Free Trade? at 25, USA and Canada

Charge!!!   

There is a scene from the John Candy movie Canadian Bacon, where American military types realize that 90% of Canada's citizenry live within 100 miles (~160 km) of the American border. They pretend to fear an invasion. The fact is Canadians invade the United States regularly, every weekend. But when Canadians 'charge,' they do it with a credit card.

This month marks the 25th Anniversary of the Canada-United States Free Trade Agreement (FTA).

Reciprocity, as it was once called, pre-dates Canada, back then it was limited to raw materials, but in 1911 the terms were broadened and Reciprocity or free trade, was defeated when the Borden Conservatives rejected a treaty signed by the Laurier Liberals. The same arguments used against free trade then, were used in 1987, when ironically, the Mulroney Conservatives signed the FTA. A national election in 1988 confirmed the deal, which was apposed by the socialist NDP and left Liberals of the day. I'm sure Laurier would have been sickened by those modern era Liberals.

So if free trade has been around for a quarter of a century, why do Canadians in ever growing numbers choose to shop in the nearby border towns of the United States? Why are there services that provide "border wait times," for travellers - mostly Canadian - here, here, and here? The answer is simple, just have a look at the tariff chart below that was published in the National Post recently.

from the National Post

If all those items are 7 to 18% more expensive in Canada, AND, each province (except Alberta) has a sales tax plus a federal GST, you can see why many Canadians go on US shopping jaunts particularly since the currencies have been close to par for sometime now. Where I live in Ontario, there is a 13% HST (harmonized sales tax, federal and provincial) that may be avoided with a 90 minute trip to New York State. The potential savings on an item of clothing would be upwards of 30%! Lets not forget that shopping in upstate New York provides more selection and good sales too, because of "the economy of scale."

That phrase: "the economy of scale" is often used by Canadian wholesalers and retailers (as an excuse - but I'm not blaming them) to explain their higher prices. Yet the population of the Greater Toronto Area (GTA) is far larger than upstate New York, aren't we big enough here if we were part of that same New York State market? The simple answer is yes, we are big enough, and yes, we could be part of that market, but the invisible boundary that separates us from our neighbours in New York, adds various government costs to "protect" our industries here in Ontario. Some free trade.

So our political masters here in Canada try to protect the brassier and panty hose industry, while at the same time hurting the rest of the population and in particular those least able to afford brassieres and panty hose.

In that National Post article I've mentioned above, Terence Corcoran explains why free trade is due for a change.

BTW, for your enlightenment here is the trailer to Canadian Bacon, enjoy:

Ed & Ethan 0.5 are moving to a new format....

But, I made it to the final broadcast (in this format)...and some of the past broadcasts too. I like this one because I'm the only panelist along with Ed & Ethan. Have a listen:

Minarchy vs. Anarchy and the State

In libertarian circles the minarchy versus anarchy argument is ever present, and typically in a non-threatening way.

What I mean by "non-threatening" is that the anarchy is NOT the sort characterized by conservatives and liberals. You know the kind, rioters in black masks roaming the streets looting, pillaging, and causing general mayhem. That is not the libertarian view of anarchy, thats just rioting.

The libertarian view of anarchy coincides with the concept of spontaneous order. That concept describes how the unhindered the free market operates by imposing its own rules on itself, such that there is a "spontaneous emergence of order out of seeming chaos." One of the biggest proponents of that sort of anarcho-capitalism, as it is called, was Murray Rothbard.

My background teaching biology made it very easy for me to accept spontaneous order in economics and society. Anyone that has ever studied biology will know that organisms, be they plant, animal or protist, live within "self ordered" ecosystems. There is a producer level, and various levels of consumer, and any external interventions often disrupt the order of the ecosystem. So, you see its not a huge jump to spontaneous governance among humans, and I have written about this before, here, here, and here.

