Mom and Pop, Canadian Wine, and Free Trade

I came across an interesting factoid the other day, and decided it was worth writing down.

"Back in 1988, as the United States and Canada were in the final stages of negotiating their bilateral free trade agreement (the predecessor of the current NAFTA), Canada's wine industry was adamantly opposed. Canadian winegrowers argued that the wine they grew in their country's cold climate could never compete with wine from warm and sunny California. But Prime minister Brian Mulroney (1984-93) went ahead and concluded the agreement. The winegrowers responded to this outcome by sending repeated study groups to France, and eventually came up with strains of grapes that were capable of producing high-quality wine while being hardy enough to withstand the Canadian cold. These are now used to make Icewine, a dessert wine that has established a certain presence for itself internationally. This is a good example of FTA-induced structural reform." (from "Japan Echo", 10, October 2009)

Since a good chunk of my readers are wine enthusiasts, I thought this tidbit of info was worth sharing, and brings home a political point I have been an advocate of for awhile that should strike near and dear to the hearts of wine-lovers.

I would like to look at this information in the light of the plea I have heard that takes numerous forms, but looks something like this: "Those big multi-nationals are closing down the local mom and pop stores!" or "Buy local!"

I dislike this line of thinking because it is missing out alot of very important information. Taking the above info from the Japan Echo magazine, there are characters and their relationships to one another that weave a story together:

The Government
Canadian wineries
Canadian wine consumers
US Wineries

If we only look at the Canadian wineries and portray them as hard-working local mom-and-pop good guys and portray the government and the giant California wine industry as some ruthless money-grubbing machine, you end up with a way of thinking that looks something like the NDP party. (that's bad btw)

Why exclude the plea of Canadian consumers? Until NAFTA came along, Canadian law demanded that Canadians put up with mediocre wine. Why are mom-and-pop winegrowers portrayed as the good guys here? To side strictly with mom and pop is to side against consumers, and to deprive the Canadian dinner table the opportunity of having a greater selection of wines with which to pair their bacon and maple syrup.

Or consider the case of US wineries: here California wineries have one of the best products in the world. They have something that people are willing to pay for. Why should the wineries be denied the opportunity of providing their quality goods only to their local region? If they can produce it, and people are willing to pay for it, how is it fair to deny everyone above the 45th parallel line the opportunity to drink their wine?

Essentially the predecessor to NAFTA told mom and pop to suck it up and get in the ring -quit subjecting Canadians to mediocre wine.

Did mom and pop end up KO'd on the mat? This story doesn't give the details, but I'm sure some of the wineries tanked. Is this sad? I think if one's compassion makes you cry for failed businesses we need to re-think how much our hearts are dominating clear thinking -is it right to weep over the loss of a winery that couldn't produce a wine good enough to keep them in business? Some mom and pop wineries manned up and faced the challenge and improved the Canadian wine scene for all. This is laudable: should we not applaud hard work and ingenuity? On the flip side, is it good to create an economic environment where these kinds of efforts are stifled through an enforced absence of serious competition?

I think the "protect mom and pop!" mentality is the result of bad information presented in a moral-high-ground package. There's something morally edifying about thinking you're "standing up for the little guy!" in your political opinions. It even seems like the good Christian thing to do, "defend the cause of the orphan and widow" and all that. However, I think this point of view basically views the player "government" in this drama something like an "economic mommy". Rather, Governments are to the economy what refs are to a boxing match: they set the rules and makes sure there's no foul play -but the fact is, it's a fight we're watching, not an episode of "leave it to Beaver". In a way, good economics has some parallels with good parenting: If mommy is confident that she's raised junior well, she won't be afraid of letting him compete with the big boys. Real confidence comes through real accomplishment. The Canadian wine industry now has real confidence because it actually accomplished something.

Fighting and competition is part of life in all aspects, from love, to war, to the job market, to economics, to spirituality. In the bible, competition is often presented as impetus for spiritual growth: "Outdo one another in showing honor" (Rom 12:10) The Corinthian churches were also exhorted to out-give the Macedonian churches as a matter of regional competitive generosity. (2 Cor 8) I simply mention this to demonstrate that competition isn't always bad: it's also a tool for good.

So kick back and enjoy a nice glass of wine to celebrate the sweet nectar of economic diversity, and don't feel bad that some businesses lose out. Business is a gamble, a chance at good income and a chance at financial loss. That's the way it ought to be.