Opinion: Far from the gatekeepers — for real, though

the thing is, Pierre Poilifri has an opinion on the “gatekeepers”. It’s just about more than a few small-minded municipal bureaucrats standing in the way of needed housing development.

If he was serious, and not just testing streaks of applause, he expanded the discussion to include other guards at work in other areas of the economy. As with housing, their job is to protect the interests of those already in the market at the expense of those who wish to enter it. Or, as economists Assar Lindbeck and Dennis Snower put it, the inside out.

The two first developed their theory regarding the labor market. Notice how labor and management collude in setting wages above the market clearing level—that is, above the level that would lead to full employment. The interests of the current employees in this arrangement are clear. But management often finds it equally in their best interest to pay more, as a way of reducing strikes and employee turnover. Whose interests are not represented at the negotiating table? The unemployed, who are thus deprived of “pricing themselves for work”.

So what can you say: this is between the company and its workers. Except that it is not only the internal dynamics of the company that enter into these calculations. A wide range of government policies are also shifting the balance in favor of insiders to outsiders. Minimum wage laws, lay-off notice requirements, mandatory employee benefits: all of these may make life better for those with jobs, but at the cost of reducing employment opportunities for those without jobs.

The same phenomenon can be seen in other markets across the economy. Foreigners — start-ups, imports, immigrants, and others — routinely find themselves outside the market, legally barred from competition, not because of any shortcomings on their part, but because of government policy. Sometimes this is via interventions that keep price above market levels – tariffs, for example – and thus prevent willing sellers from reaching willing buyers.

Others include attempts to suppress prices below market levels – rent controls being one example; Subsidized daycare is another way — or, in fact, puts prices out completely. In subsequent shortages, some consumers certainly benefit: Insiders. But lower rents don’t help those who can’t find an apartment, and the promise of $10 a day childcare doesn’t do much good for the parent who can’t put their child into foster care.

Even worse, insiders, perversely, are often better off initially. Because when prices are not allowed to allocate resources, other factors do: social networks, education, language proficiency, or simply the ability to spend time away from work all conspire to put the middle and upper classes at the front of the class, for those who do not have such advantages.

One form of this is the well-known tendency of politics to favor the interests of producers over consumers. Here, the inside-out dynamic is primarily political. The benefits of free trade, though they may be total, are distributed to consumers in general: each benefits only a small amount, and will not know or care about the matter one way or the other. While the costs of free trade are concentrated on a few protected sectors, which have much to lose and every incentive to combat them.

Do you want to know why Canadian consumers pay double or triple the market price for milk, eggs and other products managed by the supply? Why are our domestic airline ticket prices among the highest in the world? Or our cordless phone charges, as I did? Or the service fee we pay to our banks? For this. In each case, the industry in question is protected from competition, foreign or domestic, if it is not formally organized as a government-sponsored cartel. Virtually no one in politics – including Mr. Boliever – wants to change it.

Producers to consumers. Insiders are strangers. Over and over again, the same picture appears. This does not make sense, from a number of points of view.

As a matter of fairness, it is It is a well-known axiom of social justice that politics must first look to improve the worst off in society – strangers – before anyone else.

In terms of efficiency, new entrants bring competition, dynamism, and innovation to what would become an ossified oligopoly.

As a matter of both, the interest of the consumer must clearly come before the interest of the producers. The whole point of production, after all, is to make goods and services for consumers. As they examine competing offerings in the marketplace, consumers play the vital role of separating more efficient producers from less efficient producers – crucial to driving productivity gains and raising living standards.

Away with the janitors, then, by all means. Just let’s be serious about it.

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