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When producers call for regulations in the name of protecting consumers, you can generally assume that the real and intended effect is to exclude potential competitors: see, for example, our dairy industry. (Steve Jenkinson for The Globe and Mail)
When producers call for regulations in the name of protecting consumers, you can generally assume that the real and intended effect is to exclude potential competitors: see, for example, our dairy industry. (Steve Jenkinson for The Globe and Mail)

Economy Lab

Favouring producers over consumers is a road to ruin Add to ...

"People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices." - Adam Smith, Wealth of Nations



The next time a political party vows to defend the interests of the producers in a certain industry, you should ask why it isn’t choosing to defend the interests of consumers instead. Because the contribution of an industry to the public good is not its ability to provide large incomes to those who work there; it is its ability to produce things that people want to buy.

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Business groups may give lip-service to the benefits of competitive markets, but their heart isn’t in it; they know that their real interests are best served by providing reduced output at high prices. And that’s exactly what we get whenever governments set policy in order to benefit producers: see, for example, our dairy industry.



The motives of producers who call for special treatment in the name of consumer protection are equally suspect. Producers are not in business for their health, and they definitely are not in it for your health. So when producers call for regulations in the name of protecting consumers, you can generally assume that the real and intended effect is to exclude potential competitors: see, for example, our dairy industry.



The interests of producers dominate policy discussions to an alarming extent. International trade is a case in point: producers like the opportunity to export more, but dislike the prospect of more competition in their existing markets. And so governments are expected to treat the liberalization of domestic markets as “concessions”, and export opportunities as “gains”. Of course, this has the public interest completely backwards: the gains to trade are precisely those cheaper imports, and exports are more properly thought of as costs.



A prosperous society is one in which goods and services are cheap and plentiful. This is in direct contrast with the producer’s agenda of a system in which they are expensive and scarce. A preoccupation of the welfare of producers at the expense of consumers leads us to the exact opposite of prosperity.



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