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07.18.2007

The Soul vs. The Market

I'm seriously behind on my magazine reading. So much that along with putting some delicate Japanese ceramics out of reach, I actually had to reduce the height of some piles before my 14-month-old niece Isabell came over and started wandering around my living room. In my mind's eye I watched her crushed under the weight of 12 issues of Decanter, 12 issues of The Wine Spectator, and 14 issues of Wired Magazine, and it wasn't pretty.

So anyhow, in the course of flipping through some of the stacks of dead trees in my house, I came across an absolutely lovely article on wine in the most unlikely of places: The Economist. Now I totally love the folks at the Economist -- great writers, thinkers, and generally top-notch journalists all around. But the few articles on wine that I've seen them turn out in the last few years have been less than stellar.

Not so this article from the June 14th edition.

This piece, complete with its silly cartoon, is a fantastic, if brief, exploration of the bizarre dichotomy that seems to plague Europe when it comes to "fixing" the problems with the wine industry. As the author points out, the EU has shown itself to be fairly shrewd when it comes to developing, maintaining, and culturing the growth of the European markets with respect to the primary tenets of capitalism (leaving aside for the moment a penchant for bureaucracy which is seriously unhealthy). Yet a recent set of reforms aimed at liberalizing what has been a highly over-regulated wine industry, has gone over like the Hindenburg on May 6th, 1937. No one seems to want to allow the European wine industry to actually function as anything resembling a free market.

I've been beating my head against the wall for years trying to puzzle out why the French persist in such backward thinking about how to improve their lot when it comes to the global wine industry, but it turns out that they're not alone, as the Luxembourgeois (if that's what they're called), the Portuguese, and the Germans all seem to be intent on maintaining outrageous levels of state subsidy for their wine industries.

Now I'm not suggesting that these reforms are a silver bullet. But it is remarkable just how loud the retching sounds are in response.

The writer for the Economist suggests that perhaps the problem is that we relate to wine not as a commodity, but as if it had a soul. The implication being that those things which are not just manufactured, but are crafted, somehow hold a different place in our hearts. I suppose an analogy might be that we don't want market economics deciding, for instance, who got to be an artist and who didn't, and subsequently which paintings would get hung in the Tate gallery (though there are already probably more free market effects in the art world than there are in wine).

I am a firm believer in the market, in case you couldn't tell, and it's incredibly difficult for me to understand how some people (including many readers of this blog) think that by lifting, shifting, or changing restrictions and regulations to allow EU states to better compete in the world market, somehow all the good wine will go away. As if allowing vintners to add acid to their wines or use a higher percentage of Merlot will suddenly cause those winemakers who are making fantastic wine (that everyone wants to buy right now) completely change their practices to produce shite that tastes like it was churned out of a Star Trek synthesizer. These people have far more integrity than that.

But I don't hope to really convince anyone of that point of view. I've decided that like arguments about terroir, this issue comes down to a question of faith. The EU member states think about wine regulations like Americans think about low taxes. No one wants to make any changes until the pain of inaction becomes stronger than their belief that they have a monopoly on the truth.

Comments (21)

Jack wrote:
07.18.07 at 11:40 PM

"...all seem to be intent on maintaining outrageous levels of state subsidy for their wine industries."

Just like those getting the corn, cotton and soy bean subsidies here. They don't want to give up their yearly windfall.

Carl wrote:
07.19.07 at 9:00 AM

Nice can o'worms here Alder. Where does one start?

Firstly, you must stop using Britishisms like "shite". If not, you will soon be saying "claret" and "trollop" and other shagging shite like that. We are not amused.

As for why governments do silly things, I believe that is the price we pay for Democracy. Farmers form a protected class. No matter how small a minority they represent within a community, their whining and wailing falls on open ears. We just picture Henry Fonda muttering "I'll be there", and we're putty. Farm subsidies and protection of farmers has become sacrosanct, and not just in Europe. As Jack points out, the U.S. has its share, paying farmers to keep their fields fallow. In Japan, it took ages to buy the land for Narita Airport through eminent domain because the farmers protested and nobody wanted to fight them. Until recent years, it was illegal to import rice into Japan because of its "cultural and religous significance, (until the 19th century, rice was used as money).

