The Good Ol' Hockey Tariff

It's the worst tariff you can name:

The government’s decision to eliminate tariffs that were protecting a largely nonexistent industry seems to have more to do with online shopping and the rise of the Canadian dollar to parity with its American counterpart.

For example, many of the skates at Pro Hockey Life priced from $500 to $700, a surprisingly large category, are available from American online retailers at prices that are at least $100 lower because of low tariffs in the United States.

So the federal government established high tariffs to protect domestic hockey equipment manufacturers. The tariff failed miserably as producers shifted to low labour cost countries more than a decade ago. It only got around to eliminating this pointless tariff this year. Something that was marketed as protecting Canadian jobs was really just gouging Canadian consumers, while providing little revenue to the federal government.

If you were to make a careful review of the Canadian tariff schedule, I suspect you'd find hundreds of similar bone-headed trade barriers. They were born of the long ago discredited idea of economic protectionism: You make a country rich and prosperous by gouging many to benefit a few. It made very little sense in the 1870s, when John A Macdonald cooked up the National Policy as a way of getting back into power, it makes even less sense now. Yet it still persists.

Economic logic cannot explain it. What can explain this cut off your nose inspite of your face mentality is politics. Tariffs are a cheap and easy way to buy off special interest groups. Rather than having to hand out subsidies, which takes valuable tax dollars away from other vote buying efforts, a tariff allows you earner political support while actually increasing federal revenue. Sure ordinary consumers are screwed over by this policy, and ordinary consumers are also voters, but luckily voters are remarkably stupid.

A wide range of tariffs on consumer goods keeps prices higher in Canada than the States. Yes, I know we signed a "free trade" deal with the Americans a quarter century ago, but like most things in modern politics free in a relative thing. We have freer trade with the Yankees, though hardly anything Adam Smith or David Ricardo would have supported. There is still plenty of protectionism in Canadian trade policy. There is also plenty of protectionism in domestic policy ranging from supply management in agriculture to a vast array of specious health and safety requirements. Health and safety are certainly important, but such regulations provide ample room for manipulation.

If boosting entitlement funding is Canadian politicians favourite pastime, their second favourite is aiding and abetting rent seeking. There is the garden variety stuff, like paying for new carpeting at curling rinks, then there is the more pernicious variety seen in consumer tariffs. For several decades now economists and economic historians have spectulated that the persistant gap in living standards between us and the Americans has been largely driven by our tariff policies. In trying to promote our industrial base, which would have developed anyway, we instead impoverished ourselves.

That we continue to repeat the same old failed policies, expecting a different result, seems to be the working definition of both insanity and our political process.

 

 

Comments

[John Chittick]

Yes, but those "Conservatives" are relatively competent leviathan managers compared to their competition. Today, their opposition doesn't come from the relatively more-statist looters, thugs, and green theocratic fascists across the floor so much as the dominant institutional-left culture which deems "conservatives" acting "as such" (presumably more libertarian) - verboten. Harper is just an astute "man of the people". Virtually all sacred cows of the centre-left will remain untouched under his guidance. He has become a less corrupt version of Chretien but with language skills and Reform zipped-up in his back pocket instead of on the other side of the floor.

The political real estate of the party of the Spawn of Satan has been stolen by Harper.

[Jim Whyte]

To Sir John's credit, the advantages of freer trade were not as well accepted then as they are now (Hell, it's even a bit of a fight to get people to admit it today!), and there was nothing like reciprocity with the large market nearby -- else why would Laurier have made "reciprocity" his platform later?

I've still got my Micron M1s, which is sometimes embarrassing at the local arena.

[Cytotoxic]

We need an army of citizen smugglers. Crowdsourcing via the internet and tools like Bitcoin should make this easier than ever.