Tuesday, March 13, 2007
Weaning Canadians from government intervention
On Friday, I wrote about the ability of comparitive statistics to be misleading.The National Post began a series of articles this past weekend, Swaddled in Nanny Nation. The first article speaks of the damage to Canadian consumers caused by government intervention in the marketplace, with comments aimed specifically at banking, air transport, telecommunications and agriculture.
One of the most flagrant ways Canadian industry is being coddled is through corporate subsidies.The Saturday article points out billions in dollars in aid to Pratt & Whitney, Bombardier, GM and Ford.
Proponents of government subsidies argue that they create jobs, encourage research and development and spur economic growth. But often, the opposite happens.Unintended consequences of artificial incentives.
This morning's final installment of the Post series focusses on foreign investment restrictions in telecom: Not Upwardly Mobile. Writer Peter Nowak concludes:
The only way to solve a Canadian-created problem, therefore, is to bring foreigners in to fix it. Canadian politicians will first have to rid themselves of their cultural and economic xenophobiaA truly level playing field, with no handouts to try to pick winners, will work best for consumers and business alike. For sustainable competition, the lesson would appear to be that consumers will win if government will just get out of the way.
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National Post, unintended consequences, spectrum auction
Posted by Mark Goldberg @ 3/13/2007 07:30:00 AM 
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Mark, I fully support your conclusion that "a truly level playing field....will work best for consumers and business alike. For sustainable competition, the lesson would appear to be that consumers will win if government will just get out of the way."
However, I think a reality check is in order. Presumably we've had an open, competitive cellphone market that has supposedly been free of regulatory interference pretty well since the industry's get-go. And yet, there's all those problems/anomolies/ noted in the FP article you refer to that suggest that consumers haven't won despite the fact government has stayed out of the way.
But rather than question deregulation, maybe everyone should be looking at why this has happened. Could it be that even though the market has been deregulated there just isn't enough competition to create the benefits consumers are supposed to experience. If that's the case, then, as the article points out, foreign ownership seems to be one answer. The question then becomes 'if foreign investment is allowed, will foreign and Canadian investors throw their hats into the ring without any handouts or concessions so we can have truly sustainable competition?'.
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However, I think a reality check is in order. Presumably we've had an open, competitive cellphone market that has supposedly been free of regulatory interference pretty well since the industry's get-go. And yet, there's all those problems/anomolies/ noted in the FP article you refer to that suggest that consumers haven't won despite the fact government has stayed out of the way.
But rather than question deregulation, maybe everyone should be looking at why this has happened. Could it be that even though the market has been deregulated there just isn't enough competition to create the benefits consumers are supposed to experience. If that's the case, then, as the article points out, foreign ownership seems to be one answer. The question then becomes 'if foreign investment is allowed, will foreign and Canadian investors throw their hats into the ring without any handouts or concessions so we can have truly sustainable competition?'.
Posted by 
: 12:45 PM, March 13, 2007
: 12:45 PM, March 13, 2007 << Home
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