If Americans, the ultimate capitalists, can't apply free market principles to agriculture, I don't think we can expect anybody else to. And really, I don't think we have any crop so near and dear to our national heart as Europeans countries have with wine grapes. They'll protect that national treasure to the bitter end -- literally.

I suppose you, and all of us who agree with you about this, should do what we can to combat anti-market measures. I wonder what that would be.... Any suggestions?

Jerry D. Murray wrote:
07.19.07 at 3:54 PM

As alluded to above there is a serious cultural heritiage being protected by subsidizing Europes winegrowing. It goes beyond just helping growers, entire communities have vested intrests in a successful wine growing. In America most people, regardless of how close they might live to vineyards, have no connection to the vine. I encourage anyone to travel the golden mile from Bernkastel to Zelting in germany's Mosel Valley. Grape growing dates back 2000 years, it provides the fabric for the history and legand ( ie Bernkastel Doctor vineyard ) of the region. Everybody knows when the vines are ready to be picked bare. Everybody knows the invisible dividing line between Zeltinger Sohnenneur and Wehlener Sohnenneur, it isn't a bussiness it is a way of life.
Another bennefit of subsidizing grape growing is that it imposes, without officially doing so, restrictions on land use. Can you imagine what the cote'd or might look like with some european version of disneyland built on top of it? By encouraging grape growing they also discourage development of these lands. Americans have a 'sprawl' mentality that just does not exist in europe. Saving land for something other than development is a lesson we can certainly learn from.

Alder wrote:
07.19.07 at 4:20 PM

Jerry,

Your thoughtfully made point is very well taken. But let's be honest -- apart from the occasional scare about a freeway going through Margaux, or the recent new development threatening a vineyard in Cornas -- none of the vineyards that most of us know about and have experience with wine from are really affected by or targets for the reforms under consideration.

When the EU talks about grubbing up 600,000 hectares of vines, it ain't in the prime winegrowing region of the Mosel Valley. Its in Europe's equivalents of California's Central Valley -- huge flat areas of massive grape cultivation that yield fruit of seriously mediocre quality.

Now, I do believe that you are correct about the cultural differences between Europe and America when it comes to the cultural relevance of winegrowing, and in particular the cultural importance of certain zones. But the preservation of cultural heritage is completely different than the reform of an industry. It is possible to do both. Look at the recent designation of part of the town of Bordeaux as a UNESCO World Heritage site. Bravo, I say. Let's have more of that. But for pete's sake, let's also change some of the rules so that Europe can compete again on the world market for wine.

Alder wrote:
07.19.07 at 4:26 PM

Carl,

Sorry about the Britishisms. I just can't help myself. :-)

I don’t really thing that there's anything we can do of substance, unless we happen to have voting rights in the EU. This is a policy based problem and only changes to policies will fix it -- which means the people need to elect people who will do so, or pressure those they've elected to do so.

Frankly I don't even think buying lots of good European wine will help, but I'm doing that just in case.

Stacy wrote:
07.20.07 at 7:02 AM

Farming subsidies are an economic fact. But we have to remember that no money come without strings. I don't see that any wine grower would willingly give up the sure money in exchange for a total gamble.

That said, as some of the 'old world' wineries begin producing 'new world' style wines to up their sales they create havoc in the European wine making community. There seems to be an overwhelming amount of peer pressure to hold onto the social facade of tradition.

We Americans think of progress and natural and embrace change easily. So easily that we can't understand those who just don't have it in them.

As always, I think you hit it on the head. As much as we support the market, these changes are not going to come about any time soon until they become a glaring necessity.

