explains that it does not have the data, due to a lack of corporate transparency, but still seems quite willing to use the average income to make a splash, claiming that CAC 40 CEOs earn more than 250 times the minimum wage. The calculation of median income, on the other hand, is quite possible and gives a result below 250. If we do this calculation, we find that the median income of CAC 40 CEOs in 2016 was 3.745 million, so we arrive at 3,745,000/17,599 = 212. It should also be noted that this calculation does not take into account a differentiation in the hours worked by people paid at minimum wage. Is Oxfam asking us to compare a person who works part-time with a person who works overtime regularly? And why is Oxfam hiding the fact that fixed salaries for company executives represent only 12% of their total income, and that options, bonuses and shares (based on company performance) vary continuously? Assuming we had all the data on the median salary, we would only have 12% of total income, and certainly not a factor of 257.

Next, regarding the assertion that CAC 40 companies would have paid 67.4% of their profits to their shareholders in the form of dividends, it is essential to remember that these are paid according to the company’s added value and after salaries have been paid. However, as economist Jean-Marc Daniel notes, since 1985, 65% of a company’s added value has gone to wages and 35% to the gross operating surplus, which is either redistributed in the form of dividends and or profit-sharing or invested in the company’s productive apparatus. 

But we will be explained that these “small calculation errors” and this representation are not significant. After all, Oxfam is not here to do research but to lecture us. Need we remind you that Cécile Duflot, the former Minister of Housing, author of the catastrophic Loi Alur whose measures are still being felt in the building sector, has just taken over the reins of Oxfam’s French branch? Is she responsible for the appearance of a proposal for a new blacklist of tax havens at the end of the report? This list should include Belgium and Luxembourg, which are by no means tax-havens. Let us add that the CAC 40 companies that are singled out (LVMH, BNP Paris, Société Générale, Crédit Agricole and Total) are in countries that Oxfam considers as tax havens, not because they practice tax evasion (Oxfam concedes that it has no evidence to prove it), but because they have clients there. Removing their subsidiaries from all these countries would be tantamount to depriving themselves of a considerable part of their turnover.

Political and ideological NGO. Instead of recognising the achievements that the development has made of the free market, Oxfam wants to revive the stereotype of the operetta boss, a man in a suit smoking a cigar in his office while looking down from his canopy at his exploited employees. But this caricature, inspired by the Monopoly man, no longer has much to do with reality.

As Steven Pinker reminds us in his book Enlightenment Now, while 90% of the world’s population lived in extreme poverty in 1820, only 10% of it remains today, thanks to the market economy. In recent decades, China’s economic miracle has lifted 600 million people out of absolute poverty, halving the world’s extreme poverty levels. We live in the most materially prosperous times in history, which is not about to be reversed.

Oxfam is a political and ideological NGO. It will continue to release misleading reports to argue for broad redistribution that would harm our economic performance and, ultimately, those it purports to help. Helping the poorest means opposing this demagoguery. It also means, for the media, to stop relaying it massively.

Originally published here.

The worrying return of protectionism

Trade is not a zero-sum game.

During his speech to the French on 14 June, President Emmanuel Macron outlined a recovery plan based, in part, on economic sovereignty on a national scale: “We must create new jobs by investing in our technological, digital, industrial and agricultural independence” he declared.

The French President’s protectionist turn is surprising. Opposed to Marine Le Pen in the second round of the 2017 presidential elections, Emmanuel Macron ran as the open society candidate. Here he is now defending protectionism! He made fun of trumpet populism, and now he promises to bring jobs home! But the most surprising thing is that he does not limit himself to advocating European sovereignty – as he has already done on several occasions – but national sovereignty, disregarding the principles governing the single market.