In the ReasonTV video below, Stefan Molyneux is interviewed by Matt Welch at FreedomFest 2012. If you live in or near Southern Ontario, Stefan Molyneux will be the Keynote Speaker at Liberty Now on November 3, 2012. Why not come out and challenge the self-confessed  anarcho-capitalist on his home turf? I'll be there too.

US vs. Canada Health Care: "A Mercedes Costs More than a Corolla"

Yes, "A Mercedes Costs More than a Corolla," even though they both seem to be able to do the same thing, that is carry people from one place to another. Certainly the Mercedes does the "carrying" in more style and comfort, but the end result is the same.

That comparison used in the following video from ReasonTV discusses the cost and availability of health care, including a brief comparison of the American versus the Canadian medical care systems. 

If the American system is the Mercedes, and the Canadian system in the Corolla, then the end result for patients should be the same, just difference between luxury and utility. But is it? Do Canadians get faster better service, or are wait times longer and access to care more restricted? 

I think a better and more appropriate comparison would be comparing the product of an ordinary X-Ray machine to the product a CT Scanning machine. Both products will give physicians an internal view of a patient, but the CT Scan will provide volumes more data for the physician to make an accurate diagnosis of an ailment.

In this commentary Michel Kelly-Gagnon, president of the Montreal Economic Institute, does have an interesting viewpoint.

Achieving a critical mass?

Europe is in a deep recession. Spain has a 25% unemployment rate, the rest of the EU has unemployment north of 11%, and those are the official "adjusted" government figures. Various countries have required huge monetary bailouts including Spain and Greece, Italy is in trouble and government austerity measures have resulted in rioting throughout the EU.

In the US, official unemployment figures show rates over 8%, but unofficially some say it is over 20%. The US Fed has announced a third round of Quantitative Easing, even though the previous two have not worked.

The price of gold has tripled in just 5 years and is now approaching record levels. Interest rates in the Western democracies, controlled by their various central banks, are at or near record lows, jeopardizing large pension plans and the savings income of retirees and the elderly. A worldwide economic malaise lingers from the economic turmoil of 2008-09; the bailouts and handouts back then may yet lead to greater problems in the future. World markets and investors are in a constant state of apprehension.

Governments everywhere (including Ontario) are reining in spending and are at odds with their various public sector unions; terms like cutbacks, pay freezes, and outsourcing are common in the daily news. The same is true in the North American manufacturing sector.

While all this is happening government run education costs in North America continue to increase, while student test scores are mediocre at best. Canadian government run health care costs continue to rise, yet wait times and access to service never seems to improve. At the same time Americans are expanding their socialized health care system.

Local and regional governments everywhere are instituting bans related to environmental and personal choices. Bans on the sale and distribution of pesticides, herbicides, plastic bags, sugary soft drinks, foods, breeds of dog, and on and on, are becoming more and more common. That, of course, is in addition to the restricted sale of alcohol in Canada, smoking bans everywhere, and continued and seemingly fruitless prohibitions on the distribution and use of recreational drugs.

So, the question needs to be asked, have we reached a point yet where the actions of governments are so detrimental to the general welfare that some sort of action is required? There is no question that the individual liberties of large swaths of the population have already been constrained. Can personal and economic freedoms be restored? If so, how, and who will do it?

These and other issues will be addressed at first annual Liberty Now at the University of Toronto, November 3, 2012.

Liberty Now is an opportunity to network with other liberty-minded Canadians. This full day event is designed to provide liberty-minded individuals the opportunity to listen to, and participate with, panels of leaders discussing such topics as the philosophy of freedom, the environment, the economics of liberty, the politics of freedom, freedom on campus, and how to spread the message of liberty.

Whether you are a conservative, classical liberal, libertarian, objectivist, anarcho-capitalist, a follower of the Austrian School of Economics, or just in favour of limited government, you'll find something of interest at Liberty Now.

One question may be answered at this event. Has the liberty movement in Canada achieved the critical mass required to make an impact on the social and political fabric of this country?

Find out. Be a part of it!

