The Canadian government is determined to end "Sticker Shock" - Canadians paying higher prices for consumer products than Americans. Of course, such a policy would require an absurd intervention into the free market economy, affecting thousands of products. But the government can lessen supply-management: controlling prices through high tariffs, quotas on imported goods and marketing boards. The biggest example is food, particularly dairy and meat.
According to a new study by a University of Toronto professor,* the Canadian-U.S. price gap for milk, cheese and eggs rose from 35% in 2005 to 77% by 2011. Meat jumped from 11% to 76%. Dr. Nicholas Li concluded: "where there is stronger government regulation and less competition, those are the places where you are seeing strong price increases". Government restrictions and marketing boards may have good intentions - to protect Canadian producers - but the unintended consequence is higher consumer prices. So it's a trade off. Open Canadian markets to unfettered competition or protect the near-monopoly status of some Canadian industries?
A step in the right direction (no pun intended) was taken in 2011 by the Harper government. For 75 years, the Canadian Wheat Board ran a monopsony (one buyer) - all wheat and barley farmers in Western Canada had to sell their products to the Board. After calls from many farmers for the right to sell into the open, competitive market, the government reduced the Board's power by turning it into a voluntary marketing organization. Farmers now have freedom of choice.
Now the government must decide: maintain the status quo or open other markets to competition. I know how the average consumer would vote.
*Sticker Shock: The causes of the Canada-U.S. price differential
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