Quote:
Originally Posted by bizaro86
Ahh, sorry, I don't think I understood your point. What I'm trying to point out is the different level of regulation. Regulation in pursuit of public health and safety goals is generally speaking a good idea (food safety, seatbelts, taxi driver licensing, etc). Regulation in pursuit of providing an economic advantage to a specific group by limiting supply almost never works out as intended and should be avoided.
Examples include taxis, where licenses end up being owned by brokers. Then new entrant taxi drivers don't make any extra net income from the restricted supply, since that "extra" gets siphoned off by brokers.
Another example as mentioned above was dairy supply management. Canada restricts supply of cheese, which increases cheese prices to theoretically benefit farmers. But now anyone starting to produce cheese has to buy quota for such a huge amount that it eats up all of the extra profits from higher cheese prices.
Basically it transfers money from customers to current owners of licenses/quota, which isn't a noble goal, imo.
|
To add an Alberta example and tie in all three levels of government look to grazing lease holders. The government leases land to the ranchers at well below market value. The ranchers can then sell that lease for big cash so it keeps new entrants out and transfers a bunch of cash to the established ranchers.
The big problem with these systems is how to unwind them. You can't cancel the dairy quota outright because some poor farmer may have just bought into the system.