Fraser Forum

Supply management or cartel enforcement?

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What’s in a name?

Supply management (French: Gestion de l'offre) is a catch-all term for policies that control the price of milk, cheese, eggs and poultry in Canada through marketing boards. It restricts the supply of these products by controlling the amount produced domestically and limiting imports with high tariffs.
So says Wikipedia. Wikipedia isn’t always right, but in this case it is.

But “supply management” is a misleading term and opponents of supply management who use the term are undercutting their own attempts to abolish it.

Why do I say that? Because there’s nothing wrong with managing supply. We do that every day in our own lives.

The famous economic journalist Henry Hazlitt made the same point about economic planning. There’s nothing wrong with economic planning. The question is not whether to plan but who is to plan. Most people do their own economic planning, whether in choosing a job, managing household finances, saving for retirement, or running a business. The problem is not economic planning: the problem is having the government replace our economic planning with its central economic planning.

The same reasoning applies to “supply management.” The question is not whether to manage supply but who is to manage supply? Should producers of milk, eggs, cheese, and poultry be allowed to manage their supplies or should marketing boards, using the power of the state, do it for them?

If producers are free to manage supplies, then we get healthy competition, with the results that usually come with competition, one of which is lower prices. If governments manage supplies, then, when the government restricts supplies, it is essentially enforcing a cartel. The result is higher prices.

I propose that opponents of supply management by government—and I am one of those opponents—use a more accurate term for what they oppose: cartel enforcement.

Not only is the term “cartel enforcement” more accurate, but also it evokes a negative, and completely justified, revulsion. Will that difference in terms lead to a defeat of cartel enforcement? It will surely help.

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