Supply & Demand - DRUG POLICY - CLIMATE CHANGE

When setting about the task of developing government policy Supply and Demand plays a role. The law of "Supply and Demand" is in no way an economic theory; the affects of Supply and Demand are as profound and real as gravity. It is a simple reality that the more people value something, the more they will pay for it and if the supply of that valued item increases, the price falls. This was true in Soviet Russia, this was true before the first clay tablets were used as currency in Mesopotamia.

CLICK HERE FOR MY PROFESSIONAL WEBSITE

Supply and Demand dictate that the better police do their job with the war on drugs, the worse the problem gets. When the police constrain the supply of drugs, the price goes up, and people are often addicted to drugs so their demand for drugs is “inelastic”, they have to have them – so they pay more. As the product becomes more valuable, the greater lengths drug pushers will go to provide them, so violence grows. Further, as drugs become more valuable drug pushers look for new ways to get drugs to markets in the more difficult environment police have created for the drug pushers to operate – so now highly potent drugs that are easier to smuggle become required – now the Fentanyl crisis is born. This is just reality, a reality we have to accept – and then build a policy that addresses this reality. We have watched this reality be ignored and we have watched too many of our young people affected by the ravages of drug abuse.

Supply and Demand play a role in climate policy. The carbon tax as a deterrent to fossil fuel use fails to work. There are years of price sensitivity analysis from all the oil majors that support this statement. The reason, the demand for fossil fuels is inelastic – inelastic because there are presently no viable substitutes for fossil fuels, and there is nothing on the horizon to offer a viable alternative. This is supported by more or less consistent oil consumption over any given time frame, regardless of price fluctuation.

Supply and Demand play a role in supply management, a process whereby government regulation restricts the volume of a given commodity’s production to elevate price. This causes the affected products’ to increase in price and the consumer pays more.

CLICK HERE FOR NEW BC LIBERAL LEADER'S PLATFORM

Too often policymakers choose for political reasons to ignore this reality. Ignoring this reality in drug policy has resulted in an escalation in violence, an escalation in the amount and types of street drugs used and to a degree, the Fentanyl crisis. By ignoring the realities of Supply and Demand in climate policy a massive distortion in the public perception of the challenge has given rise to carbon policy that effects regional disadvantage, offers no value in a transition away from damaging carbon emissions, no avenue to developing the safe use of fossil fuels or no reduction in carbon emissions.  Ignoring this reality in food policy means a Canadian family pays an estimated $275 more per year for dairy products than they would otherwise, a single parent or the most affluent among us.  No amount of political spin will change these cold mechanics, they are as elemental as gravity or any other force of nature.

Oilsands Moratorium - NOW - Why

Carbon Tax V Cap & Trade

Drug Policy that works

Agriculture Supply Management - Addicted Folly

Supply Management & the Trans-Pacific Partnership (TPP)

Supply Management is showing as an inhibiting factor in Canada’s participation in the TPP, it has been an inhibiting factor in the DOHA trade talks and it played in our trade talks with the EU and it has been a bane at the WTO. Tallying the overall cost to our economy due to lost trade opportunity is outside the scope of this discourse; however, it is substantive, because the reduction in trade due the presence of Supply Management (SM) in the agriculture sector reaches beyond just agriculture. It is reported, for example, the SM is threatening Canadian participation in the TPP, which represents access to a market of 800 million people. At other international forums, SM has been an inhibiting factor – third world countries want access to our the “rich” West's food market and the West is being stubbornly obstructive; paradoxically, now, the expanding middle class in the “third world” countries is one of Canada’s biggest opportunities.

It is worth noting as well, that if you're unwilling to support the end SM for access to trade internationally, then do it for domestic reasons.  Each Canadian household subsidises the dairy industry in the amount of $260 / year, for most households, this is an imposition, for low-income people it is a burden.  Please also, support the end of SM so that we can have a healthy, vibrant primary food sector that is rationalised to the market and that is accessible to everyone.  The present SM regime in Canada is very obstructive to new entrants, and as such, retards the innovation for the respective sectors.  In the case of the BC Dairy Milk Marketing Board, for example, access to the industry for innovative production, process or new markets is grossly retarded – worse, however, is that the market share for primary dairy products has stagnated and is losing ground against products that are unaffected by SM.  All are better off if the industry operates in response to the market.

There is no question that SM regimes must go, they simply are burdensome to manage, please examine any of the SM regimes. I have examined the Milk SM regime, my conclusion is that, domestically alone, the SM regime is detrimental – TO THE INDUSTRY – as well as the rest of Canadians; it is clear that on the world trade front they are an inhibiting factor and very costly to our economy. The question if SM should go, but, how.

The Government of Canada & the provincial governments have developed, in most cases, a quota system – quota is, in essence, a permit to produce a given amount of product for a predetermined sale price. Quota when originally allotted to producers was allotted for free and was never met to accrue value – of course, the right to access a market garnered value and of course quota began to be traded. Eventually, many boards set up quota exchanges to manage the trade of quota, this was done under a government legislated regime.  There is no argument that quota has value, there is no argument that government has recognised that value and there is no argument that government legislated and by extension, forced participation in the system. Farmers have invested heavily in the system, for many, quota represents more than 50% of their net worth – government has an obligation to ensure that farmers have a transition strategy the recognises this reality.

We have quantified the cost to each household of $260 per household per year to support SM now. We can quantify the degree of benefit we will garner from free trade; we can quantify the net benefit to the taxpayer that flows from fee trade agreements. In that mix is a means to fairly remunerate farmers for relinquishing an asset and facilitating an orderly transition to a free market operation. THIS IS RIGHT AND FAIR, a byproduct of a clearly published policy on the transition that has Quota market value at the heart of it is, farmers will offer less resistance.  Conversely, there needs to be a clearly communicated benefit to the public, that shows how they benefit from the arrangement.

The time for hesitation is through, we need to act, we need the change – let’s get on with it.    

More thoughts on the subject  

Supply Management - Transition

Supply Management - Minister of International Trade

Experiences & Overview of the BC Milk Marketing System

Inverine Consultancy