Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP Posting-Version: version B 2.10.1 6/24/83; site ubc-cs.UUCP Path: utzoo!utcsri!ubc-vision!ubc-cs!acton 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