Friday, April 28, 2006

PM Harper gets a softwood lumber deal

Not a perfect deal. Not a great deal. But, it looks like a good deal.

Posters on the Globe and Mail site are going nuts criticizing PM Harper.

Here's my response to them:

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"If the Liberals hadn't spent all their time spewing venom towards the US, they might have come up with a better deal than the Tories. As it is, they had their chance, and they accomplished: zero.

The one billion dollars forfeited is not taxpayers' or citizens' money -- it belongs to big forestry corporations, who, along with big energy corporations and other enterprises, expend their energies to create wealth, jobs, and tax income for governments, while producing the goods and services that enrich our Canadian lives.

In other words, the very same kind of companies that many posters to this site would normally be railing against as greedy capitalist profitmongers."

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The long-term prognosis?

I suspect that the US dollar is heading south, which means the Canadian dollar is heading north; this will put increased pressures on Canadian forestry companies to compete in the US. With the rise in the Canadian dollar, the problem has been solving itself.

Some Canadian companies used the unfair, punitive US tariffs as a motivation to improve productivity, so they could become super-productive and compete even with the tariff.

These companies are in a good position to thrive, going forward.

May God bless both Canada and the USA.

3 comments:

frappeur said...

Actually none of the $5 billion belongs to Canadians or to the forestry companies or to any government. It belongs to those American consumers who had to pay the inflated prices caused by the tariff.

The Liberals are spewing nonsense because over all the years they failed to get any deal. Now the Harper government has done the job in three months.

BallBounces said...

Frappeur -- you are undoubtedly right, but could you explain what you mean a bit so we understand it better. Are you saying that without the tariff, the product would have sold more cheaply, so that the Canadian forestry companies didn't actually lose this $5 bil?

frappeur said...

Something socialists never understand is that corporations do not pay taxes. They collect taxes for governments in one way or another.

Tariffs and other impositions are added into the price. Sometimes this makes the company less competitive. Sometimes it will drive a company out of business. Hence, "The power to tax is the power to destroy."

If Canadian companies had been totally unable to sell into the US market they would have stopped doing so. In fact, some did and turned to other markets. The US consumer, in many cases, was still willing to buy the product at the tariff inflated price.

The reason for the tariff was that Canadian lumber was cheaper to start with than the equivalent US product.

Consumers never ask for tariffs. It is business competitors that do so. They are able to convince governments to use their coercive power to force a price increase on foreigners by adding a tax. Governments are usually easy to convince because they love to tax someone who cannot vote.

The true payers of the tax are, of course, the consumers who do vote. Most of the time they are unaware of the tax and, in any case, are so diffuse that they have little influence unlike the concentrated influence of the industry lobbyists.

A curious side effect of the softwood tariff was that it forced Canadian producers to become extremely efficient. Those that did so were still able to sell into the US market and make a profit.

"... nothing intellectually compelling or challenging.. bald assertions coupled to superstition... woefully pathetic"