June 18, 2007

Blood and Wine Mix in France’s Centralized Economy

The imagery of Dickens came to life again this week as blood and wine mixed in France. Despaired by the combination of overproduction and exploitation by middlemen, the Union for Viticultural Action in the Languedoc region in the south, aka the Crav, has threatened to turn to violence if the French government does not raise the price of wine.

The 100-day ultimatum issued by the group came exactly 100 years after the French wine makers last raised arms for the cause, which may have been the last the French in general raised arms, but that’s another story.

Cultural backbiting aside, having workers in an industrialized nation resort to violent methods is very alarming. If the economic mismanagement of a government spurs a response usually reserved for suicide bombing reprisals, it is safe to assume that the problem is neither a new one nor a simple one to resolve.

Although the Crav has contained the marking of its presence to graffiti, many non-affiliated wine makers have turned to more drastic measures, including suicide.

A French journalist who witnessed the taping of the video the Crav issued to the public officials said that the group seems completely serious about carrying out its threats, but that it is clear that their motivation is not revenge, but rather desperation.

Can anyone blame the wine makers who sell their product at a euro a liter while the restaurants are serving it at 15 euro?

And here the economic structure problem rears its ugly head. The wine makers, not as individual producers or collectives or companies, have to appeal directly to the government. And the nice EU people in Brussels who are all the more government.

Government regulation is all fine and well. Government negligence is not. The extreme measures the wine makers are promising to use are not commendable by any means. However, it is undeniable that they are measures of last resort.

I never thought I would question the pretty-in-pink controlled economy, but . . . did someone in the EU bureaucratic tower of Babel miss a memo about responsibility? If governments want the benefits of holding the reigns of the private sector, then they should be ready to serve the interests of the private sector.

The imbalanced relationship between the state and the wine makers is a telling example of how lack of market freedom is not only harmful in and of itself, but can result in other, potentially lethal, repercussions.

It can also harm the country in indirect ways. The number of wine makers who are now reliant on social security payments as their main source of income is growing. What is the logic behind forcing taxpayers to provide for people who are more than willing and able to work?

However the French government decides to handle, and hopefully resolve, this conflict, other countries reliant on a centralized economy should pay close attention. Whatever industry is in question, it is the government’s obligation to make it flourish. We can all raise a toast to that, no?