What industries should the state never subsidize?

[cannuck]

taxation is the number 2 motivation of human financial behaviour right  behind greed.

to exempt an exporter from royalties would of course be silly, and the government(s) ALREADY tax damn near 1/3 of profits!   To exempt an exporter would be to do great disservice to the country - as it once more puts us in the resource depletion model, not adding value to resource.   Think of it this way:  a farmer gets a few pennies for the grain in a box of cereal, but has to buy it back for $4!!!!!   The same is true for minerals, fiber, petroleum - but not all in such an extreme.

[Machjo]

39 minutes ago, cannuck said:

taxation is the number 2 motivation of human financial behaviour right  behind greed.

to exempt an exporter from royalties would of course be silly, and the government(s) ALREADY tax damn near 1/3 of profits!   To exempt an exporter would be to do great disservice to the country - as it once more puts us in the resource depletion model, not adding value to resource.   Think of it this way:  a farmer gets a few pennies for the grain in a box of cereal, but has to buy it back for $4!!!!!   The same is true for minerals, fiber, petroleum - but not all in such an extreme.

You do have a point there. I'm just brainstorming an ethical question. Since some states have resources and others don't, how do we ensure the have states don't exploit the have-not states by imposing a tax on their resource exports to them?

I think visa-free access to Canada's economic resources is the easiest solution. That way, the Hong-Kongese would be paying for this right through the taxes they'd pay on the resources they buy from us. Another would be to transfer part of the tax to Hong Kong. Yet another would be to sell tax free to Hong Kong on the condition that it impose an equivalent tariff on our fuel exports to them. I still think visa free access is the simplest solution though.

Edited October 7, 2018 by Machjo

[Machjo]

58 minutes ago, Michael Hardner said:

1. But Hong Kong doesn't manufacture either, their expertise is in allocation of resources for the best return.  There's no reason we can't do that.

2. Luckily that's pretty far off.

Actually, Hong Kong does some manufacturing too, but its main staple is the service sector, especially in banking and travel, tourism, and transportation both commercial and industrial.

Edited October 7, 2018 by Machjo

[cannuck]

3 minutes ago, Machjo said:

You do have a point there. I'm just brainstorming an ethical question. Since some states have resources and others don't, bow do we ensure the have States don't exploit the have-not states by imposing a tax on their resource exports to them?

I think visa-free access to Canada's economic resources is the easiest solution. That way, the Hong-Kongese would be paying for this right through the taxes they'd pay on the resources they buy from us. Another would be to transfer part of the tax to Hong Kong. Yet another would be to sell tax free to Hong Kong on the condition that it impose an equivalent tariff on our fuel exports to them. I still think visa free access is the simplest solution though.

we are very much a "have" state when it comes to resources.  What we don't seem to appreciate is when they run out, we very little infrastructure outside of Ontario's auto trade to continue to create any wealth.

Nobody needs a visa to buy resources, just a bank account.  We need to be selling everyone the products MADE from our resources, not giving them our legacy in exchange for a few beads.

[cannuck]

9 minutes ago, Machjo said:

Actually, Hong Kiss some manufacturing too,. But its main staple is the service sector, especially in banking and travel, tourism, and transportation both commercial and industrial.

Hong Kong got there by being manufacturing to begin with, and simply earned so much money by creating wealth that they are now in a position to redistribute with financial games (Casino Capitalists - just like Wall Street).   Hong Kong (and Taiwan) businesses are the source of what became the manufacturing giant(s) of the Pearl Delta, so they are still in manufacturing, they just use cheaper labour and access to the massive pool of public capital (of the CHICO gov't).  Same true of Taipei.

We can thank HKSAR for being the window on the world for China (as an extension of Shenzhen, really).   It saved 1/4 of the world's population from a life of sheer misery.  Hell of an accomplishment for a tiny fishing village.  And it was all done without a penny of government subsidy (until their invasion of the mainland, that is).

Edited October 7, 2018 by cannuck

[Michael Hardner]

14 minutes ago, Machjo said:

Actually, Hong Kong does some manufacturing too, but its main staple is the service sector, especially in banking ...and transportation both commercial and industrial.

These are the sectors I was thinking about and the value they add is in intellectual power and expertise.

[Machjo]

12 minutes ago, cannuck said:

we are very much a "have" state when it comes to resources.  What we don't seem to appreciate is when they run out, we very little infrastructure outside of Ontario's auto trade to continue to create any wealth.

Nobody needs a visa to buy resources, just a bank account.  We need to be selling everyone the products MADE from our resources, not giving them our legacy in exchange for a few beads.

