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Farmers for economic freedom

Updates from the Prairie Centre/Centre for Prairie Agriculture in Regina, Saskatchewan.

Hot off the press! Don Baron's Jailhouse Justice and
Canada's Great Grain Robbery
are now available at
http://www.ajagra.com/authors_comment/baron/baron.htm

web posted October 22, 2001

Learning from history

By Craig Docksteader

It seems to be a regular event now. Demonstrations against free trade, corporations, profits, poverty, or capitalism in general. We saw them in Seattle at the WTO talks. We saw them in Quebec at the Summit of the Americas. Every time you turn your head they show up somewhere else, insisting that free markets destroy the world and that excessive government control is the only answer to the world’s economic and social problems.

Most recently, they turned up in Toronto at a march by the Ontario Coalition Against Poverty. Equipped with rocks, poles with sharpened ends, gas masks, knee pads, two-by-fours, baseball bats, and cans of tomatoes, they had come to protest, and cause damage to private and public property. Exactly how this was supposed to help poor people is unclear.

What is clear, however, is that those who participate in these protests seem to think that the power of the state must be used to ensure equal outcomes for every individual. What they don’t appear to realize, is that this is called socialism, and it has already been tried and failed.

As noted by Donald G. Smith, in an article published by the Foundation for Economic Education, socialism "was probably the biggest flop in recorded history." Following are excerpts from Smith’s article, entitled "Reflections on a Failure":

- - - - -

"Socialism had a run that lasted from 1920 until 1991. The Union of Soviet Socialist Republics had an opportunity to succeed unmatched by any social or economic movement. For nearly 70 years, the Soviets had absolute control over a landmass greater than that of the United States and Canada combined. They had no political opposition, offering a clear shot at effecting any plan that they wanted to put into action.

"The Soviets possessed immense national resources, including the largest forested area in the world. No single continent could begin to match the standing timber resources that lay within the boundaries of the U.S.S.R. Yet, they were forced to import lumber from Sweden.

"In minerals, an enormous potential was again largely untapped. The Soviet Union contained copious supplies of virtually every important mineral within its borders. Despite possessing 53 percent of the world’s supply of iron ore, the U.S.S.R. lived with a chronic shortage of iron and steel products. The Soviets also led the world in crude oil and natural gas reserves -- again, resources that remained largely in the ground.

"Other riches included an estimated 800 million tons of manganese, as well as generous deposits of gold, silver, tungsten, mica, copper, nickel, and molybdenum. Within Soviet borders lay more than 60 percent of the earth’s phosphatic rock resources, but little was put to use.

"Soviet agricultural potential staggered the imagination, but the country could not feed itself. Its citizens suffered constant shortages because farmers were unable to grow enough food and could not bring what they did grow to the consumer.

"The underlying cause of this colossal failure can be described in one word: socialism. Because of a top-heavy and strangulating bureaucracy, minerals remained in the ground, trees stayed in the forests, and crop yields were always below expectations. Manufactured goods were shoddy, behind schedule, and forever in short supply. Elevators didn’t work, buses and trucks broke down constantly, and the telephone system was about on a par with that of Bolivia.

"The 70-year span of the U.S.S.R. proved conclusively that socialism is an idea whose time will never come because it doesn’t offer the slightest incentive for anyone to make it work. Common sense tells us that this is true. The increasingly distant memory of the Soviet Union proves it."

Craig Docksteader is Coordinator with the Prairie Centre Policy Institute.

web posted October 15, 2001

The disappearing monopoly

By Craig Docksteader

Over its history, the monopoly powers of the Canadian Wheat Board have never been without opposition. Even when the Wheat Board legislation was first drafted in 1935, the compulsory marketing provision had to be dropped because of opposition and replaced with voluntary marketing status. It wasn’t until the pressures of a war time economy necessitated additional measures that the CWB was given its monopoly powers in 1943.

Although limited information on public opinion polling is available from this time period, most researchers agree that in its early years the CWB monopoly enjoyed its greatest amount of support. There was a segment of the prairie farm population which was philosophically committed to socialism and central planning, and the CCF government which swept into power in Saskatchewan in 1944, was dedicated to the compulsory powers of the CWB.

But as you follow the CWB through the 20th century and into the 21st, it is evident that while the monopoly has been retained, the power base of the Wheat Board has been steadily eroding.

