In its search for new revenues, Ontario commissioned a government panel to examine how to wring more money out of government assets. In recent days, the panel led by TD Bank CEO Ed Clark has revealed several ideas including selling off Hydro One’s distribution business, restructuring Ontario Power Generation so it provides more revenues and modernizing the Liquor Control Board so that it can generate more revenues via internet sales. Moreover, Ed Clark also suggested that the Beer Store – which is a private monopoly sanctioned by the Ontario government – should also be used to provide more money for the Ontario government.
The Ontario government wants to harness existing monopolies to provide more revenues. In this regard, the Ontario government is not so much a “liberal” government but a “mercantilist” one. I suppose one can argue that a key difference is that the monopolies of the mercantilist era largely enriched private individuals while public monopolies today provide a better return to taxpayers. Perhaps.
Nevertheless, as we all learned in first year economics, they still provide less output at a higher price and therefore reduce efficiency relative to more competitive outcomes. In the case of the Beer Store, the lobby group representing the Beer Store’s private ownership consortium has already threatened to raise prices if the government extracts more revenue from them.
This seems like a good time to revive Frederic Bastiat’s satiric petition letter to the French Parliament in 1845 that made the case for assisting candlemakers against the ruinous competition provided by the sun. As the excerpt below states:
“We are suffering from the ruinous competition of a rival who apparently works under conditions so far superior to our own for the production of light that he is flooding the domestic market with it at an incredibly low price; for the moment he appears, our sales cease, all the consumers turn to him, and a branch of French industry whose ramifications are innumerable is all at once reduced to complete stagnation. This rival, which is none other than the sun, is waging war on us so mercilessly we suspect he is being stirred up against us by perfidious Albion (excellent diplomacy nowadays!), particularly because he has for that haughty island a respect that he does not show for us.
We ask you to be so good as to pass a law requiring the closing of all windows, dormers, skylights, inside and outside shutters, curtains, casements, bull's-eyes, deadlights, and blinds — in short, all openings, holes, chinks, and fissures through which the light of the sun is wont to enter houses, to the detriment of the fair industries with which, we are proud to say, we have endowed the country, a country that cannot, without betraying ingratitude, abandon us today to so unequal a combat.”
You can read the whole petition here.
Perhaps the Ontario government can take an additional trip down the mercantilist road and simply attempt to shut out the sun in an effort to generate additional demand for electricity from OPG while casting the Federal government in the role of perfidious Albion.