Again, I'm looking at it from an ethical point of view. Let's say all have States adopted a law preventing the export if raw resources. This would unfairly devastate have not states. Even just imposing a tax on these resources that Canada collects to invest in its own citizens gives Canada an unfair advantage. By giving citizens if gave not states visa-free access to study, work, and business in Canada would ensure that those harmed by these taxes could freely partake if the benefits of these taxes in Canada.

 

I guess another theoretical solution would be that the UN collects resource taxes for the benefit of all and that individual states would not be allowed to impose their own taxes on the same resources.

[Wilber]

11 hours ago, Hates politicians said:

Bombardier is one business who should'nt be getting corporate welfare.

Boeing and Airbus subsidies

WTO calls Airbus subsidies illegal

Embraer and Bombardier

 

It's a complicated business. The fact is, if you want an aerospace industry you will be providing subsidies in some fashion.

[Argus]

1 hour ago, cannuck said:

Nobody needs a visa to buy resources, just a bank account.  We need to be selling everyone the products MADE from our resources, not giving them our legacy in exchange for a few beads.

And who are we going to sell these products to given it will cost us more to make them than our international competitors, who can then sell those products cheaper? You want to do away with the welfare state, pollution controls and minimum wages so we can sell products abroad more cheaply?

[cannuck]

6 minutes ago, Argus said:

And who are we going to sell these products to given it will cost us more to make them than our international competitors, who can then sell those products cheaper? You want to do away with the welfare state, pollution controls and minimum wages so we can sell products abroad more cheaply?

That is of course a valid question.

Ever sit beside one of the national rail lines and watch the endless parade of Chinese containers coming into Canada - and across the West to waiting ON markets?  Go to any store and see how much of what we buy is from Canada vs. imported mostly from China, but other low cost Asian suppliers.  Then check out the expensive cars on the road - German and Japanese for the most part.  The list goes on.  

Before we can compete globally, we have to have the infrastructure to at least meet our OWN needs, never mind having export capacity and being able to go toe-to-toe with the big guys.   We don't do that.  We either mine some resources and sell them off without adding any value, or get a government job giving away as much money as we possibly can to terrorists who will likely vote Liberal.

We miss the simple stuff:  Alberta/SK has the largest known reserves of petroleum hydrocarbons (Athabasca sands) on the planet.  People (with some good reason) do not want it dilluted with very light fractions and shipped down pipelines where a spill can be a real bitch.   As a result, producers get about 1/2 the actual value of their resources if they can find a market at all.  By simply restricting export of bitumen and especially dilbit, it forces the industry into producing synthetic crude - as did GCOS/Suncor to start with, and later Exxon and Shell.  Those are fabulous feedstocks for refineries and MUCH safer to ship than what goes down the incredibly dangerous rail links now - but most of all the value is added within Canada.

We will NEVER be able to compete with the newest of emerging economies, but we shouldn't need to.  There are things we do or can do that we do very well.  We also have most of the infrastructure to do so - and what we don't have we can access the US component quite easily.  Trump can figure this shit out, and he is not the brightest bulb on the string, so why can't the left and red Torries here grasp such simple concepts??

[Michael Hardner]

1 hour ago, Machjo said:

1. You do have a point there. I'm just brainstorming an ethical question. Since some states have resources and others don't, how do we ensure the have states don't exploit the have-not states by imposing a tax on their resource exports to them?

2. I think visa-free access to Canada's economic resources is the easiest solution. That way, the Hong-Kongese would be paying for this right through the taxes they'd pay on the resources they buy from us. Another would be to transfer part of the tax to Hong Kong. Yet another would be to sell tax free to Hong Kong on the condition that it impose an equivalent tariff on our fuel exports to them. I still think visa free access is the simplest solution though.

1. You're worried about resource-rich countries exploiting those who invest in them ?  That's a pretty unique concern.  I don't see much call for the African states to stop taxing the US and China into the ground at least so far.

2. You're really into government solutions, but - oddly - to help the very investors who eschew government intervention and profit well enough without it.  Unless I'm misreading you, of course...

[Argus]

33 minutes ago, cannuck said:

That is of course a valid question.

Yes, but you failed to address it.

33 minutes ago, cannuck said:

Ever sit beside one of the national rail lines and watch the endless parade of Chinese containers coming into Canada - and across the West to waiting ON markets?  Go to any store and see how much of what we buy is from Canada vs. imported mostly from China, but other low cost Asian suppliers.  

I'm aware of all of this. But I'm also aware Chinese workers make a fraction of what workers make here, that safety regulations are minimal, as are pollution restrictions.

33 minutes ago, cannuck said:

Before we can compete globally, we have to have the infrastructure to at least meet our OWN needs, never mind having export capacity and being able to go toe-to-toe with the big guys.