I also agree with buying as much European wine as possible. I'll start today. :)

Jerry wrote:
07.20.07 at 11:44 AM

Alder,

Your point is also well taken. The vineyards most worthy of protection are those with the least need for it. But the second point, I believe, must of slipped by you. That is the value of agricultural land for the sake of it being agricultural land. Granted maybe some of these vineyards would be better off planted to wheat or used for grazing but for whatever reason they are not. By subsidizing the wine industry these areas are kept under vine instead of becomming housing developments or malls or resorts. Europeans have a several thousand years head start in understanding quality of life, evironmental impact and how to keep the peace. To help maintain agricultural land they have to subsidize some form of agriculture, why not grapes?

In addition many viticultural areas have made vast improvements in wine quality as a result of not only new technology ( enter MONEY ) but a change in thinking in viticulture. Who is to say, that given enough time, these regions won't begin making drinkable wine and become viable industries?

Europe is also much more inclined to behave in a socialist manner, a very unamerican trait. Are they wrong for doing so? I personally don't care one bit if the French kill off half ( the low quality half ) of thier wine industry, it is there problem. I just don't like being in a country that gives corporations benefits that only benefit corporations and pool wealth. If the french want to support farmers, regardless of what they farm, they are welcome to it. Recent events have brought into light the importance of not relying of global sources of agricultural products. If any nation is to be self sufficient or able to withstand international turmoil they must provide for themselves agriculturally. Wine grapes, by nature, are a pretty good way to maintain a healthy agricultural landscape. Compare the effects of 25 years of wheat farming on a soil to 25 years of grape growing. Americans have this sort of disdain for agricultural land and agriculturalists, we should take a lesson from the french and think about how we might convert an industrial park into food ( or wine ). Sometimes it is less about what grows on the land and more about the land itself.

Alder wrote:
07.20.07 at 11:46 AM

Jerry, I'm not necessarily a big fan of grubbing up as a solution, so don't take my comments as advocating that. I'm all for keeping vineyards vineyards, but the "who's to say, given enough time..." train of thought runs right smack into the brick wall of current regulation reality for these winegrowers. They have absolutely no incentive to make better wine, so without any changes in regulation, it's hard to imagine that even if these vineyards stay put that they could possibly improve their product.

Jerry wrote:
07.20.07 at 11:49 AM

I do see where you are coming from. It is just a foreign concept for me to think of someone NOT trying to make better wine ( especially when the wine currently sucks ). I do see your point and perhaps a tug of the rug beneath them might do more increase wine quality then giving them handouts. Of course there is the ethanol market!

Alder wrote:
07.20.07 at 11:52 AM

Yeah, I think that's the trap that's so easy to fall into. The folks that could really benefit from these reforms are currently suffering from a one-two punch: a) they have no incentive to make good wine (because they get paid so much for such crap right now) and b) even if they wanted to make better wine the current regulations make it both difficult to do so, and very difficult to market it once it is made.

hotsauce wrote:
07.20.07 at 12:06 PM

Alder, just because you believe free market capitalism is the cure to all ills (and you've found a magazine that agrees with you) doesn't mean you "have a monopoly on the truth".

You seem puzzled by French attitudes. Perhaps you would be less puzzled if you considered that not everyone believes in the things you do.

In fact, all of the world uses subsidies, grants and regulation to control and direct development. Tacit evidence that the laissez faire crowd remains on the fringe.

Alder wrote:
07.20.07 at 12:22 PM

Hotsauce,

Actually, I absolutely do not believe that free market capitalism is the cure to all ills. I believe that the government has a number of responsibilities to the society that creates it, among which are providing safety nets, entitlements, incentives and preventative investment to make sure that the unfortunate, disenfranchised, and marginalized members of society, as well as the arts, are taken care of and can thrive.

As far as the monopoly on the truth, you clearly don't know me very well. I dont believe in the truth. Period. There is no such thing. There are just interpretations, all of which are equally valid, but not all of which are equally powerful.

Blogs, and this one is no different, are places for the author to offer opinions and points of view. That's what you're reading here. It may be an emphatic point of view, but that's all it is.

Subsidies are very useful tools. But they don't always work. In France, they are not working. Or are you suggesting that the people runnning around burning buildings, bombing offices, and threatening the life of the new prime minister are an example of a properly functioning system of subsidies?

