Tuesday, September 29, 2015

Where Is Helen Milner When You Need Her?

As I watch the diary cartel of Canada perpetuate its reign via "supply management", government policies maintaining the cartel's supremacy in Canada, I have to wonder: where is Helen Milner?

Milner wrote a great book, a model for those working on dissertations, arguing that the interests of protectionists (such as the dairy industry in Canada) are often offset by those with stakes in international stuff:
  • those firms that rely on exports since they understand that trade involves reciprocity
  • those firms with foreign investments that sell back to the domestic market (less relevant here)
  • those firms that rely on foreign parts for their own products.  Barriers to trade increase their costs.
At this moment in time, Canada is engaged in international trade negotiations: the Trans Pacific Partnership Agreement (TPP).  Canada's status within this has been at risk over Canada's refusal to allow more competition in the dairy markets.  My question is this: where are the Canadian firms that would benefit from TPP?  Shouldn't they be lobbying government?  Shouldn't they be opposed to the perpetuation of supply management?

I don't expect consumers, who are hurt by the dairy cartel via higher produces and reduced selection, to lobby because their pain is diffuse.  I don't expect consumers to solve their collective action problems to organize to push for lower prices and more selection (and better quality--competition does help with that as well). 

Given that dairy farmers are but a few, where are the companies whose interests are threatened by these few folks?  I am seriously confused.  Helen Milner cannot be denied!


Jason Blackwell said...

What company/industry in Canada does stand to gain from a loosening of restriction on dairy?

The only one I can think of is shipping and they are fairly tightly regulated or controlled by the government (relatively speaking).

Packaging is largely done in-house in Ontario dairy farming.

Retailers don't care because they'll do a 50% mark-up on the product whether that's 4$ on 2$ bag of milk or 2$ on a 1$ bag of milk. And it's a pain in their butt because they have to stock more.

From what I can tell - for a consumer good - the people who stand to gain are the consumers. And you already rightly pointed out the reasons the consumers won't lobby...

Steve Saideman said...

You miss the point--it is about companies losing out in other areas, other trade restraints that other countries impose in part because they don't like Canada's trade restraints.