Wednesday, June 27, 2012

Opposing Supply Management & Economic Principles

While supply management is bad for our economy, the discussion around it has at least managed to supply how the majority who oppose it are intellectually dishonest.

For the Conservatives, libertarians, Liberals, and the like who are now so vocal in their opposition to supply management, a relatively minor economic program, one must wonder where were these defenders of economic principles when this government made a far more substantial and far worse economic decision, when it reduced the GST.

With artificially inflating the prices of milk and eggs it's easy to agree with the loud and rancorous crowd who are now calling supply management an inefficient policy. But if economic principles are truly important, those same people should have been even louder and even more rancorous in defending the GST from the worst economic decision in Canadian history.

Though the expense of supply management is unclear, one poorly cited reference puts the annual cost of inflated prices of milk, eggs and the like, for Canadian consumers at just under $5 billion.Though such a program clearly hurts regular Canadians, and certainly merits its scrapping, the decision to cut the GST, one of the most efficient forms of taxation, by 2% has resulted in foregone government revenues of $15 billion a year, has created a structural deficit, and is compounding the interest on the ever-accumulating national debt.

Scrapping the inefficient, but relatively minor, program of supply management does warrant action, but so did maintaining the GST, the most efficient source of government revenue.

The majority of business people, pundits, and politicians, who are today fighting to end supply management are right to do so on economic grounds, but those same people who were silent when the government cut the GST and increased the deficit are made all the more wrong by those same standards.

The people who are so miraculously vocal in opposing supply management yet were silent on the GST need to recognize that economic principles applied selectively only make them intellectually dishonest completely.

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