Statutory knowledge monopolies and supply management

Two forms of government manipulation of the marketplace have become the most controversial aspects of the Trans-Pacific Partnership (TPP) for Canadians: supply management and statutory knowledge monopolies. Each are government interventions in the marketplace between producers and consumers, each have a stated public policy purpose, and each are controversial.

Supply management in the case of agricultural goods like milk, eggs and poultry has its origins in the 1960's. Volatile market pricing didn't allow farmers to plan, and became a disincentive for farming specific crops. The government stepped in and removed the free market in favor of government granted monopoly control by marketing boards over production, imports and prices. Opponents say this artificially inflates pricing and harms consumers, as well as harming producers who might otherwise be able to make more money when market conditions were particularly good.

Statutory monopolies in the form of copyrights and patents have a longer history, but are similar in policy goals. They are a government granted monopoly on specific activities as an intervention between producers and consumers which creates artificial scarcity and inflates pricing. In a free market the price of something approaches the marginal cost. Given knowledge is non-rivalrous, and the marginal cost is zero, it is only this government granted monopoly that enables rent-seeking behaviour (collecting royalties). Similar to supply management, opponents say this government intervention artificially inflates pricing and harms creators/innovators by discouraging alternative business methods which may make them more money.

The most extreme form of statutory monopoly, and the form that most resembles supply management marketing boards, can be seen with collective societies. These collective societies, in collaboration with a government agency known as the Copyright Board, fixes pricing for copyrighted works and discourages (sometimes disables, sometimes makes legally impossible) competing business methods which copyright holders may have wished to harness.

(Note: Before some get confused on language. While a copyright can be bought/sold/owned, the statutory monopoly of copyright regulates specific activities that can be done with respect to that property without changing possession/ownership. It is similar to how farmers may buy/sell/own farms, independent of a government granted monopoly on the marketing/import/pricing of what was grown on farms)

I disagree with each of the pro/con extremes in each of these government marketplace interventions, and believe the best policy for producers and consumers of agricultural goods and knowledge lay somewhere between the extremes.

I find it interesting how inconsistent the treatment of these policies are. While not unique to the current government, we often hear rhetoric which claims that one government intervention is bad for the economy and the other is somehow required for there to be an economy. Many of the arguments in favor of increasing statutory monopolies work equally well for increasing supply management, and many of the arguments in favor of abolishing supply management work equally well for abolishing statutory monopolies.

You can see this inconsistency in the discussion of the TPP, where it is assumed that one of these government interventions may be abolished by this agreement while the other strengthened. Each are protectionist of specific markets and business models, but which countries are net exporters in each of these protected markets is different. Canada is a net exporter of agriculture, but a net importer of products and services regulated by royalty-bearing statutory monopolies. The USA is a net exporter of royalty-bearing statutory monopolies, but a net importer of most other things (except arms).

Canadians should take note of this: The TPP seeks to remove protections where we export, but increase protections where we import. The government seems to be selling this as opening markets, hiding the fact that it increases some forms of protectionism. It requires far more scrutiny of these conflicting policy goals than it has received thus far.

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