This “reinvention” is, unfortunately, not an innovation. On the contrary, Emmanuel Macron is resurrecting the old Ancien Régime fallacy according to which a nation’s wealth is not measured by the number of real goods and services at its disposal but by the amount of gold in its coffers. An ideology championed by Jean-Baptiste Colbert, a minister under Louis XIV.  “This country does not only flourish in itself, but also by the punishment it knows how to inflict on neighbouring nations”, such was his philosophy. But if Colbert is remembered as the Minister who was at the origin of the “greatness of France”, it is because history is more interested in the rich and powerful than in the little people. On the surface, France may have shone in Europe, but in reality France was “nothing more than a large and desolate hospital”, as Fénelon testified in a letter to King Louis XIV in 1694.

Behind the mercantilist ideology, such as the one Emmanuel Macron was inspired by when he spoke of a revival based on sovereignism, lies a misconception: that trade is a zero-sum game. But as the classical authors have subsequently shown, trade, by definition, is a positive-sum game. Forcing consumers to buy domestic goods rather than the imported goods they desire is not in their interest and, by extension, not in the interest of the nation. As Paul Krugman points out in a 1993 article, “What a country gets from trade is the ability to import the things it wants. France is therefore going to invest massively in certain technologies to “gain its sovereignty” when it could benefit from the experience and competence of its neighbours. An excellent way of wasting precious resources. 

Emmanuel Macron also said that the advantage of relocation was the creation of “new jobs”, but at what price? Examples of the economic war between China and the United States show the shortcomings of such a policy. A study by the American Enterprise Institute (AEI), for example, showed that the cost of the Chinese tyre tax set by the Obama administration was $900,000 per job. Moreover, since this $900,000 could have been spent elsewhere, the increase in tyres’ price has led to a drop in demand for other goods. Thus, the AEI estimates that the preservation of a single job in the tyre industry would have actually cost 3,700 jobs in other sectors. This phenomenon is not exceptional, examples abound. Another is the steel tariffs imposed by the Bush administration: while they have saved 3,500 steel jobs, economists estimate that these tariffs have led to the loss of between 12,000 and 43,000 jobs in steel-dependent industries! Krugman’s lesson still holds today: “Government support for an industry can help that industry to compete with foreign competition, but it also diverts resources from other domestic industries. 

These examples clearly show that the economy is too complicated for a President of the Republic,  to hope to administer it. The idea that an acceptable recovery policy would reduce unemployment is a pipe dream: it is entrepreneurs who create jobs, not bureaucrats. Outside of the crisis, about 10,000 jobs are created every day in a French economy that employs a total of about twenty-five million workers. Who can claim to be the direct source of so many jobs? At best, Emmanuel Macron may manage to create a few thousand jobs in the handful of sectors he has arbitrarily designated. Still, it will be to the detriment of tens of thousands of jobs which will disappear as a result.

Of course, what applies to France also applies to Europe: sovereignty is only legitimate when it is applied on a single scale, that of the consumer.

Originally published here.

Climate change, nuclear power and security

Germany is a modern country that, for many, serves as an example of a functioning state. All the more astonished must be those who have observed our energy policy in recent years.

Not so long ago, when a pandemic did not yet dominate the world, there was one central issue in politics. Thousands of young people took to the streets every Friday to show their anger at politicians’ perceived inaction on the climate issue. Eventually, Greta Thunberg, the 16-year-old face of the movement, named Time Magazine’s “Person of the Year 2019” despite criticism. The award certainly shows how much momentum the movement had last year.

The solutions of NGOs, governments, scientists and the young demonstrators differ fundamentally among themselves. Still, there is one thing they have in common: all strategies have a reduction of greenhouse gases, especially CO2, as their goal. In doing so, governments are faced with a difficult task. After all, there are interests to be weighed up. Without a significant loss of prosperity, one cannot merely close all coal and gas-fired power plants and switch to wind.  

A safe, efficient, CO2-neutral alternative that could produce a lot of energy, as well as having been tested by years of experience from different countries, does not exist. 

