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From: robinson@ubc-cs.UUCP (Jim Robinson)
Newsgroups: can.politics
Subject: Re: High Duties => Increased Competitiveness?
Message-ID: <36@ubc-cs.UUCP>
Date: Mon, 7-Oct-85 04:08:02 EDT
Article-I.D.: ubc-cs.36
Posted: Mon Oct  7 04:08:02 1985
Date-Received: Mon, 7-Oct-85 23:28:30 EDT
References: <2591@watcgl.UUCP>
Reply-To: robinson@ubc-cs.UUCP (Jim Robinson)
Organization: UBC Department of Computer Science, Vancouver, B.C., Canada
Lines: 68
Summary: 

(shuffle, shuffle,..... that's just me putting on my asbestos suit :-)
In article <2591@watcgl.UUCP> jchapman@watcgl.UUCP (john chapman) writes:
>1. How much does all this really cost? Is it really a significant problem?

I'll admit that I don't know what the costs really are. However, I do 
know that due to gutless anti-combines legislation and excessively 
powerful unions the Canadian public gets the dubious honour of helping
to provide Big Business with Big Profits and Big Labour with a Big Strike
Fund. As long as outside competition is not allowed, businesses have no 
incentive to keep costs down.  So when the Widget Manufactures Union
decides it wants a 20% wage increase the widget manufacturers growl
a little and quickly succumb. They then pass all of their increased 
costs on to the consumer and everybody is happy again - except, of course
for John Q. Public who has *no choice* but to pay the increased price. 
(How else did you think B.C. grocery clerks managed to wrangle $16.45/hr?)

As to the question of whether it's really a significant problem: I'd say 
that whenever there is an almost total lack of competition there exists a
big problem. Free trade with the US is one means of forcing increased 
competition. Other means would be stricter anti-combines legislation and 
looser labour laws. If we are going to have an economy based on free
market principles, then by all means let's do it properly and have
competition in our industries.

>2. Where will government recoup the revenue it now gets from duties?

First off, how much does it get from duties? Is it a significant amount?
If it's just a piddling amount then it's obviously no biggee. Let's have
some figures on this one.

Secondly, consider that quotas and tariffs act basically like a sales 
tax in that they increase the effective price of goods. Since sales taxes
hit the poor the hardest (i.e. they are regressive) I imagine it would not
be at all difficult for a politician to argue that revenues lost from 
a decrease in duties should be made up for by *income* tax increases. 
Unless I'm very mistaken it's the NDP who is most against regressive
taxation (and presumably equivalents thereof) so they should be the first
group to call for tariff reductions and a corresponding increase in 
income tax (:-).

Note that quotas are often the preferred vehicle of protectionism. Thus,
the Gov't could lift Japanese car import quotas thereby decreasing the
cost of all cars and yet end up with no reduction in tariff revenues.
Ditto for quotas placed on clothes from Bangledash (sp?).

>and, of course:
>3. what happens to the (possibly up to 1 million according to the
>   cbc evening news) people who lose their jobs through free trade.

I seem to remember reading in the Wail that the Macdonald Commission
claimed that free trade with the US would in the long run be responsible 
for a 5 percentage point *decrease* in unemployment. Sounds good to me.

>and, just since I'm on a roll
>4. If free trade if such a solid gold no lose proposition why is it
>   that the government feels it's so necessary to do such a con
>   job on us (refering to the publicized document on selling free
>   trade to the canadian public)

I imagine that they think it's necessary to counteract the con job that
the unions have been trying to hand us. For example, the extremely 
interesting claim by Dennis McDermott that Canada would have to give
up Medicare in order to secure a free trade agreement. I know, you know, and
Mr. McDermott knows that no Gov't in its right mind would trade away Medicare
(unless it has a death wish), but it sure make good politics to say so.

J.B. Robinson