It is widely known that the Canadian public has a low opinion of politicians. The best evidence of this comes not from surveys or coffee shops, but from the low turnout in Canadian elections. Of course, politicians always try to spin this to suit their purposes. The winning party claims it is because people are satisfied with them and see no need to change. The losing party sees it as proof that people are so fed up with the government they won’t stoop to participating in the process that elects it.
Rhetoric aside, people don’t vote because they increasingly don’t think what governments do is relevant to their lives. They are wrong, but it may be that what governments do today is not as important as what they don’t do. In the last couple decades, governments have steadily and continuously eroded their own ability to intervene in the economic and social fabric.
Let me give you a couple of examples. In the United States, a drug manufacturer is asking to be allowed to use the drug cefquinome against respiratory infections in beef cattle. Cefquinome is from the family of cephalosporins, a relatively new family of antibiotics that is used in humans as a last line of defence against certain infections. Many medical groups in the U. S., including the American Medical Association, have urged the U. S. Department of Agriculture not to license the drug for animal use. The fear is that resistance to this class of antibiotics could be hastened by using them in livestock. The response of the USDA has been that the rules do not allow it to turn down the drug company’s request, no matter how well founded these fears might be.
The second example is also American. Last year, the Peanut Corporation of America continued to sell peanuts after salmonella contamination was found in its processing plant. It did not report this contamination to health authorities. It seems the Food and Drug Administration in the U. S. does not have the authority to compel such plants to turn over their inspection data. One bureaucrat thought it would not be wise to enact such a law because then companies might simply stop testing.
In Canada, governments have also been quick to limit their own powers. The issue of competition is a glaring example. Competition is essential to the working of a capitalist economy. Competition ensures that no one is gouged and that companies continue to seek out ways to be more efficient. You would think that competition would be absolutely sacred to a free enterprise government. Yet governments claiming to be devoted to that ideology seem to care little if effective competition in the marketplace exists.
For example, what farmer would deny that competition in the beef-packing industry is insufficient? With the consolidation of the packing industry into only three hands in Canada, the farmers’ share of the beef dollar has shrunk dramatically. The National Farmers Union pointed out the degree of this in a carefully researched study.
Presently, the Competition Bureau is examining a proposed sale that would reduce the number of major beef processors in Canada to two. The proposal would allow the sale of Tyson’s beef slaughter plant in Brooks, Alberta to XL Foods. XL already has a significant presence in Canada in cattle feeding and slaughter, and owns all the major livestock auction facilities in Saskatchewan. If the sale proceeds, Cargill and XL would control the slaughter of 95 per cent of the fed cattle in Canada. Few reputable economists believe you can have vigorous competition when there are only two competing firms in the market.
It is likely, however, that the Competition Bureau will allow the sale to go ahead, if its past track record is any indication of future actions. It had no qualms about allowing Cargill to buy Better Beef in Ontario. As a result, Ontario is now the lowest-priced market for cattle in Canada.
The National Farmers Union has insisted that the bureau make public its full analysis of the situation so that Canadians can see if the bureau’s analysis stands up to scrutiny. This too is unlikely if past behaviour at the bureau is any indication.
Lest you think the Competition Bureau is useless, however, rest easy. If you are hiring a school bus in Newfoundland, the bureau is right there at your side. In a recent ruling, the bureau found evidence of price fixing among school bus drivers and companies in Newfoundland.
Other than that, since 2005 the bureau has never failed to give its blessing to all and any mergers and acquisitions that came before it. It allowed appliance manufacturers, drug companies, steelmakers, newspapers, cellphone companies, all and sundry who came before it, to buy out their competitors. In all cases, the bureau’s response was the same: “Based on the information available, the bureau determined that the proposed transaction would not likely result in a substantial lessening or prevention of competition in any of the relevant markets.”
There was one exception. In 2005,the Competition Bureau decided that Johnson and Johnson could not buy out the consumer health care business of Pfizer Inc. without some remedial measures. The reason? Diaper rash ointment. Johnson and Johnson would have had too big a share of the diaper rash ointment market. So, farmers need not despair. They will never be subject to market dominance should there be an outbreak of diaper rash among their cattle.
Paul Beingessner writes from his farm near Truax, Sask.