The only way to do that is steep tariffs on imports, which would greatly increase the price of goods Canadians buy.

 

33 minutes ago, cannuck said:

We miss the simple stuff:  Alberta/SK has the largest known reserves of petroleum hydrocarbons (Athabasca sands) on the planet.  People (with some good reason) do not want it dilluted with very light fractions and shipped down pipelines where a spill can be a real bitch.   As a result, producers get about 1/2 the actual value of their resources if they can find a market at all.  By simply restricting export of bitumen and especially dilbit, it forces the industry into producing synthetic crude - as did GCOS/Suncor to start with, and later Exxon and Shell.  Those are fabulous feedstocks for refineries and MUCH safer to ship than what goes down the incredibly dangerous rail links now - but most of all the value is added within Canada.

You presume that private enterprises will kick in the tens of billions to construct these refineries. I have not seen the economic case which suggests this.

 

[Michael Hardner]

27 minutes ago, cannuck said:

1. Before we can compete globally, we have to have the infrastructure to at least meet our OWN needs, never mind having export capacity and being able to go toe-to-toe with the big guys.   

2. We miss the simple stuff:  Alberta/SK has the largest known reserves of petroleum hydrocarbons (Athabasca sands) on the planet.  People (with some good reason) do not want it dilluted with very light fractions and shipped down pipelines where a spill can be a real bitch.   As a result, producers get about 1/2 the actual value of their resources if they can find a market at all.  By simply restricting export of bitumen and especially dilbit, it forces the industry into producing synthetic crude - as did GCOS/Suncor to start with, and later Exxon and Shell.  Those are fabulous feedstocks for refineries and MUCH safer to ship than what goes down the incredibly dangerous rail links now - but most of all the value is added within Canada.

3. We will NEVER be able to compete with the newest of emerging economies, but we shouldn't need to.  There are things we do or can do that we do very well.  We also have most of the infrastructure to do so - and what we don't have we can access the US component quite easily.  Trump can figure this shit out, and he is not the brightest bulb on the string, so why can't the left and red Torries here grasp such simple concepts??

1. Competitive advantage involves infrastructure, yes, but I doubt we LACK the infrastructure.  We are known for cheap power and good transportation and communication systems so I don't know where this comes from.  I believe labour costs and innovation are the usually cited as factors that hold us back.

2. Right ok, I guess this is what you meant by infrastructure ?  But ... you didn't say why refinement doesn't happen here ?

3. Need more info.

[Michael Hardner]

1 minute ago, Argus said:

 You presume that private enterprises will kick in the tens of billions to construct these refineries. I have not seen the economic case which suggests this.

Looks like you have answered the questions I just posted...

[Machjo]

5 hours ago, Wilber said:

Boeing and Airbus subsidies

WTO calls Airbus subsidies illegal

Embraer and Bombardier

 

It's a complicated business. The fact is, if you want an aerospace industry you will be providing subsidies in some fashion.

If we must subsidize it, then is it worthwile? Why not focus our attention on self-supporting industries instead?

[Wilber]

2 hours ago, Machjo said:

If we must subsidize it, then is it worthwile? Why not focus our attention on self-supporting industries instead?

Well what do you want to do? These are the kind of companies that actually develop technologies, they don't just make stuff. You go on about developing value added products while at the same time advocating giving up our ability to produce them by giving up our markets to business' that are protected and subsidized. A nation of burger flippers trying to get by selling each other stuff that other countries produce. 

 

US tariffs

Edited October 7, 2018 by Wilber

[Machjo]

20 hours ago, Wilber said:

Well what do you want to do? These are the kind of companies that actually develop technologies, they don't just make stuff. You go on about developing value added products while at the same time advocating giving up our ability to produce them by giving up our markets to business' that are protected and subsidized. A nation of burger flippers trying to get by selling each other stuff that other countries produce. 

 

US tariffs

Raising taxes on the net profits of resource-extraction businesses would give government the wiggle room it needs to then lower taxes on other businesses.Would that not be an indirect subsidy from the resource-extraction businesses to the value-added businesses by having the former carry the tax burden for the latter? If a business still can't compete after deep tax cuts, what else does it want? What else does it deserve? Yes we want value-added, but let the market decide what value-added businesses we want, not government.

 

We can also subsidize value-added busineses indirectly by increasing funding for universal compulsory public education. This combination of lower business taxes for non-resource-extraction businesses and more generous funding for public education would reduce their tax and staff-training overhead costs. Again, if a business still can't compete after that, then tough. The average mom and pop shop should not be subsidizing the aeronautical engineer's salary given how even without government subsidies, he can probably earn far more than than the mom and pop shop ever could.

