POLICY DEPENDENCY AND REFORM: ECONOMIC GAINS VERSUS POLITICAL PAINS

Economic analysis condemns market intervention in favour of farmers as inefficient, if not also ineffective, and therefore well worth reform. Practical experience, however, indicates that such lessons are hard to learn and implement. Part of the reason appears to be that economic analysis seldom clearly identifies the real costs and benefits of reform, and seldom explains these sensibly to the relevant constituencies. Furthermore, economic analysis rarely explains why the protectionist measures were adopted in the first place, or explores the dependencies that these policies generate. Without these explanations, and without reform strategies that take full account of them, policy reform will continue to be reluctant, slow and frequently counterproductive. This paper reconsiders the evolution of farm policies and the economic assessment of their costs and benefits, and draws conclusions as to the general shape of reforms likely to reconcile economic efficiency with political acceptability. In so doing, it re-phrases conventional economic arguments in terms which seem to accord better with sensible intuition, which may prove more accessible and credible to policy makers and advisors. It concludes with a substantial challenge to the agricultural economics profession