Tuesday, February 3, 2015

the great NAFTA foreigner cash grab

People trade because it is mutually beneficial for them to do so; they value what they are getting more than what they are giving up. Trade is a vital to the modern way of life. It's the reason why our ancestors attempted to circumnavigate the globe. Trade promotes not only prosperity but also peace, since nations which trade are less likely to engage in hostilities. The free trade movement grew out of the liberal reaction in Europe of the 17th and 18th century to the mercantilism and absolutism that preceded it. The idea was simple : that people should be able to trade free of government interference in their activities.

Part of the basis for the idea of free trade was enunciated by Adam Smith in the opening to his Wealth of Nations "The greatest improvement in the productive powers of labour, and the greater part of the skill, dexterity and judgement with which it is any where directed, or applied, seem to have been the effects of the division of labour." When individuals specialize it raises overall productivity. International trade enables the benefits of the division of labour to be reaped on a global scale. But nations also benefit from what Ricardo termed 'comparative advantage'. When nation A is more efficient in, for example, producing both television sets and cars than nation B, the benefits of specialization can still occur. Nation A can prosper by specializing in, for example, cars and then trading with Nation B for television sets even though nation A is more efficient at producing both. That is to say by specializing in only cars and trading for television sets nation A will end up with more cars and television sets than if they were all produced domestically (as, for that matter, will nation B). 

In more recent years governments have been trumpeting so called 'free trade agreements' ostensibly to reduce tariffs or other barriers to trade. Given the importance of trade and the historical success of the free trade movement it is tempting to laud these arrangements but unfortunately as is often the case in politics not everything which is called free trade is actually free trade. Agreements like NAFTA could more appropriately be considered 'managed trade' and these agreements can sometimes leave the Canadian taxpayer on the hook for a lot of money when they enable super rich foreigners like Matty Moroun to sue our government. Moroun, who owns a bridge connecting Windsor to Detroit, is suing the Canadian government for 3.5 billion dollars on the basis of NAFTA provisions which state his company must be treated no differently than a Canadian firm. This is hardly the only case of a business using NAFTA to sue the Canadian government; over $170 million in damages has already been paid out to foreign interests under the Investor-State Dispute Settlement (ISDS) Mechanism.

We should welcome foreign investment in our shores. We should pursue an aggressive strategy of unilateral free trade. But our government should not be shelling out big bucks to foreign oligarchs under shoddy pretexts.

Monday, February 2, 2015

The Dread Bill C-626

There are three types of lies, lies, damned lies and statistics - Mark Twain.

In 2013 a 79 year old woman, Janet Churnin, was charged and convicted with refusing to fill out the long form census and sentenced to 50 hours community service. While her opposition wasn't to the census per se but rather to the fact that prominent American merchant of death Lockheed Martin had been contracted to handle the data and it's vulnerability with regards to the American government and the Patriot Act this hardly denigrates her courage and one cannot help but he filled with contempt for the idiot crown attorney who felt the need to take this case to trial. Our tax dollars at work. This may prove to have been the last - though certainly not the first - time a citizen was brought to court for refusing to fill out these forms since in 2010 the mandatory long form census was replaced with a voluntary National Household survey but perhaps not because on Wednesday Parliament votes on Bill C-626 determining whether the long form census should return. While it is likely - but not certain- this bill will be defeated the specter of the census' resurrection looms large on the horizon and the opinion molding class is agitating tirelessly for it's return.

The argument, repeated tirelessly, is that without the information collected by the census it is impossible to plan the economy. Well precisely so. We don't want or need the economy to be planned by officious bureaucrats and obnoxious do-gooders. The only planning that needs to occur can be done by entrepreneurs with the help of the price system. Government planning is morally and economically bankrupt. The free market system is in every way superior to that of state compulsion and control. Statistics have always been a means to bamboozle others and almost never a tool for elucidation. Of course it is wrong to compel individuals through the power of the court system to provide statistical data to the state but it is also unnecessary to collect this information in the first place, so eliminating the census is a great opportunity to spare the taxpayer some money and the annoying knocks on the door.

Far too often the statistical data gleaned from the census or other sources is used as a rationalization for government spending or intervention in the market. Economists are far too eager to call for state action on the slightest blip. A fall in unemployment brings demands for make work projects. A fall in oil prices mans we need more stimulus and a monetary policy of easy credit. The economy is slowing down? Better amp up the government spending. With sufficient motivation the data can be examined or teased to support any conclusion but seldom is this conducive to good policy.

Central economic planning does not work. Instead of having the government control and plan the economy we must revert to the free enterprise system. Leave the government blind, deaf and dumb, without the aid of statistical data as a means to plan and we will all be better off.