Except, of course, nuclear energy. To say that nuclear energy is a safe alternative is almost like calling water low calorie. Even renewable energy sources, such as hydroelectric power plants, solar and wind power, tend to be inferior to nuclear energy in this respect. If you look at the data, it makes your head spin to think of the ideological battle that has been waged against nuclear power for years. The safety of energy sources is calculated by relating the number of deaths to energy production. For example, a 2016 study found that nuclear energy production kills about 0.01 people per terawatt hour. Just for comparison: with lignite, it’s approximately 32.72 people, and with coal, we’re talking about 24.62 deaths, according to a 2007 study.  This means that about 3200 times as many people die with lignite as with nuclear power – there are beautiful places inhabited by fewer people.

But how does nuclear power compare to renewables? In the 2016 study already cited above, solar energy comes in at 0.019 deaths per terawatt hour, hydropower at 0.024, and finally wind power at 0.035 ends. The research includes the traumatic experience of Fukushima. But how traumatic is it? One would think that the disaster would cause the numbers to skyrocket, but, at the time of the study, there was not a single death that was a direct result of the disaster – in 2018, the Japanese government reported the first death, one person died of lung cancer.

But what happens if we use a conservative, cautious methodology? The 2007 study cited above does just that. In the systematic comparison of energy sources at “Our World in Data”, both studies are quoted and compared. The authors of the 2007 study are quoted there:

“Markandya and Wilkinson (2007) include estimated death tolls from separate accidents (not including Fukushima) but also provide an estimate of deaths from occupational effects. They note that deaths:

“can arise from occupational effects (especially from mining), routine radiation during generation, decommissioning, reprocessing, low-level waste disposal, high-level waste disposal, and accidents. “

So the paper says that Markadya and Wilkinson use the LNT method (linear-no-threshold), which assumes that there is no harmless “minimum” and radioactive irradiation, but rather that the potential damage is linear to the radiation levels. This is a very conservative and cautious method, but we only arrive at a rate of 0.074 deaths per terawatt-hour of energy produced even with this study. 

One terawatt hour is about the amount of energy consumed by 27 000 people in the EU per year. If we assume the very conservative methodology, the converse is that we would need 14 years for one person in this group to die. This study includes one of the most significant nuclear accidents in human history, Chernobyl. It is highly probable that the processes that led to the super disaster in the Soviet nuclear power plant have very little to do with the responsible management of today’s nuclear power plants. Moreover, technological progress has brought about further safety improvements.

So if we take the less conservative approach, it would take about 100 years before we had the first fatality in this group of people. And this with a downward tendency, because we can assume that there will be further technical improvements in the future.

Against this backdrop, the German energy turnaround not only appears to be a defeat of politics, which cannot implement its goals, it is above all a failure of science and reason.

The targets set for the promotion of renewable energies have not been achieved. According to European statistics, Germany emitted 752.655 Mt of CO2 into the air in 2018. This corresponds to 9.146 t per capita annually. Just for comparison, France produced 323.279 Mt of CO2 in the same period, which is equivalent to 4.956 t of emissions per capita.

What about the reduction of CO2 and greenhouse gases? Germany was able to reduce CO2 emissions from energy production by 24% between 1990 and 2018. That sounds good, as long as you don’t know the data of your neighbour. In France, we read of a reduction of 27%. Between 2005 and 2015, Germany recorded a decrease of 8% for all greenhouse gases in this category. The model pupil from France can score here with 44% (!). Of course, there are several reasons for this. Among other things, France obtains a large part, namely 75%, of its energy from nuclear power. Unfortunately, there are plans to reduce this share to 50% by 2035, but this cannot be compared with Germany’s brutal nuclear phase-out. 

Steven Pinker, a world-renowned Harvard professor, is puzzled by the irrationality of the Germans. In a Spiegel Online interview, he argues that nuclear power plants are safe and that the German consensus on nuclear energy could soon be history. If you want to fight climate change, he says, it is simply irrational to forego a low-CO2 and safe option. 

