Quotulatiousness

May 26, 2013

Putting the Gibson Guitar raids into context

Filed under: Bureaucracy, Law, Politics, USA — Tags: , , , , — Nicholas @ 11:06

Remember back in 2011 when the US government raided Gibson Guitars for alleged violations of Indian law? (Posts here, here, here, here, and here.) Now that we’re learning much more about the IRS witch hunt for Tea Party organizations, Investor’s Business Daily points out that the Gibson raids now make sense:

Grossly underreported at the time was the fact that Gibson’s chief executive, Henry Juszkiewicz, contributed to Republican politicians. Recent donations have included $2,000 to Rep. Marsha Blackburn, R-Tenn., and $1,500 to Sen. Lamar Alexander, R-Tenn.

By contrast, Chris Martin IV, the Martin & Co. CEO, is a long-time Democratic supporter, with $35,400 in contributions to Democratic candidates and the Democratic National Committee over the past couple of election cycles.

“We feel that Gibson was inappropriately targeted,” Juszkiewicz said at the time, adding the matter “could have been addressed with a simple contact (from) a caring human being representing the government. Instead, the government used violent and hostile means.”

That includes what Gibson described as “two hostile raids on its factories by agents carrying weapons and attired in SWAT gear where employees were forced out of the premises, production was shut down, goods were seized as contraband and threats were made that would have forced the business to close.”

Gibson, fearing a bankrupting legal battle, settled and agreed to pay a $300,000 penalty to the U.S. Government. It also agreed to make a “community service payment” of $50,000 to the National Fish and Wildlife Foundation — to be used on research projects or tree-conservation activities.

Update, 31 January 2014: Gibson releases a new guitar to celebrate the end of the case.

Great Gibson electric guitars have long been a means of fighting the establishment, so when the powers that be confiscated stocks of tonewoods from the Gibson factory in Nashville — only to return them once there was a resolution and the investigation ended — it was an event worth celebrating. Introducing the Government Series II Les Paul, a striking new guitar from Gibson USA for 2014 that suitably marks this infamous time in Gibson’s history.

From its solid mahogany body with modern weight relief for enhance resonance and playing comfort, to its carved maple top, the Government Series II Les Paul follows the tradition of the great Les Paul Standards—but also makes a superb statement with its unique appointments. A distinctive vintage-gloss Government Tan finish, complemented by black-chrome hardware and black plastics and trim, is topped by a pickguard that’s hot-stamped in gold with the Government Series graphic—a bald eagle hoisting a Gibson guitar neck. Each Government Series II Les Paul also includes a genuine piece of Gibson USA history in its solid rosewood fingerboard, which is made from wood returned to Gibson by the US government after the resolution.

[…]

The Government Series II Les Paul is crafted in the image of the original Les Paul Standard, with a carved maple top and solid mahogany back with modern weight relief for improved playing comfort and enhanced resonance. The glued-in mahogany neck features a comfortably rounded late-’50s profile, while the unbound fingerboard — with a Corian™ nut, 22 frets and traditional trapezoid inlays just like the very first Gibson Les Pauls — is made from solid rosewood returned to Gibson by the US government. And, the guitar looks superb with its unique Government Tan finish in vintage-gloss nitrocellulose lacquer.

May 6, 2013

A Canadian criminal innovation – cheese smuggling

Filed under: Cancon, Economics, Food, USA — Tags: , , — Nicholas @ 09:58

The CBC reports on a breathtaking news item … imported mozzarella cheese is being removed from the clutches of the supply management system, which will reduce prices by a significant amount:

Pizza lovers could soon be paying less for their favourite pies.

A ruling made this week by the Canadian Dairy Commission could soon allow Canadian restaurants to buy deeply discounted mozzarella cheese.

The commission changed the rules used to classify mozzarella cheese, putting the milk product in its own class and essentially removing it from supply-management pricing. Before the ruling, the price for mozzarella cheese in Canada was artificially high when compared to the world market.

The new class, to take effect June 1, is expected to result in lower costs for Canadian-made mozzarella for restaurants that prepare and cook pizzas on site.

Bob Abumeeiz, who owns Arcata Pizzeria in Windsor, Ont., said the ruling could drop the price of a large pizza by as much as 10 per cent.

Oh, and the cheese smuggling?

High prices are part of the reason some pizzeria owners were turning to contraband cheese, smuggled into Canada from the U.S.

Last fall CBC News learned three men, including one current and one former police officer from the Niagara Falls area, were charged in connection with an international cheese-smuggling network.