It was the early 70’s when farmer dissatisfaction with the monopoly began to register on the public record in a more significant measure. A huge surplus of wheat had left western Canada with mountains of unsold wheat, farmers had only a four-bushel quota, and the grain handling/transportation system was failing. There was a growing realization amongst producers that over-regulation and government control was hindering the industry’s performance. Throughout the 70’s and 80’s this shift in attitude continued, making significant gains in the 90’s. By the turn of the century, the CWB’s own polling revealed that less than a third of prairie producers supported the monopoly.

In addition to diminishing support from producers, the relative economic significance of the CWB has been shrinking as well. In the early years, agriculture dominated the prairie economy, with wheat as the primary crop produced. Today, agriculture accounts for only 4 percent of the prairie economy, with regulated export grains making up less than 1 percent. In Saskatchewan alone, the number of farms growing wheat dropped by half between 1976 and 1996, while farms growing other grains, oilseeds, specialty crops or livestock doubled. This trend is expected to continue, as the prairies continue to move away from the historic practice of relying on exporting low value, unprocessed grain, and move toward higher-value crops and value-added processing.

The CWB’s share of the world wheat market is also in decline. During the 1960’s, Canada averaged 22 percent of the world wheat export market. By the 1990’s this had fallen to 19 percent. The CWB projects that by 2003 this slide will continue to 17 percent, while other countries such as Argentina and Australia step in to pick up the slack.

Although CWB spokespersons and monopoly advocates lobby hard to promote the idea that the monopoly is an indispensable part of prairie agriculture, the facts paint a different picture: Fewer producers support the monopoly, fewer producers use the monopoly, fewer producers care about the monopoly. World wide wheat production is increasing, but the monopoly’s market share is dropping and other sectors have long since overtaken the industry.

Perhaps this explains why the monopoly is never mentioned in discussions about improving the profitability of agriculture or promoting economic growth in the prairie region. Once the dominant player on the prairies, the monopoly has been slowly slipping to the margins of the prairie economy and prairie agriculture in general, and is increasingly seen as irrelevant or undesired by most prairie farmers.

Craig Docksteader is Coordinator with the Prairie Centre Policy Institute.

web posted October 8, 2001

Labour legislation that works

By Craig Docksteader

In 1944, Saskatchewan introduced what was called the most far-reaching and drastic labour legislation in Canada. Although the Act has been amended several times since then, it has retained its reputation as a law which is highly contentious.

Earlier this year, in a draft submission to the Government of Saskatchewan’s Department of Economic Development, the Saskatoon Chamber of Commerce tackled this problem. In what would seem at first glance to be an unlikely solution, the Chamber explored the mutual benefits of what is commonly known as Right to Work legislation.

Although the topic of Right to Work legislation is vehemently opposed by union bosses and invokes an emotional response from both business and labour, it’s an issue which cannot be ignored. In today’s world of global markets and free trade, jobs and money flow to the jurisdictions which offer the greatest opportunity for a return on investment. Whether we like it or not, the prairies must compete in this environment.

But contrary to the usual polarized arguments which accompany this debate, an increasing body of evidence suggests that workers, employers and unions can benefit from voluntary unionism. Consider the following points made in the Chamber’s submission:

"In the United States, non- Right to Work states have lost more than 2.3 million manufacturing jobs since 1970. Right to Work states have gained 1.5 million manufacturing jobs since 1970."

"The adoption of Right to Work legislation has spurred economic growth in various regions. New capital expenditures increased by 205.2% in right-to-work states versus 184.2% in forced union membership states."

"Personal income has grown nearly 25% faster in Right to Work states while living costs are an average of 15% lower."

"Findings of James T. Bennett, economist for George Mason University indicate that families in forced union states pay nearly 25% more for food, housing, health care, transportation, utilities, property taxes and college tuition than families in Right to Work States."

"After implementation of Right to Work legislation, Idaho saw its per-capita personal income grow by 15.4% from 1987 to 1995. This was the highest growth rate in the United States according to the U.S. Commerce Department’s annual estimates."

"Following the enactment of Right to Work, manufacturing employment in Idaho grew 36.2% from 1987 to 1995, after having declined by 8% in the previous five (1982 - 1987) years while it was a forced union state."

"By providing employees with an option, unions will provide the level of service demanded by their members at fees supporter by members. If the union cannot meet the demands, members will resign. If the union exceeds expectations, which occurred in the City of Indianapolis, union membership levels will skyrocket. In this case, union penetration grew from about 75% to 95%."