It makes no sense to do without nuclear energy and at the same time continue to use fossil fuels, which are responsible for many more deaths every year.

In the USA, P.A. Kharecha and J.E. Hansen examined the historical impact of nuclear energy in 2013. According to their calculations, about 2 million lives were saved between 1973 and 2009 because nuclear energy was used instead of fossil fuels. They also try to quantify the impact of the German energy transition. For example, Stephen Jarvis, Olivier Deschenes, and Akshaya Jha calculated in a 2020 study that the Energiewende has cost 1100 lives a year.

It is really not easy to understand why, at a time when climate change is one of the main issues in politics, a safe and low-carbon alternative is being abandoned. 

Nuclear power is not a danger but an opportunity. Goals such as climate and environmental protection are an essential challenge of our time. The German nuclear phase-out harms Germany’s inhabitants and the climate, it also harms the entire world, as Germany has taken on a pioneering role.

It is to be hoped that the German consensus on nuclear energy will indeed be broken and that as few states as possible will follow Germany’s policy. Fortunately, the latter is unlikely due to the results of the energy turnaround so far.

Originally published here.

Free the buses

We need to push bus market liberalisation further.

One of the EU’s common transport policy principles is the freedom to provide services in the field of transport. This freedom includes access to international transport markets for all EU carriers without discrimination on the grounds of nationality or place of establishment. The second Mobility Pack is encouraging the liberalisation of the inter-city bus market. Therefore, it is attempting to replicate that which has been a success in countries like Germany (and subsequently France after the Macron labour reforms).

In Germany, the coach usage has sextupled between 2012 and 2016, while ticket prices are simultaneously falling from €0.11 to €0.089 per kilometre in the same period, with discount prices going down from €0.05 to €0.036 per kilometre. This evolution is crucial for the development of improved transport services, and most importantly, for the living standards low-income households. The competition of buses in the inter-city transport business has increased competition between air travel, rail, and car-sharing, to the extent that consumers see themselves with increased choices and reduced prices on all fronts. Instead of giving in to interest groups in one sector or the other, which profit from restricted market access, allowing for the competition is the real way to improve consumer services quality.

Protecting a local provider for the sake of protectionism would negate the spirit of free trade within the Single Market. This will ultimately be the challenge if liberalisation of the coach market is settled as a desirable goal by the EU: market entry costs will be crucial in determining if the system works. Allowing for bus travel between city A and B is all well-intended. Still, suppose city B requires a special permit, paid in the local currency and subject to administrative approval. In that case, we’ll soon find ourselves once again with increased prices in favour of a state-owned rail company or a subsidised airline. Market entry costs cannot only be unfairly advantageous to local providers but may very well turn against them. Large coach-providers have the capabilities to comply with local market regulations and figure out rules and regulations, while small start-ups might not be able to do the same. 

Once again, market-entry costs would then limit the supply and give a specific provider preferential treatment. In the interest of the consumers, member states should commit to liberalise the routes and make it easy for new companies to enter the market and compete on it.

Bus transport providers will be aware that price increases will experience the market’s price-elastic nature, meaning that consumers respond swiftly to higher prices. This is, of course, related to the fact that the market provides alternatives such as air travel, car sharing, rail, or simply using your car. The fact that all options remain on the table is crucial for the price development in this sector.

As long as local regulators respect this principle, the fear that the current market landscape, or even a more concentrated market in which a handful of companies take over their competitors, would become predatory, is doubtful. In this instance, consumer choice isn’t only an argument of principle for the freedom of consumers. Still, it represents a guarantee against a market controlled by a handful of people or companies.

Ultimately, bus market liberalisation means that consumers can travel more efficiently and cheaply than ever before. It offers low-income households the opportunity to benefit from the same opportunities as everyone else. It helps reduce social inequality. 

However, challenges remain even as liberalisation progresses. Not all member states are on top of their game when it comes to reducing barriers, so more is left to be done to reach a fully integrated single transport market.

Originally published here.

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