Please join us for the first annual Liberty Now at the University of Toronto November 3, 2012. Registration is now open.

It's Justin....time

The Liberal Party of Canada has not had much luck with its leadership choices since the glory days of Jean Chrétien.

Paul Martin came next as leader and he was just too wishy-washy.

Then came Stéphane Dion, a convention compromise, and characterized as "not a leader."

Next Michael Ignatieff was literally shipped in, and he was "just visiting."

Each of these men led the party to lower and lower popular vote counts: Martin got 36.7% in 2004, then 30.1% in 2006, Dion 26.2% in 2008, and Ignatieff 18.9% in 2011. Down and down they went, from being the minority government, through to loyal opposition, then to a back bench third place finish for a once great political force. The current interim leader Bob Rae, a refugee from the socialist NDP, has already read the tea leaves, and will not run for permanent leader.

The stage has been set for the second coming of a saviour for the Liberals and by extension Canada, and this boy was born on Christmas Day too!

Yes, it's Justin Trudeau, eldest scion of the charismatic Pierre who led Canada to larger and ever more bloated government. Trudeau the father took office in 1968 when Canada's debt was 24% of GDP, by the time he left office in 1984, the debt was 46% of GDP, an increase of 83%. But of course the rest of the Western Democracies, did precisely the same thing during that time and it has become much worse. The evidence in Europe, America and Canada clearly shows bloated governments don't work.

How does the younger Trudeau - just Justin, thank you - propose to fix the country? I think he gets it right, sort of, lets reinvigorate the middle class. Here is a part of his leadership entry speech:

"A thriving middle class provides realistic hope and a ladder of opportunity for the less fortunate. A robust market for our businesses. And a sense of common interest for all.
The great economic success stories of the recent past are really stories of middle class growth. China, India, South Korea and Brazil, to name a few, are growing rapidly because they have added hundreds of millions of people to the global middle class.
The news on that front is not so good at home; I don’t need to tell you that. You, like our fellow Canadians all over the country, live it every day. Canadian families have seen their incomes stagnate, their costs go up, and their debts explode over the past 30 years.
What’s the response from the NDP? To sow regional resentment and blame the successful. The Conservative answer? Privilege one sector over others and promise that wealth will trickle down, eventually.
Both are tidy ideological answers to complex and difficult questions. The only thing they have in common is that they are both, equally, wrong.
We need to get it right. We need to open our minds to new solutions, to listen to Canadians, to trust them.
And as we face these challenges, the only ideology that must guide us is evidence. Hard, scientific facts and data. It may seem revolutionary in today's Ottawa, but instead of inventing the facts to justify the policies, we will create policy based on facts. Solutions can come from the left or the right, all that matters is that they work. That they help us live - and thrive - true to our values.
Because middle class growth is much more than an economic imperative."

So, Justin and the Liberals should eschew ideology, except where it is supported by evidence and hard scientific facts. Maybe that has been part of the problem with the Liberals, no principles, nothing but the ideology de jour, or as I heard this morning, there is no there, there. 

I don't know where Justin gets his facts, but it seems to me, he and the Liberals have absorbed the prevailing collectivist ideology so they don't even recognize that they have one. If putting a larger and larger tax burden on the middle class, then saddling it with huge debt, is not evidence for why the middle class is struggling, then I'm not sure what is. Maybe Justin should consider unburdening the middle class and stop trying to fix it. That is a second coming I can get behind.

Here is Justin telling the internet he is going to share his greatness with us:

    

Omar Khadr comes "home"

 Khadr in a video 2002....

The hue and cry over the last few days among conservatives in the Canadian media has been deafening.

Why? Omar Khadr has finally been shipped from GITMO to a Canadian prison, 10 years after he was captured by US troops in Ayub Kheyl, Afghanistan.

In October 2010, Khadr pled guilty to war crimes as stipulated here. In Canada the entire story has had wide exposure.