Edited October 8, 2018 by Machjo

[Wilber]

You seem to think resource industries are some kind of piggy bank when in fact they are businesses like any other, they operate of profit margins and if they aren't there, people won't invest in them. Where were you during the NEP? Trudeau Sr. tried to do just what you are advocating. Energy companies fled in droves and the Alberta economy took decades to recover. Now you want to do the same thing again.

Edited October 8, 2018 by Wilber

[taxme]

On ‎10‎/‎5‎/‎2018 at 5:29 PM, Machjo said:

While I think the government should subsidize no industry without a very solid rationale for doing so, I think there are certain industries that the government absolutely should not subsidize on ethical, economic, or other grounds. I would include among them:

 

1. Any addictive product or service for recreational consumption (such as alcohol, tobacco, lottery tickets, etc.). I hope the reason for that is obvious.

2. Any animal product or byproduct. Research shows that a meat diet is multiple times more economically inefficient than a vegan one in terms of food production, resource consumption, land use, and overall cost. This raises both economic and ecological concerns. Excessive meat consumption can also undermine public health due to high cholesterol content and other factors. This too translates to additional health-care costs subsidized by the taxpayer. Then there are the ethical considerations concerning the treatment of the animal.

3. Resource-extraction industries. Given our finite resources, any extracted resource should be sold on the market at its true cost, just like meat and tobacco.

What other products and services would you add at the top of the list of industries to not subsidize?

The government should never be in the business to subsidise or run a business. When the government tries to run anything the taxpayer's in the end always get screwed, blued and tattood. The private sector can do a better job of running a business or industry than the government ever can. The only thing the government is very good at is creating more taxes and more government and less freedom and it would appear as though there are many Canadians who like and want it that way. Aw well.

[GostHacked]

On 10/6/2018 at 12:55 PM, cannuck said:

those are assumptions we can never prove.   We already have a country, so we don't need to subsidize transportation any longer.   The Trans Mountain pipeline could have been built very easily - but simply giving approval to the private owners who were trying to build it.

Canada simply would not exists as it does today without the rail road.

Now what are we talking here in terms of subsidies?  Infrastructure built and operated with our tax dollars is essentially subsidized and still we get screwed with more toll roads.

But I have a feeling this is more related to the private sector with subsidies. Like dairy farming.

[Zeitgeist]

There are many unprofitable services that a society needs to function.  No business will run them because the profits of the infrastructure don’t flow immediately to the service provider.  In most countries, especially those with uneven population distribution like Canada, these include: postal service, public transit, inter city rail, medical services, police, national defence, elementary and secondary education, roads, canals, water supply, and in many cases even energy and steel production.  Government plays a critical role in most of these areas no matter how many road tolls, private schools and hospitals, or similar user-pay mechanisms you introduce.  In fact in most cases private business takes care of only the most profitable markets — the rich students in Rosedale or the heavily traveled train route, leaving everyone else with substandard service.  I guess if you’re rich it works for you.  

[Wilber]

4 hours ago, taxme said:

The government should never be in the business to subsidise or run a business. When the government tries to run anything the taxpayer's in the end always get screwed, blued and tattood. The private sector can do a better job of running a business or industry than the government ever can. The only thing the government is very good at is creating more taxes and more government and less freedom and it would appear as though there are many Canadians who like and want it that way. Aw well.

Go back to your cave then and don't expect utilities, roads, police, firefighters, a military or any other service government provides.

[Machjo]

19 hours ago, Wilber said:

You seem to think resource industries are some kind of piggy bank when in fact they are businesses like any other, they operate of profit margins and if they aren't there, people won't invest in them. Where were you during the NEP? Trudeau Sr. tried to do just what you are advocating. Energy companies fled in droves and the Alberta economy took decades to recover. Now you want to do the same thing again.

Of course such a proposal would reduce resource extraction, but the lower dollar would increase the eexport of manufactured goods. Resources are finite.

[Wilber]

Just now, Machjo said:

Of course such a proposal would reduce resource extraction, but the lower dollar would increase the eexport of manufactured goods. Resources are finite.

You make no sense. You want to make an industry smaller, then take more money out of it. 

[Wilber]

5 minutes ago, Machjo said:

Of course such a proposal would reduce resource extraction, but the lower dollar would increase the eexport of manufactured goods. Resources are finite.

You still don't address the issue of unsubsidized industries having to compete with those that are subsidized as well as protected by tariffs. You have to deal with the world you live in, not the one you would like.  The US may be booming but it is on a combination of tax cuts that aren't paid for and trillion plus dollar deficits. It's being done on a credit card.