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From: acton@ubc-cs.UUCP (Donald Acton)
Newsgroups: can.politics
Subject: Re: High Duties => Increased Competitiveness?
Message-ID: <14@ubc-cs.UUCP>
Date: Fri, 20-Sep-85 04:31:48 EDT
Article-I.D.: ubc-cs.14
Posted: Fri Sep 20 04:31:48 1985
Date-Received: Fri, 20-Sep-85 08:44:29 EDT
References: <1394@utcsri.UUCP> <2188@mnetor.UUCP> <2223@mnetor.UUCP>
Reply-To: acton@ubc-cs.UUCP (Donald Acton)
Organization: UBC Department of Computer Science, Vancouver, B.C., Canada
Lines: 81
Summary: 

In article <2223@mnetor.UUCP> sophie@mnetor.UUCP (Sophie Quigley) claims:
>In article <420@looking.UUCP> brad@looking.UUCP (Brad Templeton) writes:
>>Second thing that happens is that *every* Canadian pays a few dollars more
>>for shoes.  How much in total? .....
>> .... So a large sum of money is taken
>>from one sector (the rest of Canada) and given to a proven non-productive
>>sector.  

>There is something I don't understand in this line of reasoning:  if people
>start buying canadian shoes, then why the manufacturing of shoes be 
>considered "non-productive"?  
>.....
>Why would the job of shoe-maker be "extra" and "propped up" if there is a 
>real demand for shoes?  Why would people lose their job because they are
>paying a few more dollars for their shoes? 

Let us suppose for a moment that on average a person buys a new pair of shoes
every two years and that various duties and import restriction raise, on 
average, the price of a pair of shoes by a dollar. (I consider these 
estimates to be conservative, what with kids always needing new shoes and 
then those of you on the wrong side of the Rockies also having this little
matter of winter footwear to consider. The dollar a pair is also
probably quite conservative when one considers that the duty is 
probably in excess of 10% and shoes certainly cost more than $10.)
With a population of 25 million people this means that we consumers
pay 12.5 million dollars extra each year for the privilege of propping up the
shoe industry. If there are 10,000 people employed in making shoes (which
I doubt) it means that each job is subsidized to the tune of $1,250.

The classical problem with duties and import restriction is that it 
encourages activities which can be done more cheaply someplace else. 
Presumably there is something that we can produce more cheaply than 
that someplace else, that is the reason we trade. These restrictions create
a false demand for a product (in this situation overpriced Canadian
footwear) which  results in the misallocation of resources which culminates
in further increased costs to the consumer. Consider the following
scenario with the propped up shoe industry. The artificial demand for
Canadian shoes results in the shoe makers bidding for more leather on
the open market than they would without the supports. Since in the short
run the amount of leather is fixed (you can't manufacture cows overnight)
the increased demand will cause the whole sale price of leather to
increase. This results in added costs to the other purchasers of leather
which of course is passed on to the consumer. If the duty weren't there
the costs of "non-shoe" leather products would decrease and price of shoes 
would go down too because of the removed duty.


>The "large sum of money"
>which is "taken away" is not taken away from a few people but in a 
>distributed manner over the entire population.

Doing something to an entire population does not automatically justify or
legitimize any action. Even if a tax/tariff/duty/import restriction
(choose your favourite one) does apply to everyone it doesn't mean 
that it affects everyone in the same manner. Tariffs and such are usually
fixed percentages just like a sales tax and these are all considered
regressive taxes. That is, on a proportional basis, the poorer members
of our society require a greater portion of their income to cover 
these taxes than the wealthy. Consequently these taxes have a greater
adverse effect on the purchasing power of the poor than the rich.
Anyway, what is so special about shoe makers or any other protected industry
that we need to redistribute the wealth in their favour? Why not
distribute some of it my way? :-)

>
>>Now I see why duties are such a good idea!!
>
>You do?

Sure Brad does. It is a way to buy votes in one or several ridings 
at the expense of everyone else. Just ask Brian Mulroney and Lloyd
Axworthy (The Billion dollar man) how this all works. They are both
well versed in how to spend taxpayers' money or how to introduce policies
that favour one riding over those in the rest of the country. As an
aside, more federal monies have been spent in Brian's riding since
the election than in all of BC, so you can see that Brian knows how to 
play the game and is already trying to buy his seat, at our expense, for
the next election.


   Donald Acton