Monday, December 15, 2014

"The cause of the Canada-U.S. price gap is obvious — the government"

Mark Milke:
... the federal government recently introduced legislation — dubbed the Price Transparency Act — that will force retailers to explain why Canadians sometimes pay higher prices than Americans for the same products. 
... To think a government is remotely capable of collecting and properly collating this type of comparative information assumes a degree of specific knowledge that governments do not possess, as it would be impossible to track the millions of business decisions that are made on a daily basis.
... All of this ...ignores one significant reason why some prices in Canada are higher than those in the United States: government policy.  ... For example ... Ontario’s rising electricity costs ... federal “supply management” policies ... airline fares - federal government policy that prevents full cabotage ...
Several others have also written about James Moore’s proposed law:
Andrew Coyne: The whole ‘Canada-U.S. price gap’ issue is a con surrounded by hypocrisy
John Ivison: Moore trades tariff relief for discredited 1970s policies
Peter Foster: Regulations R Us

All make excellent points.  There is certainly nothing “conservative” about such regulation.  We are blessed with (mostly) free markets in this country.  Retailers are best able to price their products in those markets and consumers are perfectly capable of sorting out where to buy them and deciding what price is fair.  The government should not be meddling with or attempting to micro-manage retail businesses.


Anonymous said...

Conservatives have lost their way. It is difficult to predict where Harper stands on any issue. When he was in opposition he could be counted on to be a small c conservative. HE has flip flopped on so many positions who knows what he believes.

Anonymous said...

oldwhiteguy says.......... why do Canadians think that 32 million people should or could have the same market prices as 320 million people in a different country?

Anonymous said...

What does population have to do with price? Businesses are milking Canadians.

JR said...

"Businesses are milking Canadians."

Sure. Just like you are "milking" your employer.

Businesses make products and services for customers and money for themselves, their shareholders and employees and for everyone else through taxation. Governments messing with free markets will reduce all of that, making us all incrementally poorer.

farmdogg said...

I thought it was a rather weak column, but typical of those who comment on supply management w/o actually understanding what it provides, especially to reference MHF and her half assed paper that a kindergarden student could disprove. Milk prices are higher in Canada due to the prices charged by the dairies and the groceries, not the fact that farmers get a rate of return is reflective of cost of production. I'll point to 2013, when the House of Representatives was fighting over he Farm Bill, without which the US Department of Agriculture would have had to revert to 1940's regulations and buy up dairy commodities to a point where the cost of milk would have doubled in the US.

Further to Mr Milke silly article, can we look at the price of automobiles built in Canada for the US and domestic markets. How the heck is the federal government responsible for a $9K price gap when the Canadian & US dollars were nearly the same value.

Price disparity
A look at manufacturer's suggested retail prices (MSRP) in Canada and the U.S. for selected vehicles produced in Canada.

Canada MSRP (Cdn)
Manufactured in

Acura ZDX 54,990 46,120 Alliston, Ont.
Acura MDX 52,690 43,030 Alliston, Ont.
Chrysler Town & Country 31,645 29,995 Windsor, Ont.
Dodge Grand Caravan 19,995 20,995 Windsor, Ont.
Chrysler 300 32,995 28,670 Brampton, Ont.
Dodge Charger 29,995 24,495 Brampton, Ont.
Dodge Challenger 26,995 24,995 Brampton, Ont.
Ford Edge 27,999 27,525 Oakville, Ont.
Lincoln MKX (AWD) 47,650 41,395 Oakville, Ont.
Ford Flex 30,499 30,885 Oakville, Ont.
Chevy Camaro 27,965* 23,280 Oshawa, Ont.
Chevy Impala 28,125† 25,760 Oshawa, Ont.
Buick Lacrosse 34,935† 30,170 Oshawa, Ont.
Chevy Equinox 26,445 23,530 Ingersoll, Ont.
GMC Terrain 28,395 25,560 Ingersoll, Ont.
Cadillac XTS 2013 48,995a 44,075 Oshawa, Ont.
Honda Civic sedan 14,990 15,995 Alliston, Ont.
Civic Si 25,990 22,555 Alliston, Ont.
Civic coupe 18,240 15,755 Alliston, Ont.
Toyota Corolla 15,540‡ 16,130‡ Cambridge, Ont.
Lexus RX350 (AWD) 44,950 40,710 Cambridge, Ont.
Toyota Matrix 16,795‡ 18,845‡ Cambridge, Ont.
Toyota Rav4 24,865ⁿ 22,650ⁿ Woodstock, Ont.
Volkswagen Routan 28,575 27,020 Windsor, Ont.
*$2,280 credit available some places
† $2,000 credit available some places

‡ Freight and PDI of $1,465 in Canada, $760 in U.S.
ⁿ Freight and PDI of $1,565 in Canada, $810 in U.S.
a Add $1,595 destination fee
(Sources: Manufacturers online listings)

johndoe124 said...

I don't know if it's mentioned in any of the articles but short of collusion or fraud it's really none of the government's business what Canadian businesses charge for products. If someone is willing to pay then it becomes a completely voluntary exchange.

The Conservatives are starting to remind me of the petty meddlers of the Liberal party who seem to take a perverse pleasure in regulating the minutiae of everyday life.

JR said...

farmdogg: "... typical of those who comment on supply management w/o actually understanding what it provides ..."

Mark Milke understands perfectly well that it provides government sanctioned collusion, price fixing and higher costs to consumers and that similar behaviour in any other industry would see the culprits prosecuted and tossed in the klink.

But one assumes that farmdogg would be equally enthusiastic about having other industries (eg. the automobile industry) also permitted to engage in "supply management". Sure, why not get rid of free enterprise altogether?