Writing for the Globe and Mail, Macdonald-Laurier Institute Managing Director Brian Lee Crowley says the obsession with how much Canadian internal trade barriers cost is obscuring what should be the real focus: how to knock them down.
"No, we cannot stuff a comprehensive list of internal trade barriers and their exact costs into a big computer and get a precise figure out", Crowley writes.
"Yet here is what we can state with confidence: such barriers exist, they leave us all far worse off materially, and the harm compounds with time".
By Brian Lee Crowley, Aug. 7, 2014
There are two questions journalists always fall back on when they need a good story. The first is “Whose fault is this?” The second is “How much is all this going to cost?” If you can find a guilty party and a big number, bingo. In fact you’ve probably got a series of stories as the “bad guys” in one article (the provinces, unions, corporate elites, free trade, the One Percent, Baby Boomers, marketing boards) rise up in their own defence and point at somebody else as the true culprit.
In this Manichean world, having a guilty party is not enough on its own. In the vast majority of countries, for example, Mike Duffy and the $90,000 Senate expense scandal would be too small to register on the radar when the local rulers are salting away billions in the Caymans.
I have been fascinated to watch the search for the journalistic magic formula (guilty party plus big bill) play out recently in discussions about renewing the effort to tear down the barriers to trade within Canada. Industry Minister James Moore has recently been making much of his sense that this is a historically propitious moment to attack those barriers, not least because of a strongly federalist government in Quebec with a mandate to rebuild the economy.
Having written a lot about the plague these barriers represent to Canadians I have been inundated by journalists’ calls, but they have all asked one question and one question only: what do these barriers cost Canadians? Give a big number, like the Conference Board’s $50 billion or the Macdonald Royal Commission’s 1.5 percent of GDP, and their eyes light up. But then they hear from others lowball estimates like $2 billion to $3 billion annually and that results in stories that claim trade barriers are insignificant and big numbers don’t pass the “baloney meter” test.
Trying to fix a number on the cost of existing barriers, though, misses the point and misunderstands the problem. As I argued in a report a few years ago, suppose it was possible to list every provincial rule that raised the price of everything from a bottle of beer to a lawyer to a haircut to an insurance policy, figure out how much every rule raised the price of each, then multiply the relevant dollar figure by the number of beers consumed, lawyers’ hours billed or haircuts or policies issued in that province in a year, and add it all together. To call that result the “total cost” would still undercount badly, even if you got every part of the exercise right.
For one thing, it would leave out the time and effort brewers, lawyers, stylists and insurers waste filling out unnecessary forms full of baffling fine print. For another, it would omit the things people don’t buy goods or services because they cost too much and the things entrepreneurs never even try to do because a successful new trans-provincial business might unleash a swarm of provincial bureaucrats determined to stop this assault on local businesses. And it certainly fails to capture the long-term harm: how can anyone claim to measure the cumulative impact of stopping a decade’s worth of innovations and improvements before the first one can take place?
We’d also have to count all the regulatory bodies and enforcement mechanisms created in each province to oversee every profession, every insurance policy, every movement of a bottle of wine or beer, most of which we could dispense with if we had uniform national rules, or even just mutual recognition by each province of the others’ rules.
Because of the complexity and the dynamic effects of barriers and potential barriers, it is frankly impossible to come up with an estimate of their costs that will not be subject to legitimate criticism by the friends of the status quo. But focusing on the methods of estimating the barriers’ costs is a classic obfuscation.
No, we cannot stuff a comprehensive list of internal trade barriers and their exact costs into a big computer and get a precise figure out. Yet here is what we can state with confidence: such barriers exist, they leave us all far worse off materially, and the harm compounds with time.
Worst of all, the barriers are an affront to our rights of citizenship, preventing Canadians from buying from and selling to one another and pursuing their lawful occupation in any part of this country. That cost is not forgone economic progress, but violated rights and obstructed nation-building.
Confederation was in part about tearing down these barriers between Canadians. The job is far from done.
Brian Lee Crowley (twitter.com/brianleecrowley) is the Managing Director of the Macdonald-Laurier Institute, an independent non-partisan public policy think tank in Ottawa: www.macdonaldlaurier.ca.
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