False Economy - Alan Beattie [46]
Of course, Britain and Europe generally had to pay for these imports, but they could do so with the labor-and capital-intensive products in which they had begun to specialize—clothes and shoes in particular. Since the colonies were based on slavery—and American cotton was produced by slaves even after the institution was abolished throughout the British empire, in 1834—Britain did not have the problem that other countries encountered. China and Japan found that the farmworkers who produced the cash crops in which they traded would get distracted into subsistence farming or cottage industries and have to be lured back with higher wages.
The fruitfulness of the transatlantic trade was aided by the fact that Britain was increasingly comfortable with letting the comparative advantages of its economy vis-a-vis those in the New World play out. The repeal of the Corn Laws in the mid-nineteenth century was a sign that the British political establishment was prepared to regard importing agricultural produce and exporting manufactures as a consistent pattern in Britain's economic future. Britain preferred buying in food and fiber from around the world to aiming for self-sufficiency. Gradually, though it took longer for some than others, most of Europe adopted the same view.
Wheat from the United States, Canada, Australia, and Argentina—and the Ukraine, once a railway had been built to the Crimea to carry grain—completely changed the pattern of European agriculture. The opening up of the pampas and the prairie also drove millions of now uncompetitive European farmers off their land, and in very many cases caused them to emigrate to their competitor countries in the Americas, where there was an abundance of land and a shortage of labor. A series of bad harvests hit Europe in the 1880s, but rather than a disaster for European consumers it proved to be a business opportunity for New World producers. Far from the spike in prices that might have been expected, considering the experience of earlier centuries, the real price of wheat in Europe (adjusted for movements in general inflation) fell by 15 percent between 1873 and 1896.
So much for importing embedded or virtual land in the eighteenth and nineteenth centuries. When it comes to the virtual water trade of the twentieth century, though the pattern of competitiveness is clear, there remains considerable scope for natural advantages to be given much freer rein.
Only recently have many people come to see that water is rather like oil: it is essential to the running of a modern economy; demand for it is unresponsive to price in the short run, though it may be more flexible in the medium term; and its owners have a disturbing tendency to mismanage it in spectacularly silly ways. The second of these characteristics often gives rise to the third. Patterns of water use built up over time, even if circumstances have now changed substantially, are not easy to shift. In particular, the physical and social infrastructures of farming are often reliant on water being used the way it has always been used, which often means given away free or well below its real cost. Farmers are reluctant to abandon a traditional way of life because the availability of something