Pancake economics and socialists syrup

Published 9:03 pm Monday, February 15, 2016

 

Consider the pancake. Humble, in and of itself, yet made glorious by the addition of maple syrup. What can dim this glory? Try bureaucracy.

“Quebec’s ‘autocratic’ control of maple syrup makers, a reign of terror which relies on bailiffs, security guards and the courts, is crippling the province’s most celebrated export, and the province needs to abandon its maple syrup quotas, says a new report,” the (Canada) Financial Post explains. “The report, released Thursday, warns that New York State alone boasts more maple trees than Quebec, and the United States could become self-sufficient in maple syrup in 10 years, destroying the province’s biggest syrup export market.”

What’s behind this breakfast-table tyranny? It’s democratic socialism – the kind of price controls and “managed economy” measures at the center of Sen. Bernie Sanders’ presidential campaign.

“In a system designed to give producers a fair price, the syrup federation tells each producer how much syrup they may make, is the sole authorized buyer of the syrup, sets one price for syrup, judges syrup quality and pays producers only when it sells their product,” the Post reported.

Does that sound familiar? That’s exactly how Sanders would approach prescription prices, as just one example.



Sanders is right to argue he’s not a true socialist. Socialism is government control or ownership of the means of productions – the factories, the farms and the businesses. Sanders says he will stop short of ownership, but his system would involve an awful lot of the “control” of the means of production – through regulation, price caps, “fair” returns on investment, minimum wage hikes and CEO pay ceilings.

And those things, combined, make up the kind of top-down control that we see in the Canadian syrup industry.

“Some producers told (report author Florent) Gagn← that the federation orders them to reveal the names of every person who bought from them a can of maple syrup, or they’ll be cut off from farm subsidies,” the Post wrote. “Producers must reveal their clients, electricity or oil bills, number of taps in trees, sugar bush rental agreements, bank and financial statements for many years. … Quebec has forbidden increases in syrup production since 2009, even as world demand for syrup skyrockets, the report notes.”

It’s pretty simple. The government stinks at setting prices. Look at Venezuela, which is in economic collapse after decades of socialist rule of the government-controlled economy. Price controls discourage production, as do production quotas and oppressive regulations.

The free market is a far better way to determine prices. Lifting Canada’s production quota might result in lower maple syrup prices – but how is that a bad thing? And because demand is high, prices will soon find a natural equilibrium.

Right now, the free market system sets prices in the U.S., for the most part (there are some exceptions). The result is we have plenty of choices.

And when it comes to drug prices, we also have something else – innovation and development.

Price controls threaten all of those things – quantity, quality and innovation. The proof is on your pancakes.