Ontario’s Ford To Fight Trump On Tariffs – OpEd
Doug Ford, the Progressive-Conservative Premier of Ontario, is calling a snap election. He is doing so, he says, in order to obtain a strong mandate from the most populous of Canada’s ten provinces, so as to be able to better combat President Trump’s threatened tariffs. With a more recent and he hopes even more powerful mandate, he will be in a better position to combat this threat emanating from the south of him and his fellow citizens. He can do nothing, directly. Tariffs are a federal, not a provincial, responsibility in Canada. But with this mandate he expects to be able to do more than otherwise to lead the battle against this threat emanating from the south.
If successful, he will be acting in accord with what economics 101 teaches us: trade is mutually beneficial and tariffs decrease these opportunities.
Bob purchases a hat from Mary for $50. How much did he value that head-piece when he made the purchase? Certainly not at $45, in which case he would have lost $5 on the deal, and he wants to better, not worsen, his economic condition. At exactly $50? No again. In that case, there would have been no profit in the deal for him; why bestir himself, get off his comfortable couch, for such a no-gain situation? If he values it at $60, then he makes a $10 profit, ex ante, in anticipations. As for Mary, she’s got dozens of this article of clothing in her shop, and is happy to get rid of as many of them as she can. She values them at $15, each, and garners a profit of $35. (It is possible that Bob didn’t give a fig for that hat, but thought that if he purchased it, he would get a date with Mary; all we can know for sure when he makes the purchase is that there is something about that hat that he valued at more than $50). True, later, the hat might have gone out of style and Bob regrets this purchase (he didn’t get a date with Mary either). So, ex post, after the fact, we cannot say definitively, necessarily, that trade is mutually beneficial. But it is certainly not exploitative.
Donald Trump is incensed at what he sees as a negative balance of trade on the part of the US, vis a vis Canada. I have a horrid balance of trade with my grocer, auto mechanic, plumber, favorite restaurant owner, house cleaner and air carrier.
I spend hundreds of dollars on them per year. Do they have the decency to purchase any of my economic consulting services? Sadly they do not. What rascals. On the other hand I have a tremendously positive balance of trade with my employer. This organization pays me a hefty salary for work I would do for free anyway (psst, don’t tell them about this), and I buy, perhaps, a meal or two or three from them, yearly, in the faculty and student cafeterias. Boy oh boy am I exploiting them!
This is obvious stuff and nonsense. We all have positive balances of trade with some people, negative ones with others.
Should Canada retaliate against US tariffs by emulating this policy against its southern neighbor? Yes and no.
Yes, perhaps that will bring Mr. Trump to his senses, especially if all other countries follow the Canadian lead in this regard.
No. If there are two men with pistols sitting in a rowboat, and one of them shoots a hole in its floor, and the water starts gurgling in, should the second man do the same, to get even with the first? Of course not. The point here is that this is a matter of strategy and politics, not economics, so there is no clear answer emanating from the dismal science.
I have only one problem with this heroic effort of Doug Ford. He is pictured wearing a hat (not the one Bob purchased from Mary) which states in large letters: “Canada is not for sale.” As I tell my students, over and over again (they rarely listen to me), it all depends upon the price offered, whether something should be for sale or not. Suppose someone offers the Canadians, or the members of any other country on the planet for that matter, that if they all sell out and depart, they, we all, will be blessed with the sun, the moon and the starts, with peace and justice, with an end to cancer, heart disease and other maladies, heck, eternal life in our bodies when we were 22 but with our present knowledge. Then, should we sell out? You’re darn tootin’ we should.
Get rid of that hat!
References:
Snap election: https://www.google.com/search?client=firefox-b-1-d&q=ford+calls+election+in+ONtario
Canada is not for sale hat: https://apnews.com/article/ontario-election-trump-doug-ford-tariffs-canada-e5453352eeaf0e790143fb5265db1341
Source of Ford quotes: https://www.msn.com/en-ca/money/topstories/you-better-pray-we-get-elected-doug-ford-says-he-will-call-snap-ontario-election/ar-AA1xOlpi
