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On the other hand...

I've praised Flaherty's laissez-faire attitude towards the dollar discrepancy issue because it's the right approach. Change happens when people demand better; it's not up to the government.

And things are starting to change. The Collected Works bookstore in Ottawa is allowing their customers to pay the US price on items with both prices marked (hat tip: Kateland). I've never been there, but I'll have to take a look the next time I'm in the area. Dell.ca is now showing prices in line with their American parent. Companies that have been slow to adapt (like Chapters) have been deluged with complaints. Meetings are being held, buyers are being harangued, and slowly, slowly, more progress will happen.

But the government shouldn't be smug about this. Government is the main reason people in Canada pay more than Americans, and why we will continue to pay more, even after the currency fluctuations have been accounted for.

The Conservatives still stand by the policy of 'supply management' for many agricultural products -- controlling supply by allowing only so many 'rights' to produce, while preventing any imports -- which has the effect of driving prices up considerably. The ironic thing is that the supposed 'reason' for this scheme is to maintain a vibrant agricultural sector. But what it does is decrease new investment and innovation, block new entrants to the business, and lower yields and consumer consumption.

Government standards on many products effectively prevent imports or allow them only through licensed middlemen. A couple of days ago I read the story of a man who found all the appliances for his new house in the US at half the price of what they were selling for here. He thought he had a great deal: his warranties would still be honoured and after paying the duty he would still be far ahead. But then he was informed that because these new appliances were not CSA approved, he would not qualify for house insurance -- even though they were exactly the same make as what he could buy in Canada! I was never a fan on the EU merging their currencies, but I did think it was smart that they merged their various standards on all products, painful as it no doubt was. These standards often operate as de facto trade barriers, while offering governments indignant deniability. "Lower our standards? Would you risk the lives of your children to save a few dollars?"

The government also prevents competition in alcoholic products. Living near the border with Ontario, I have the luxury of choosing from two expensive and unresponsive monopolies (neither of which will carry Laphroaig) but other Canadians aren't that lucky. And in many other markets, such as mobile phones and banking, the government restricts the foreign competitors that would force the incumbants to lower prices.

But probably the biggest reason Canadians pay more is just the border. It takes a long time to cross, a long time to cross back, and long waiting periods before you can bring back anything that would make the trip worthwhile. If Flaherty really wants to see Canadian retailers get competitive, work to make the border crossings more streamlined, and eliminate all those restrictions on foreign purchases. Canadian businesses could adapt or die.

There's about as much chance of that happening as Elizabeth May becoming Prime Minister. In fact, I'll bet that the next 'mini-budget' to come out will offer compensation to those poor Canadian businesses that are losing money to customers going to the States. And you can expect border hassles to actually increase. That's how this country works; the consumer is the least important part of the economy.

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