The men are accused of smuggling caseloads of cheap cheese from the U.S. to sell to Canadian pizzerias and restaurants.

April 16, 2013

Six political talking points on international trade that are myths

Filed under: Cancon, Economics, Media, Politics — Tags: , , , — Nicholas @ 11:32

In Maclean’s, Stephen Gordon collects six of the most common myths politicians use to justify trade distorting policies:

1) Exports are good. Not true; exports are the costs we pay for engaging in international trade. Diverting domestic productive resources to producing more things for foreigners doesn’t increase our standards of living.

2) Imports are bad. This is point one restated: imports are the benefits from trade. The reason we engage in international trade is to obtain goods and services more cheaply than we can produce them for ourselves.

3) Trade deficits are bad. I went though this at length in this post: noting that a country has a trade deficit (or, more properly, a current account deficit) is the same thing as noting that domestic investment is larger than domestic savings. It’s not obvious why this is necessarily a bad thing.

4) Trade deficits are a sign of a slowing economy. The Canadian trade balance is generally counter-cyclical: falling during expansions and rising during recessions. A trade deficit is standard fare for Canadian expansions, not something to get concerned about.

5) Liberalized trade increases employment. Again, this is point one restated. Liberalized trade may increase the number of workers in certain export-oriented sectors. But the effect on total employment in the economy is zero.

6) Liberalized trade reduces employment. Again, this is point two restated. Liberalized trade may reduce the number of workers in certain sectors vulnerable to foreign competition. But the effect on total employment in the economy is still zero.

March 25, 2013

Budget Day was also apparently opposite day

Filed under: Cancon, Economics, Politics — Tags: , , , — Nicholas @ 10:51

In Maclean’s, Stephen Gordon give props to the spinmeisters in the employ of the federal government:

Full credit to the government’s communications strategists: they managed to produce budget-day headlines that said the exact opposite of what was in the budget.

The first thing I read on the morning of budget day was the National Post story about cutting tariffs on hockey gear. There was also a matching A1 story in the Globe and Mail and I walked to the budget lockup in a cheerful mood. Even though the numbers involved were tiny, I couldn’t help but feel encouraged about how the measure was being marketed. Almost without exception, trade liberalisation is presented as a concession to the demands of foreign exporters, but the real gains from trade are those obtained from being able to purchase cheaper imports. These gains can be obtained by reducing tariffs unilaterally – the most famous example is the repeal of the the UK Corn Laws in 1849. There was no drawn-out process of negotiations with corn (wheat) exporters in other countries: the UK government simply eliminated tariffs so that the population could have cheaper food. The morning headlines led me to believe that our government was going to implement a unilateral tariff reduction for the simplest and best reason: because it increased consumers’ purchasing power.

I was wrong, of course. Yes, there were those 37 tariff reductions, but there was also the measure to ‘modernize’ Canada’s General Preferential Tariff (GPT) regime by ‘graduating’ 72 countries from the GPT; imports from these countries will now face higher tariffs. Mike Moffatt estimates that those 37 tariff reductions will be accompanied by 1290 tariff increases. [. . .]

So instead of a unilateral reduction in tariffs, the government is planning a unilateral increase. This is not how a pro-trade government behaves.

March 10, 2013

Do they have to destroy the Republican Party to save it?

Filed under: Media, Politics, USA — Tags: , , , , , — Nicholas @ 10:00

The defeat of the Republicans in the last US federal election has a lot of them starting to consider radical changes to the party in order to attract new voters. Some of these proposed changes are so radical that it’s hard to believe they wouldn’t rupture the party and drive away nearly as many as they hope to bring in. The farcical notion of a “conservative welfare state“, for example, would likely jettison any last vestiges of reducing the size of government:

[Matthew] Continetti is not the first conservative to argue — falsely as I note in an upcoming piece for Reason magazine — that courting new constituencies such as Hispanics, Asian Americans and other minorities will require the party to give up even its pretense of limited government. Still, Continetti’s basic point that the GOP does not have a coherent ideology that will allow it to court new constituencies while hanging on to its old ones is well taken. After all, how does the party appeal to the “millennial generation” that includes gays, young foodies and indie-music listening hipsters without losing the meat-and-potato social conservatives in, say, Charleston, South Carolina?