"In Idaho in 1986, private sector unions won fewer than half of the elections where they sought to represent the employees of a particular organization. In 1994 [after the implementation of Right to Work legislation], unions were successful in elections at a rate of 63 percent for union formation."

Right to Work legislation was never intended to eliminate unions, but rather make them voluntary: Workers cannot be refused employment simply because they do not belong to the union. Rather than turning these jurisdictions into low wage ghettos, the track record demonstrates that workers find themselves faring better than when they were in a forced-union environment.

Craig Docksteader is Coordinator with the Prairie Centre Policy Institute.

web posted October 1, 2001

Creating jobs

By Craig Docksteader

While touring China a number of years ago, a western businessman came upon a team of nearly 100 workers building an earthen dam with shovels. The businessman commented to a local official that with an earth-moving machine a single worker could create the dam in an afternoon. The official’s curious response was, "Yes, but think of all the unemployment that would create."

"Oh," said the businessman, "I thought you were building a dam. If it’s jobs you want, then take away their shovels and give them spoons!"

Originally told in a speech by Jerry Jordan, president of the Federal Reserve Bank of Cleveland, the story illustrates an important truth: People have good reason to be skeptical when governments claim that they have created jobs.

In his speech, Jordan explained further:

"Before the Great Depression of the 1930’s, the notion that government ought to be responsible for creating jobs would have seemed absurd. Today, however, we commonly hear aspiring politicians declare that their number-one economic objective would be to increase employment. Whatever good intentions are presumed, when government focuses away from creating wealth and onto creating jobs, it inevitably engenders a lower average standard of living.

"The distinction between creating wealth and creating ‘work’ can be illustrated by an economy that has experienced a catastrophic natural disaster. A well-known feature of market economies is that in the wake of a disaster, such as a hurricane or earthquake, employment and production tend to rise.

"But clearly, society is not better off just because people are working long, hard hours. A more reasoned conclusion is that these natural disasters are destroyers of wealth - and creators of work in the sense that households and firms must now toil harder to help recover from their losses. I doubt that this is the sort of ‘job creation’ program voters have in mind when they cast their ballots, although I suspect that many government ‘job’ programs operate much like a post-disaster cleanup program.

"The natural experiments provided by political borders illustrate what government can and cannot accomplish. Why economic prosperity varies greatly along a seemingly arbitrary boundary poses perhaps the critical question.

"In the simplest terms, there can be only two reasons for divergent levels of per capita income: 1) different levels of resources or 2) differences in the allocation of resources.

"A person in an economy can use resources in only one of four basic endeavours: He can produce, trade, influence the political process in an effort to redirect greater resources to his advantage, or protect himself against the wealth-redistributing efforts of others."

Jordan goes on to note how, in the first two uses (production and trade) the total wealth generated by the economy increases. In the latter two efforts, they add no value and therefore generate a lower standard of living for the citizenry as resources are directed away from production and trade.

When governments assume a wealth redistribution role, the incentive to create and accumulate wealth is lowered. This lowers the productivity of the economy. But if government majors on protecting property rights and enforcing private contracts, these wealth-enhancing activities help an economy to blossom, which always results in more jobs.

Craig Docksteader is Coordinator with the Prairie Centre Policy Institute.

Prairie Centre/Centre for Prairie Agriculture, Inc.
#205, 1055 Park Street
Regina, SK
S4N 5H4

Phone: 306-352-3828
Fax: 306-352-5833
Web site: http://www.prairiecentre.org
Email: prairie.centre@sk.sympatico.ca


The CFEN needs your help! The battle against the Canada Wheat Board can only continue with your support.

Canadian Farm Enterprise Network
Box 521
Central Butte, Saskatchewan
S0H 0T0
CANADA

Write the following and demand free market rights for Western Canadian farmers!

The Canadian Wheat Board
423 Main Street
P.O. Box 816, Stn. M.
Winnipeg, MB
Canada
R3C 2P5

Telephone: (204) 983-0239 / 1-800-ASK-4-CWB
Fax: (204) 983-3841

Email Address: cwb@cwb.ca

Ralph Goodale
Minister Responsible for the Canada Wheat Board
Department of Natural Resources Canada
21 - 580 Booth Street
Ottawa, ON
Canada
K1A 0E4

Telephone: (613)996-2007
Fax Number: (613)996-4516
Email Address: rgoodale@NRCan.gc.ca

 





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