by Themistocles Evangelakos by Themistocles Evangelakos
I live in Canada, in the province of Québec to be more precise. I enjoy my vin, but I don't enjoy the purchase process because the Québec government holds a monopoly over liquor sales. This state of affairs assures that we pay more than our Ontario neighbours for our tipple. The CEO of the SAQ (Socit des alcools du Québec, our liquor board leviathan) Sylvain Toutant, coolly explained the racket thusly: "If tomorrow, we dropped our prices to match those in Ontario, our profits would automatically melt by 250 million dollars. That would be 250 million less for the government to devote to public services and social programs that make Québec the envy of other provinces of Canada.” Whew! Thanks Mr. Toutant. Makes me want to pop some bubbly … as a social duty. Besides being a perfect example of adding insult to injury, a poorer grasp of economics would be harder to find. Fact really is stranger than fiction. It amazes me how some economic dimwits can wind up running major corporations. When a friend brought Mr. Toutant's sagesse to my attention, I nearly choked.
Obviously a product of today's education. I would confidently bet that Mr. Toutant has no idea who Frédéric Bastiat was or the slightest inkling of the "Fallacy of the Broken Window." Can't blame him though, neither did I as I proudly sauntered up to the stage to accept my university degree in business. It was after graduation that I was made aware of Henry Hazlitt's excellent Economics in One Lesson, thanks to my good friend Luigi.
If you're reading this Mr. Toutant, (not bloody likely, otherwise you wouldn't utter such nonsense) here is a brief summary: A shopkeeper has his storefront window broken by a rock-wielding rascal. The unfortunate merchant now has to replace his window. The happy result (for the economics 101 challenged) is the glazier makes money and tonight he will cheerfully treat his wife to dinner Chez Pierre, tomorrow Pierre is off to the haberdasher to buy that new suit and so on. Money circulates and *presto* we have an economic stimulus. Why would society put the heroic lad in jail? Should we not give him a medal and an "atta boy" instead? Uh…no, Mr. Toutant, the sad reality is that the merchant finds himself having to replace a once perfectly good window and cannot buy the new machine he was contemplating. The machine that was going to increase his productivity. What about the money the machine seller was going to make? The economy is not stimulated, rather it has been stifled.
I can't help but wonder if that is the reason for the pitiful condition of our roads. Every spring our cars are assaulted by terrifyingly huge potholes, the explanation being our tough winters, yet our Ontario and Vermont neighbours' roads do fine. Or, is it because of substandard materials and our powerful unions' expectations of perennial "spring work" to fill in the newly bloomed craters? Meanwhile, the poor motorist can expect to replace wheels, tires, ball joints, tie rods, etc. At least the money circulates. But I digress…
Some pointy-head thinks he knows where to allocate taxed (more like forcibly taken) moneys better than the actual provider of a good or service. How many rotting, inefficient industries have been (still are) being propped up by government-provided extorted money? Have we learned nothing from the disaster of Central Planning? This economic jewel comes from the CEO of a corporation, no less. Are we supposed to be grateful? We should be outraged.
The SAQ has also been embarrassed by the shenanigans of two VPs in a bizarre price-fixing scheme. Due to the Canadian dollar rising relative to the Euro, they persuaded European wine producers to raise their wholesale prices. Why? Well, the real answer is because we're dealing with a government monopoly that has a disdain and poor concept of market forces. The bewildering explanation given was that since a stronger Canadian dollar would mean lower prices for consumers (no skin off their back) it would also mean a lower bottom line for the SAQ (horrors.) Of course, the SAQ is not required to lower prices, but since there's no competition, neither is there a fear of a competitor lowering prices to the hapless consumer. Therefore, SAQ VPs thought nothing of asking a supplier to raise prices. In my business, I'm always trying to negotiate lower prices. I'm sure they justified it by all the social programs they would be saving.
What is the SAQ's business philosophy? According to the SAQ's own website (emphasis mine):
The Société des alcools du Québec (SAQ) is a state-owned corporation responsible for the trade of alcoholic beverages. As a state-owned corporation, the SAQ provides a major income stream to both levels of government in the form of taxes, duties, and a dividend payment to the Quebec government. The SAQ spends millions of dollars a year in Quebec on goods and services other than alcoholic beverages. While fully cognizant of the economic impact of its commercial activity, the SAQ is nevertheless committed to promoting awareness among Quebecers of the importance of developing sensible attitudes towards alcohol and to developing activities aimed at protecting the environment.
Interesting, a lot of nice sounding words about making sure Leviathan gets his share, saving us from our overdrinking proclivities and the required saving the planet tripe. The two socially conscious VPs have been sacked, but consumers were hosed. With the above-mentioned philosophy we can be sure that this kind of tomfoolery will happen again. Who knows what else is going on?
Mr. Toutant, please put down that rock, leave my windows alone and don’t self-righteously decide for me where my money is to be spent. I want to pay the price the market determines for my booze, not that plus an “envy of other provinces” tax. Come to think of it, brush up on your economic edification, too. Makes sense though, it’s not surprising you work for a government-mandated monopoly. Join the world of competition where I live, where I learned from a lot of expensive mistakes. Even the mere thought must be terrifying to a statist like you. My guess is that you'd rather have rewarding thoughts of sugar plums and cabernet-sauvignon funded social programs. Funny how the economically insulated are the ones who want to fix things…with others' money.
Another sad fact is that there probably are many "sophisticated, educated" people who probably agree with such hogwash. People who are ready to passively believe that the government honestly and diligently allots funds to where they are most needed. The brainwashing going on in today's schools constantly pushes the fairy tale that the all-knowing Big Brother with his birds-eye view is best placed for this serious task. Having seen the situation governments' drunken sailor spending has gotten us into, Big Brother more likely has a bird brain.
A cynic would mumble something like “that extra 250 million never sees anything other than the lining of some political parasites’ pockets.”
I'll be enjoying my Easter lamb with some home-made wine.
Themistocles Evangelakos [send him mail] is a small business owner from Montreal, Canada.