Continetti’s answer, dusted off from a 1975 essay by Irving Kristol, is that what the GOP needs is an authentically conservative version of the liberal welfare state. To fashion such a state, Continetti argues, would require:

    Republicans to revisit some of the assumptions they have held since the end of the Cold War. Maybe the foremost concern of most Americans is not the top marginal income tax rate. Maybe you can’t seriously lower health care costs without radically overhauling the way we pay for health care. Maybe a political party can’t address adequately such middle-class concerns as school quality and transportation without using the power of government. Maybe the globalization of capital and products and labor hasn’t been an unimpeachable good.

I am all for rethinking post-Cold War assumptions, but do we have to throw globalization and trade liberalization under the bus in the process? After all, hostility to trade has become passé even among Third World anti-trade activists such as Vandana Shiva — the last ones holding their finger in the dyke to stop globalization. This is in no small part due to the debunking done by economists such as Jagdish Bhagwati who have shown that even the immediate losers of trade liberalization win in the long run. So what is the point of reviving this animus especially since Continetti offers no new (or even old) evidence of trade’s downside?

[. . .]

In short, the ideal conservative welfare state would be a libertarian dystopia of even bigger proportions than the liberal welfare state. There is less welfare and more state in it.

But what is deeply ironic is that a magazine that accuses libertarians of isolationism because they oppose American military interventionism has no qualms about recommending a restrictionist immigration policy to keep foreigners out and a protectionist trade policy to keep foreign goods out. If I had to pick a term for this foreign policy, I’d call it neo-isolationism. And maybe I lack imagination, but it is hard to see how a party that wants to engage the world through its “fearsome military” — rather than through voluntary exchange and mutual cooperation — could gain enough moral high ground to craft a winning political message, especially in a war-weary country.

March 6, 2013

QotD: Canada Syndrome

It’s one of the marvels of the Canadian electorate. Show Canadians a special interest group that uses its government-granted privileges to fleece consumers, and they’ll embrace it as a “national champion,” a “uniquely Canadian way of life” or some equally vapid catch-phrase.

This is from the Wikipedia entry for Stockholm Syndrome:

    Stockholm syndrome, or capture–bonding, is a psychological phenomenon in which hostages express empathy and sympathy and have positive feelings toward their captors, sometimes to the point of defending them.

What we suffer from is the economic policy equivalent. Call it “Canada Syndrome”: a tendency for consumers to identify with the producer interests that are holding them hostage.

Stephen F. Gordon, “Our Stockholm Syndrome about supply management”, Maclean’s, 2013-03-05

February 14, 2013

Crony capitalists make pitch for industrial policy in defence purchases

Filed under: Business, Cancon, Government, Military — Tags: , , , , , , — Nicholas @ 11:02

Canada doesn’t really have a defence industry — certainly not in the sense of Britain, France, or the United States. We have some companies which happen to make products of use to the military (armoured vehicles, for example), but our government is not tightly tied to the fortunes of these companies in some sort of maple-flavoured Military-Industrial Complex. Some movers-and-shakers want to change that:

It goes without saying that the proposal to siphon funds to defence contractors is gussied up in industrial-policy jargon. For instance, we’re told how defence industries are “important sources of technological dynamism and innovation [and] leading-edge participants in global value chains.” (Who today isn’t part of a global value chain?) Also in keeping with current industrial-policy trendiness, the government is instructed to be strategically selective in KIC-starting the sector. “KIC,” you see, stands for “Key Industrial Capabilities,” which is what we’re told we should focus on.

But despite the alluring bells and whistles, the message to firms selling to the government is clear: Either pay up or forget about getting the contract. From now on, if the committee gets its way, how you plan to spread the industrial booty around the Canadian economy will weigh directly in the balance with how your product performs. The new fighter jet doesn’t accelerate quickly enough to elude missiles? Well, never mind that, it comes with a new plant in Mississauga. Shells pierce the new tank’s armour? Too bad. But the innovation spinoffs for Thunder Bay are just too good to pass up.

You might think that interpretation extreme. Surely safety for our soldiers and value-for-money for our taxpayers come first. But what else could be meant by the recommendation that bidders specify the industrial benefits they’re offering as part of their bid itself, rather than as an add-on after the performance characteristics of their product or service have won them the contract?

Suppose that instead of causing defence contracts to be inflated with offsets for Canadian industry, this committee consisting of a high-tech CEO, a former chief of staff at national defence, an IP specialist in a defence company, a retired general and Paul Martin’s one-time policy guru recommended levying a 5% tax on all government defence purchases and using the revenues thus generated to subsidize Canadian defence contractors?

