MARK MACDONALD
BRITISH COLUMBIA – Socialist governments blame businesses for higher prices, when it is actually their own policies that drive up prices.
One of the latest cases in point is Prime Minister Justin Trudeau holding an inquiry into the increasing costs of groceries. It’s much easier to try and deflect blame, rather than acknowledge this is a direct result of government policies like his ill-conceived Carbon Tax on fuel and directly, anything and everything fuel-related.
Trudeau’s solution? More competition, thus the federal government has been not so secretly courting non-Canadian grocery chains to set up shop above the 49th, including several from the U.S. and even others from Europe. There have been no takers as of yet, but if they’re already successful – why would they choose to expand into a smaller market like this with a weaker dollar? It would be shocking if any food retailer would do that.
Surely some federal Liberals can put two-and-two together and conclude that when the price of fuel is hiked, it automatically increases the costs of doing business. It’s this simple: The cost of delivery of goods to a business from suppliers, and delivering their own products to customers is up because of fuel, so they are forced to raise prices.
Business owners are not willing – nor are they able – to eat those costs by themselves. They pass them on to the public purchasing their goods and services.
Grocery margins are slim as it is. It is not abnormal to have two or three percent profit margins on food, and store operators make their return based on volume. The number of competitors ensures competitive pricing. Stores even send out their own employees to shop competitors to see how much they’re charging for similar products, and make adjustments accordingly. If they want to stay in business, they must be competitive price-wise.
It’s the same result when the provincial NDP government hikes the minimum wage – a vote gaining exercise if ever there was one. They somehow naively seem to think that this one stroke of the pen will raise the working poor into the middle class. Or that the inevitable will result: Higher costs for goods and services.
Because the vast majority of people don’t understand business at all, and blithely assume that every business owner is rich, there is little sympathy from the general public when the various levels of governments increase the cost of doing business. The presentation is that the “wealthy business owner” is in such a financial position because they’ve withheld “what is right” from the worker, in terms of wages.
Maybe changing the vernacular concerning profits could help. Profits are really the payment back to owners for their overtime and risk.
Or try this: Ask a worker to put in another two or three hours a day because the company needs it – without pay. How do you think a typical employee would respond? No thanks, get lost, or worse? They want more money for more work, and labour laws ensure that.
Yet that’s exactly what business owners do – they work extra hours and do whatever it takes to make sure that their revenues outdistance their expenditures, so that at the end of the day, for all of their time, effort and risk, there is a reward for them. Extra income.
A higher minimum wage directly results in higher restaurant prices as well. McDonald’s meals are now almost 10 times as much as it cost when the fast food chain advertised “you get change back from your dollar” for a meal only a few decades ago. Have McDonald’s profits increased 10-fold? Absolutely not.
But their overhead has – the result of government intervention, red tape and wage mandates that make everything more expensive, and push companies towards increased mechanization so they can hire less people to make and deliver their products.
Restaurant owners aren’t the problem. Short-sighted government is.
The skyrocketing cost of home ownership? Again, the finger points squarely at government.
Construction companies and realtors aren’t the problem for higher housing costs. It’s government, with their never-ending increase of needless regulations, that make it increasingly difficult, if not impossible, for a mom and pop to build their own home and earn some sweat equity. New rules block the “little guy” from being able to compete with larger companies due to scale, creating inequities in terms of in-house costs that drive up the costs of homes.
Endless delays endured by those constructing buildings add significant financing costs to the final price when the building hits the marketplace. The delays are also a major reason why smaller companies can’t afford to carry the cost of construction, and they drop out of the game, resulting in even less companies available to build. Meaning less housing, which drives up the cost of the fewer homes, being pursued by more potential buyers.
It’s the law of supply and demand, which is as certain as the laws of gravity. Politicians seem to think if they simply wish it didn’t exist, it wouldn’t.
There wouldn’t be a housing crisis if governments would get out of the way and let the private sector do what they do best – build. The market would reveal when the saturation point is reached, and construction would slow down to suit. Until then, they could build, build, build.
Inflation is a serious problem in this country, and governments of all levels can try and shift the blame to the private sector all they want. Non-informed voters may like to agree with that line of reasoning, but if government is serious about addressing these issues, the answer is staring right back at them if they look in the mirror.
Mark MacDonald is President of Communication Ink Media & Public Relations Ltd.: mark@communicationink.ca
