Thursday, December 11, 2008

Bailouts: Italian Style

So in the US, we bail out the banks, the auto companies, the insurance industry... So what does the Italian government do? They bail out the Parmesan cheese industry!
Producers sought government help in the face of prices that have fallen some 25 percent over the past five years, said Giorgio Apostoli, who represents dairy farmers for the Coldiretti agriculture lobby. The producers faced pressure from distributors who offer sharp discounts on the grateable cheeses to lure shoppers into supermarkets

So thanks to the industry's lobbying power, at the expense of taxpayers the government will buy up 3 percent of annual production in an attempt to drive the price up. The official reasoning... to buy food in order to give to the poor. But of all the things you can do for a food program, the government decides to go with Parmesan cheese?

In reality, just as the auto companies come crying to the US government looking for money because they make inferior products that can't stand up to competition, so do the cheese makers. So instead of letting consumers purchase the cheese that they want to buy at the given market price, thanks to their elected officials, Italians will now have to use their tax dollars to make their cheese more expensive. Looks like lobbying power wins out again. Instead of spending the resources to innovate, cut costs or find some other way to compete in the marketplace, they instead decide it is worth while spending resources lobbying so the government can use other people's money to keep them in business, harming society as a whole. As Jeff Flake, one of the few Congressmen I actually like famously said, "I would argue this is one cannoli the taxpayer doesn’t want to take a bite of."



When I first read EJB's post, my immediate reaction was to begin my response with some tasteless ethnic jokes about Italians - seeing as both EJB and I are (at least half) Italian, and I figured I could get away with it. On second thought, this might not be the place for such offensiveness. Rest assured, my jokes would NOT have been about smelling bad and beating your wife...

Anyway, I had two non-offensive thoughts after reading the article. First, the Italian government's stated purpose for the "bailout" (they're actually just agreeing to buy one hundred thousand wheels of Parmesan) is that they will donate the cheese-wheels to the needy. So it's win-win; Parmesan cheese-makers get to stay in business and the poor get fed. But wait, they're giving Parmesan cheese to poor people? What are they supposed to do with it, sprinkle it on top of their non-existent soups, salads and all-you-can-eat breadsticks? Who gives someone a wheel of Parmesan cheese when they're hungry? I kind of find this cruel: "Oh you're out of money and starving? Here, have this 66 pound wheel of crumbly, foul-smelling curdled milk." Come on Italy, the last thing your hungry need is Parmesan cheese. Man up and confess that you're only doing this to bailout an important industry that probably donates money to Parliament members.

My second thought was the role the EU plays in the great cheese bailout. The article EJB links to mentions an EU program that is intended to help feed the hungry. It also implies that some of the bailout money will come from the EU itself. From what little I know about EU law (and believe me, I have a very limited knowledge of the black-letter law itself), EU monetary disbursements of this nature only go towards (or primarily benefit - again, I'm not completely sure of the legal language) foods or beverages which have been labeled with "Protected Designation of Origin" status. Sure enough, Parmesan cheese is just such an item. Thus, as European economies continue to stumble alongside ours, we can look forward to other wonderful EU bailouts of Asiago cheese, Champagne and - my personal favorite - "Melton Mowbray pork pies."
I would not eat that.