I sent the original Globe and Mail URL to Jon saying, “The very last thing Canada should be attempting is to use government money to build a ‘defence industry’. Let the military buy what they need on the open market — regardless of country of origin — at market prices. The fetish to have a domestic defence industry is pure crony capitalism clothed in a “patriotic” fig leaf.”

February 11, 2013

Senate report calls for tariff cuts

In the Financial Post, Terence Corcoran looks at the good and not-so-good aspects of a recent Senate report on the reasons Canadians pay so much more for goods than Americans (even when the goods are identical and the currencies are trading at par):

Retail prices in Canada, seemingly across the board, are higher. Even with the Canadian dollar at par, the price of everything from running shoes to televisions and Chevy Camaros to books is said to be above U.S prices. One bank report once put the Canada-U.S. price gap at 20%.

Somebody’s gotta do something, everybody agrees. Enter the Senate committee with one of the most hard-nosed, market-driven overviews of how and why Canadians pay more for goods at retail. The report dodges and fudges some key issues, especially farm product supply management, which was seen by the committee and the retail industry as too politically hot to handle.

[. . .]

Even in this, however, the committee pulls its first punch. The recommendation to “review” such tariffs — watery phrasing in itself — also suggests “keeping in mind the impact on domestic manufacturing.” Sorry, folks, but you can’t have it both ways. Tariffs are protectionist devices for manufacturers that consumers pay for. If you want to reduce the price to consumers, the $3.9-billion in protection for manufacturers has to go. End of discussion.

What makes The Canada-USA Price Gap even more valuable is its compact insights into the many causes of higher retail prices in Canada. The economy is a complicated and often unfathomable series of market and price relationships beyond the power and even understanding of policy makers. The report recognizes that fact time and again.

February 8, 2013

PM’s long awaited (ghostwritten) book on hockey to be published in the US due to Canadian publishing regulations

Filed under: Books, Cancon, Media, Sports — Tags: , , , , — Nicholas @ 09:47

A double-whammy from the Globe and Mail‘s John Barber: due to protectionist media rules brought in during the Mulroney years, Prime Minister Stephen Harper’s book on hockey — ghostwritten by G&M columnist Roy MacGregor — will have to be published outside the country. Inline Update: The G&M has retracted the claim that the book was ghostwritten. Thanks to commenter Dwayne for the update.

Prime Minister Stephen Harper’s upcoming book on the history of professional hockey will be published in the United States rather than Canada because of prohibitions embedded in the government’s own cultural policy.

Simon & Schuster, the U.S.-based company chosen to publish the English-language edition of the Prime Minister’s book, is banned from publishing books in Canada under the Investment Canada Act. But the act does permit foreign-owned companies to distribute titles they have published in their home territories.

A single edition edited and printed in the U.S. will likely appear simultaneously in both markets, so Canadians will not have to wait to buy a copy.

“It’s ironic that he is publishing with a company that is forbidden by his government to have a Canadian publishing program,” Toronto literary agent Denise Bukowksi said. “But if North American rights are contracted in the U.S.A., they can get away with it.”

Three years ago, the Harper government announced a review of the policy, which the government of Brian Mulroney adopted to promote the growth of Canadian publishers at the expense of the multinational companies that then dominated the domestic market. The government has yet to announce changes.

Update: Hmmm. The story gets a bit more confused, as Roy MacGregor is quoted in this story denying any involvement:

Roy MacGregor, who has written 40 books, including the popular Screech Owl series, has talked with the prime minister about the book and describes him as “fanatically” knowledgeable.

MacGregor, who has worked as a ghost writer, says Harper hasn’t employed one.

“I can guarantee you there’s no ghost,” he said. “I’m sure it would come up. The reason it would come up is I know of his stated determination that no matter how long it took, he wanted to be the one that did it. He had research help but it was going to be him plucking away at the computer keys.”

H/T to Colby Cosh for that URL.

November 24, 2012

Regulating food container size as a form of soft protectionism

Filed under: Bureaucracy, Cancon, Food — Tags: , , , , — Nicholas @ 10:54

Terence Corcoran talks about the 1970s-era food packaging regulations that have suddenly become topical:

What started out looking like a regulatory non-event, the Harper government’s plan to repeal scores of petty federal rules governing the size of containers for packaged food in supermarkets, has suddenly become a great national food fight.

