Mount Pleasant Don Thurston

The Mount Pleasant Brain Trust talks about subsidies and such

Plant and business closures generate angst and exacerbate the deep concern about secure employment. Recent shut downs include Timkens, Caterpillar, Baskin-Robbins, General Motors, Nokia and Bowater. Resulting economic turmoil of this nature is not new and an all too familiar standing item on the Mount Pleasantmonthly Economic and Business Development Committee agenda.  Members include Rebecca Waldowski, editor of the Mount Pleasant Observer, who has written extensively about industrial growth and education. Kumar Nandakumar is an MBA graduate with experience in finance.  Thad Fagerheim has a practical understanding about agricultural economics. The committee chair is Eugene Forsythe. His doctoral thesis was award winning, dealing with comparative advantage.

Plant closures result from a complicated and interactive set of circumstances. More often than not subsidies, tariffs, duties, and incentives are involved and always part of the Brain Trust’s conversation.

As an example of these regulations and policies, consider sugar’s convoluted commodity trading history as cited by Rebecca. Sugar production is centuries old. In the early 1700’s  demand  around the world entered a major growth phase as European consumers caught the bug. Harvesting  grew with the availability of free land and exploitation of slave labor. The industry was stormy and the players were brutal. For the next three hundred years changing labor conditions, shifting politics, and economic cycles contributed to many forms of subsidies, incentives, and export and import duties. These were all designed to protect the consumer or the producer from wild price swings depending on the circumstances.  Astonishing as it may seem some of these conditions and regulations prevail today. The two remaining Canadian domestic producers are protected from international dumping by high tariffs.

Thad talked about the current example, horse racing. In Ontario and Albertas  pari-mutuel  revenues have  fallen drastically in junction with the very fast growth of electronic betting,  casinos and lotteries. What used to be the exclusive domain of thoroughbred racing now belongs to many different and successful venues. A mandated response  to this decline is the allocation of unrelated gambling monies  to the horse-racing industry. This practice is defended by many as legitimate revenue sharing and opposed by others as nothing more than an unsustainable subsidy.

The common denominator in both cases is the change in their respective businesses generated by new laws and revised regulations. In the sugar industry slave trading and transport was outlawed, changing production costs. Horse racing was impacted by the legalization of new gambling venues. Owners justify protectionism and new revenue sources because of changes over which they had no control.

We will continue our trip through the always changing world of plant closures and associated issues.

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