As the new Liberal Government takes over the reins of power from the Harper government it will be interesting to see what has and hasn’t changed in Canada’s approach to international trade policy. The early signs, for those concerned with how new trade and investment agreements impact policy making in the public interest, are cause for concern.
Posted by Bruce Muirhead · October 15, 2015 9:18 PM
The recent conclusion of the Trans Pacific Partnership negotiations between Canada and eleven other countries has resulted in the usual chorus of condemnation by right wing economists of Canada’s system of supply management covering dairy, eggs and poultry.
Economists love to talk about the theory of comparative advantage, which holds (somewhat counter intuitively) that two countries trading with each other will be better off if each specializes in what it does best, even if one country has an absolute competitive advantage in the production of all goods and services traded.
David Ricardo famously argued that it made sense for England to specialize in the production of cloth and Portugal that of wine, even though Portugal could produce both goods more cheaply.
Unfortunately, the theory has limited application to the real world, and can have pernicious policy consequences.
article originally appeared in the Globe and Mail's Economy Lab.
Photo: teegardin. Used under a Creative Commons license BY-SA-2.0
Increased inequality is a phenomenon that has affected many countries since the 1980s—industrial, emerging market and developing. At the same time, some countries have become more unequal than others. Thus, it is important to try to distinguish factors that have been at work universally from factors that have served either to retard or to exacerbate inequality at the national level. The latter category comprises, among others, income transfers, progressive income taxation and active labour market policies aimed at generating decent jobs and full employment. However, this note focuses on the former—the universal factors.