For me this story has not yet warranted a mention in any of my postings. The very idea of a "war on terror"  like most government crusades (good word here), leaves me apathetic to the cause, yawning, except that it is yet another way government wastes lives and money by maladministration. The one thing governments should be doing, protecting our rights, protecting our freedoms, ensuring our safety from violence, they manage screw up by inappropriate international interventions. Does anyone in the West feel safer now that the war on terror has entered its second decade? I doubt it.

The Khadr story has been a political football in Canada. Conservatives see it as a cause célèbre for the fight against terrorism, collectivists (left liberals and socialists including the mainstream media) see it as an injustice verging on abuse, done to an innocent child. The collectivists have a point.

Khadr was 15 years old when the incident occurred. Canadian fifteen-year-olds don't arrange to travel 11,000 km (6800 miles) to Afghanistan to get into a firefight with American soldiers. Canadian fifteen-year-olds don't arrange for weapons and explosives training while in Afghanistan. Canadian fifteen-year-olds generally don't appear in al Qaeda videos with weapons in the background. These events are due to the actions of parents, and not parents that mean well. What kind of parent would bring their child to the centre of a military conflict? What kind of parent would put their child into the path of mortal danger? Certainly these actions would be considered abusive and we may never know what Omar the child's wishes were back then. Ten years at GITMO will change you, no doubt.

Which brings me to the prevailing conservative position in the Khadr case. Conservatives are often the first to stand up for abused children in a variety of situations. Why not Omar? Omar Khadr was a child by any definition used in Canada when these events occurred, yet he is vilified amongst conservatives as being beyond redemption, a traitor, and a murderer. Lets just throw away the key. Is that a reasonable well thought out position? Do the sins of one's father transfer to the child?

Sure, Khadr has made statements and confessions while in GITMO, but he may not have felt free to speak. How would anyone act if they were held captive in such a hostile situation?

So now what? Its hard to believe that Khadr has been rehabilitated (or will ever be) by being in a prison with older terrorist operatives. I doubt that in that time they have come to love America, the West and all that it stands for. Even before GITMO, Khadr's family saw to it that he was indoctrinated with the antihuman distortions of a fundamentalist Muslim upbringing. Any religious indoctrination in my view is abusive, this one was way beyond that. All of this was sanctioned and encouraged by his family, they didn't care. Why should we?

The Islamic traditions that Khadr's family cultivates are not going to blend readily into the so-called multicultural traditions of Canada. The lies that defend multiculturalism and relativism in Canadian society will stop right here. The very idea of Sharia, the moral code of Islam, is in many ways inimical to life in a free and culturally pluralistic society such as we have in Canada. I'm concerned that the story of this conflict has just begun.

The Innocence of YouTube

An incomprehensible YouTube posting called the Innocence of Muslims has created a furor in the Islamic world, I'm sure you are aware. This incident and previous such provocations show that it doesn't take much to incite violent protests in that part of the world. So when I first heard of the posting and the reaction, all I could think of was 'here we go again.'

I tried to watch all of this 14 minute video, but couldn't make it through without fast-forwarding to different scenes just to see if it got any better. It didn't. Is it an insult to a religion, Islam? I suppose it is, but the reaction that ensued is an insult to humanity that makes the video's purpose (if there was one) pale by comparison.

Our humanity, the central thing that makes us human, is our ability to use reason, and in many ways all religion is an insult to humanity. Humans have the capacity to reject blind faith (the foundation of all religions), to control their violent emotions, to act in their own rational self interest. The reactions to this video, are so much more damaging than the video itself, yet those protesting see themselves as defenders of the faith. It's a head shaker.

But worst of all were the calls to squelch the video, pleas to both Google and YouTube to remove or review it. Those calls came from some people sworn to defend freedom, but of course the freedom to speak out, to disagree, needs to be most safeguarded in times of turmoil. Sadly that reminder too often needs repeating.
Here is ReasonTV's take on YouTube freedom.

