Anyone who has seen my Twitter feed this week has seen that I've grown quite frustrated with Canadian politics lately, with the fact that all of the parties took identical (bad) positions on the Potash decision being a particular annoyance. During the past two elections I have given the maximum legal amount to candidates I like (typically, but not always, Greens). This election, I don't even see myself voting, let alone donating.
Turns out my frustration is shared. Andrew Coyne had a fun set of tweets:
Elections are now officially meaningless. Politics has become a random walk: you can't predict what any party will do. What we need is an Economists Party. Nothing radical: just mainstream, consensus economics. ie very radical, indeed.
So: end subsidies. Full-cost pricing. Equity concerns met via Income transfers rather than price-fixing. So: end subsidies. No quotas, tariffs or unnatural monopolies. Public finance, not public provision. Benefits in cash not kind.
I love the idea of an Economists Party. The only drawback I see is that we'd all want to be Finance Critic. I do believe there is a core set of policies that most mainstream economists would agree on (though naturally any one of us would have the occasional idiosyncratic view - like mine on the need for enhanced right-to-know information on product labels).
My question for you is - what is the very first policy that a newly organized Economists Party should promote? I give mine below. Just visiting from Macleans will be surprised to see it has nothing to do with the GST or corporate tax rates:
Since the 1970s, agencies under government authority have set the prices that farmers receive for their milk, and limited production through quotas to match anticipated Canadian demand for milk, cheese, butter, and other dairy products at those prices. To maintain high farmer milk prices and not undercut Canadian production, most dairy imports are restricted by tariffs of between 200 per cent and 300 per cent.
..Restricts farmers' ability to seize global opportunities -Global dairy demand is expected to continue its long-term growth, especially among the middle classes in China and India, and Canada's higher-price system limits its competitiveness in these emerging markets. As well, supply management has restricted Canadian dairy exports up to the World Trade Organization subsidy limits-Canada exported only $255 million worth of dairy products in 2008.
..Weakens Canada's ability to access global markets -Defending supply management in trade talks compromises Canada's ability to secure market access for other Canadian goods and services - including other agricultural products. Canada's current negotiations for access to the European Union market may be compromised by the status quo dairy system.
...The supply management system has other effects: distributing benefits unfairly, as buyers of dairy products pay more and effectively subsidize dairy producers; becoming a dairy producer is difficult, since it costs about $28,000 just to buy the right to sell the milk of roughly one cow; and reducing the international competitiveness of many dairy processors.
The cost to such a policy is high - Canadian consumers massively overpay for dairy products while at the same time our ability to enter into free trade agreements is limited by our subsidies to dairy farmers. The policy represents a wealth transfer from consumers to dairy producers of over 2 billion dollars a year (Source). I use dairy supply management as my example when I introduce The Logic of Collective Action to my Ivey students.
That would be my first policy proposal of a Canadian Economists Party - ending dairy supply management. What would yours be... and why?
Edited to add: Prof. Gordon brought up a good point I hadn't thought of - my policy suggestion not only entails ending an inefficiency, it is also a transfer of wealth back to consumers from dairy farmers. If we wanted to keep the transfer of wealth at the status quo (not sure why we would, but suppose we do), we could couple my policy proposal with a one-time payout to dairy farmers equal to the 30-year NPV of the value of the policy. By doing so we have ended the inefficiency without any (significant) net transfer of wealth from dairy farmers to consumers/taxpayers.