It’s industry against industry, food processors versus supply management, Heinz battling Campbell’s, baby-food makers against corn canners — all part of a war over jobs and trade and consumer dollars. Nominally over antiquated federal regulations, it’s also a war that highlights another reason why Canadian consumers pay more for products at the retail level.

[. . .]

Never mind peanut butter. Ottawa has detailed container specs for what looks like every food product on store shelves: canned vegetables, fruit juices, vacuum-packed corn, tomato juice, maple syrup, frozen spinach, pork and beans, bagged potatoes, soups, desserts, pies, sauerkraut, horseradish sauce, wine — and many more.

It is unclear why these detailed container-size regulations exist, but one explanation is that they are a result of Ottawa’s mass conversion to metric measure in the 1970s under then prime minister Pierre Trudeau. Under the metrication rules, the law mandated metric for all prepackaged food products.

Whatever the intent of the detailed regulations, the effect has been to erect trade barriers that have created protected industries that are now opposing the proposed changes. The Food Processors of Canada set up a web page, KeepFoodJobsInCanada, promoting an email campaign to force Agriculture Minister Gerry Ritz to block the plan to repeal the container-size regulations. It seems to have worked, so far.

October 23, 2012

Canada’s foreign investment “net benefit” test is a farce

Filed under: Bureaucracy, Business, Cancon, Government — Tags: , , , , — Nicholas @ 10:15

Andrew Coyne scrambles to find the right words to describe the indescribable:

The existing rules, as readers will know, require that a foreign takeover be of “net benefit” to Canada. How this is to be demonstrated, how it is even defined, is a secret to which the bidder is not privy — understandably enough, since it is not known to the government either. The result may be compared to a game of blind man’s bluff, only with both players wearing blindfolds. The bidder makes repeated attempts to hit the mark, while the government shouts encouragingly, “warmer… ” or “cooler…” depending on its best guess of where the target happens to be at the time.

I’m joking, of course. In fact, there’s a perfectly clear definition of “net benefit.” As set out in section 20 of the Investment Canada Act, the minister is required to take into account the effect of the investment on “the level and nature of economic activity in Canada,” specifically (but “without limiting the generality of the foregoing”) “on employment, on resource processing, on the utilization of parts, components and services produced in Canada and on exports from Canada.” Clear enough, right?

[. . .]

All told, I count more than 20 different criteria to be applied, vague, elusive and contradictory as they are. Whether it is possible to measure even one of them in any objective fashion, still less all of them at the same time, may be doubted — but even if you could, the Act provides no benchmark of what is acceptable, separately or collectively. Neither does it say what weight should be given to each in the minister’s calculations, or even whether he strictly has to pay any of them any mind at all (“the factors to be taken into account, where relevant, are…”).

In other words, the whole thing is a charade, applying a veneer of objectivity to what remains an entirely subjective — not to say opaque, arbitrary and meaningless — process. Which is good, since any attempt to define such benchmarks, weights, etc would be even more arbitrary and meaningless. Because there isn’t any objective definition of “net benefit,” at least in the sense implied, nor is it necessary to invent one. We don’t need to clarify the net benefit test. We need to abolish it.

October 10, 2012

Is “national security” just another term for “protectionism”

Filed under: Business, Cancon, China, Government, Technology — Tags: , , , — Nicholas @ 10:16

Daniel Ikenson at the Cato@Liberty blog:

Chinese telecommunications companies Huawei and ZTE long have been in the crosshairs of U.S. policymakers. Rumors that the telecoms are or could become conduits for Chinese government-sponsored cyber espionage or cyber attacks on so-called critical infrastructure in the United States have been swirling around Washington for a few years. Concerns about Huawei’s alleged ties to the People’s Liberation Army were plausible enough to cause the U.S. Committee on Foreign Investment in the United States (CFIUS) to recommend that President Bush block a proposed acquisition by Huawei of 3Com in 2008. Subsequent attempts by Huawei to expand in the United States have also failed for similar reasons, and because of Huawei’s ham-fisted, amateurish public relations efforts.

So it’s not at all surprising that yesterday the House Permanent Select Committee on Intelligence, yesterday, following a nearly year-long investigation, issued its “Investigative Report on the U.S. National Security Issues Posed by Chinese Telecommunications Companies Huawei and ZTE,” along with recommendations that U.S. companies avoid doing business with these firms.

But there is no smoking gun in the report, only innuendo sold as something more definitive. The most damning evidence against Huawei and ZTE is that the companies were evasive or incomplete when it came to providing answers to questions that would have revealed strategic information that the companies understandably might not want to share with U.S. policymakers, who may have the interests of their own favored U.S. telecoms in mind.