Why American Pizza tastes better...

I know that's a generalization, and of course it may not always be true. But that has been my experience when visiting my relatives in New Jersey over the past almost 40 years.

The pizza seems richer, more flavourful, definitely cheesier! I never understood or thought about why until now, and I have theory.

This week the CBC ran a story where members of the Niagara Regional Police Service will be charged for smuggling large amounts of mozzarella brick cheese across the US-Canada border.

Cheese smuggling!! Why would anyone smuggle cheese across the "NAFTA free-trade border" between two of the largest trading nations on Earth? Good question.

I have written about this before (here), Canadians pay a premium for dairy products because of a monopoly granted to dairy farmers in Canada, which is outside of the NAFTA agreement. This distortion in the dairy market occurs because the federal government allows farmers to collude on the price of raw milk by agreeing to limit production to allotted quotas. The government also creates a tariff wall that effectively prevents cheaper foreign dairy products from competing in the Canadian market. If milk is pricey, cheese will be too. What does this have to do with pizza?

Apparently after removing labour costs, 80% of the price of Canadian pizza is due to the mozzarella cheese. Who knew? Of course getting cheaper cheese allows the local pizza shop to either use more cheese or make more profit, or both. That is my theory, that is why those New Jersey pizzas are so much cheesier. Unlike their Canadian counterparts, Americans can be generous with their cheese without hurting their bottom line.  This story from Niagara Falls Ontario explains some of the cost realities involved. A pizza shop in Ohio spends $90 on cheese every day, a similar shop in Niagara Falls Ontario spends $290 for the same type, quality and roughly the same amount of cheese. Starting to see why there is a cheese smuggling racket?

Again the unintended consequences of government intervention in an economic area, has spawned a black market criminal class of cheese smugglers, the "mozzarella mafia." According to the CBC, a cheese smuggler can earn up to $2000 per shipment, so it's not as lucrative as drug smuggling, but neither are the penalties as onerous. This story has received wide publicity in the US and Canada, here is a report from NPR in the US.

When will things change? Only when Canadians become cheesed-off enough with how they are treated by their various governments.

How to create farming jobs by spending more of your money.

Or else.....

"If every one of our families were to spend $10 more every week on Ontario foods, that would have a $2.4 billion impact on the economy and create 10,000 jobs." That sort of brilliant reasoning can only come from the mind of an overbearing politician. Most elected politicians have the view that YOUR money is theirs to spend anyway. And they justify that position because this is how they can create jobs.

The quote above comes from the Premier of Ontario Dalton McGuinty, but the rest of what he said is more ominous:

"So we've got a new bill that we will shortly be introducing, the Local Food Act....We're buying the food anyway right now, for example, in our public institutions. It's just a matter of ensuring that we're using our purchasing power to support local agriculture."

You don't have to be a mathematician to realize that $10 more per week adds over $500 to the annual family budget, which would be fine if it were your choice to do that or not. There is nothing wrong with supporting local industry if you think it helps the economy. Typically it does not, and the extra money spent often means that other parts of the economy will suffer. The ominous part is that a Local Food Act, prepared with the help of a lobby group, to "encourage" people to buy locally, well, that sounds like a tax of sorts. It's the kind of thing that hurts the poor the most, because any additional cost subtracts from their meagre discretionary income the most. There are almost 5 million family households in Ontario, and at $500 a family, you can see where McGuinty gets his figures in the first paragraph. 

In Canada we already have a system that forces citizens to buy locally grown produce at additional costs for eggs, poultry and dairy products, its called supply management. I've already discussed this here and here. 

You might wonder how Canadians feel about paying more for local produce, wonder no longer. Despite  the "politically correct" comments that you may hear from your neighbours, the fact is Canadians are voting with their feet in greater and greater numbers to avoid uncompetitive food prices. Check out this article from Jesse Kline in the National Post.

The bad news is this type of legislation is likely to pass because of the composition of the legislature, there is no good news.