In the face of such problems, which are not confined to France, you're damn right I'm puzzled by French attitudes. Actually I'm less puzzled by French attitudes as I am by French INACTION. The wine industry in France is suffering and it has been for more than a decade and NO ONE is really doing anything about it. That's what's got me puzzled.

Are you content to just let it expire under the weight of its own bureaucratic obtuseness? Or are you one of those people who is just in denial and thinks that everything is peachy in the state of Denmark?

Carl wrote:
07.21.07 at 12:12 PM

Alder,

"state of Denmark"? -- now you're alluding to Shakespeare?? This Brit thing is really getting out of hand!

I have to agree with you. My motto: If the government can avoid getting involved, it should. Socialism has not worked in large countries, and the populations of Europe have certainly realized that. Beginning with Thatcher, then Schroeder, and now Sarkozy, who seems genuinely determined to end the over-regulation in France. Merkel also is supporting freer markets and the Germans are overwhelmingly supporting her.

Obviously, Europe is different from the U.S. Changes occur more slowly, partly because the E.U. has far less power than the American Federal government. Individual nations within the E.U. have veto power on so many issues. But here in France, you can almost feel the ice breaking. Soon, transportation workers will be not allowed to strike. Even just a few years ago that would have been unimaginable. I don't know if, or how, these shifts in attitude will affect the European wine industries, but hopefully changes will come in time -- maybe just in time.

I also like your idea of supporting deregulation by buying wine, and I will glady join in that holy cause. I just hope my Visa card is just as enthusiastic....

Alder wrote:
07.21.07 at 5:04 PM

This from today's New York Times (courtesy of a tip from Hector, one of my readers):

[ snip ]

New Leaders Say Pensive French Think Too Much

By ELAINE SCIOLINO

PARIS, July 21 — France is the country that produced the Enlightenment, Descartes’s one-liner, "I think, therefore I am," and the solemn pontifications of Jean-Paul Sartre and other celebrity philosophers.

But in the government of President Nicolas Sarkozy, thinking has lost its cachet.

In proposing a tax-cut law last week, Finance Minister Christine Lagarde bluntly advised the French people to abandon their "old national habit."

"France is a country that thinks," she told the National Assembly. "There is hardly an ideology that we haven’t turned into a theory. We have in our libraries enough to talk about for centuries to come. This is why I would like to tell you: Enough thinking, already. Roll up your sleeves."

[ snip ]

07.22.07 at 8:15 AM

Alder -- With all this debate, I can't believe no one pointed out the most egregious error in your blog post.

It's called a Star Trek "replicator", not a "synthesizer." Of course I understand the mistake, as the replicator can only make "synthohol" and not real booze.

Wilf K. wrote:
07.23.07 at 3:56 PM

Alder: As always another very interesting post and great comments. It seems that just because someone knows what the problem is does not mean they have the answer. Part of the EU problem is that consumption at home has plummeted. For instance in Spain in 1987 per capita consumption was around 50 litres, today that is down to 25 litres. Subsidies to preserve agricultural land and save them from development? Here in British Columbia the provincial government, established a special land use zone to protect BC's dwindling supply of agricultural land. This zone was called the "Agricultural Land Reserve". No subsidies, just can't use that land for anything else but agricultural purpose.Anyone interested on how that came about and functions, check this website:
http://www.alc.gov.bc.ca/commission/alc_main.htm

Peter Himes wrote:
07.24.07 at 7:05 AM

Great discussion, thanks Alder for starting the thread. My American view is that there's nothing wrong with subsidies, if used as a way to encourage risk taking and investment in certain areas that the government thinks are important. It is the government version of venture capital, I suppose, done on a national and politically charged level. what is missing in France is the willingness to (a) allow initiative in the industry, both in winemaking and land use, and (b) allow winners and losers to emerge as a result. Unfortunately the politics (and socialist attitude in France) leans toward state support in perpetuity. My friends in France are glad to see Sarkozy in office & try to get some change started -- although they will admit it is a long, uphill battle! (These are the same friends who only buy Grand Cru Burdundies because the QPR of most French wines is too low!)

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