It’s not just the United States, either: Canada is also getting wary of Huawei.

The Canadian government has said that it will be invoking a “national security exemption” as it hires firms to build a secure network, hinting that Chinese telco Huawei could be excluded.

The exemption allows the government to kick out of the running any companies or nations considered a security risk, which coming in the wake of the US report earlier this week labelling Huawei and ZTE as security threats, strongly indicates they’re out of the bidding.

Prime Minister Stephen Harper’s top media spokesman refused to say for sure whether the government had Huawei in mind when invoking the exemption.

“The government is going to be choosing carefully in the construction of this network and it has invoked the national security exception for the building of this network,” he said, according to the Calgary Herald.

September 17, 2012

Harming the poorest during a food price hike

Filed under: Economics, Food, Government — Tags: , , — Nicholas @ 13:54

The Economist on the least effective ways of dealing with rising food prices:

Although the weather is the proximate cause of the price rises, governments are making matters worse. Look at America’s biofuels policy. By ensuring that a third of the country’s maize is turned into ethanol and fed to cars, it has driven up grain prices and made them more volatile by reducing stocks. At the start of this year America scrapped the subsidy for ethanol, and abolished the tariff on imports of the stuff — steps in the right direction. But a certain amount of ethanol still has to be blended with petrol by law. That keeps prices high.

Bad policies in America are encouraging bad policies elsewhere. Higher prices have spooked importing and exporting countries alike, causing them to turn away from volatile world markets and seek to insulate themselves. Between 2007 and 2011, 33 countries imposed export restrictions on food. Agriculture accounts for less than 10% of world trade, but more than two-thirds of the cost of all border distortions.

[. . .]

Farm protection is like a weed: it grows everywhere and seems impossible to eradicate. This newspaper has been making the case against it since 1843, when we were founded to oppose Britain’s protectionist Corn Laws. Sadly we seem to have made too little progress. At the moment governments are making farming less efficient than it should be. They are increasing poverty. Their policies are otiose, since there are better ways to help the poor, such as direct cash transfers. And they are counterproductive, because they exacerbate the problems they seek to solve.

July 17, 2012

FATCA “may end up killing more U.S. jobs than all the call centers in India combined”

Filed under: Economics, Government, Law, USA — Tags: , , , , — Nicholas @ 09:52

Matt Welch on the worst bit of legislation for US workers so far:

That’s a line from this commendable Wall Street Journal column by William McGurn about the oft-lamented-around-these-parts Foreign Account Tax Compliant Act of 2010, or FATCA (rimshot). While President Barack Obama keeps hitting presumptive Republican presidential nominee Mitt Romney over offshoring and jobs, one of Obama’s most economically deleterious laws continues inflicting damage largely off the journalistic radar screen.

“Within the United States,” McGurn writes, “almost no American has heard of it. Save for the occasional article, it’s gone largely uncovered. And just like ObamaCare, the nastiest, job-killing aspects will not hit until after this November’s election.”

McGurn points out that FATCA was the revenue-generating side of the Hiring Incentives to Restore Employment Act of 2010 (HIRE! God, I hate these people….) — “a jobs bill dominated by tax breaks designed to get businesses to hire unemployed Americans.” So once again, government is “paying” for the economically dubious and morally spurious act of granting targeted tax breaks to favored corporations by screwing over the middle class.

Ending supply management

Filed under: Business, Cancon, Economics, Food, Government — Tags: , , , — Nicholas @ 09:00

In the Globe and Mail Economy Lab, David Bond explores equitable ways to compensate farmers who will lose out if-and-when the federal government abandons the supply management system:

The quota was originally given out for free, therefore farmers or their direct successors still in the business would receive nothing for their original allocation and then 90 per cent of whatever they paid at the time they acquired additional amounts of quota.

Why only 90 per cent? Well having quota allowed the holders to earn returns on their investment well in excess of the returns that could have been earned in alternative forms of farming. Having enjoyed for more than 40 years these superior returns thanks to their ability to persuade government to protect them from competition it’s time they “enjoyed” some of the costs they foisted upon Canadian consumers.

While the potential beneficiaries of this compensation may complain of shoddy treatment they evidenced little sympathy on the costs they passed on to the consumers much less the harmful impact they had on potential exports of other agricultural and non-agricultural exports because government refused to modify supply management during trade negotiations.

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