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The Forum > Article Comments > The ultimate goal is free trade > Comments

The ultimate goal is free trade : Comments

By David Leyonhjelm, published 17/4/2014

Some people choose to do things that they are not necessarily the best at, and then convince governments to protect them. Trade agreements are aimed at unwinding this protection.

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Rhian,
You're the one completely missing the point, with your overly simplistic view of the world!
Shocaholic has nailed it.
It has absolutely nothing whatsoever with who does what best, but rather, the lowest production costs!
We could even win out there, given labor is only 16% of the cost of production/manufacture!
The real limiting factors are the price of energy, transport and water, and that outcome is just worsened by privatization and entirely unproductive parasitical profit demand outcomes.
If we could replace that model with cooperative capitalism, and employee owned co-ops, we could quite dramatically lower production costs, simply because they'd be totally trimmed down and just not carrying any drone or non productive profit takers.
Some say, that the government has no business in business, while conveniently ignoring the tender process and the contractual paradigm, that allows real trimmed of all fat, private enterprise, to beat the pants off of both public and private enterprise!
Even then, employee owned co-ops take the best of both worlds and jettison the rest.
Ditto simply ditching the profit demanding middle man, would allow us to actually halve the cost of living, and with it, the endless wages cost spiral. These people are no better than the money changers in the temple?
We don't need to work harder, just smarter.
If we did that much, no nation on earth could compete.
We have huge thorium reserves, and thorium power is cheaper than coal!
And we could have hydrocarbon, (energy) reserves to our immediate north, to probably rival the entire known middle East! At least that's what all the mystery oil slicks are telling us!
Returning water to the real owners, rather than completely unproductive profit demanding water barons, will bring down the price of that commodity.
There's so much more, but a usual, I run up against word limits!
Rhrosty.
Posted by Rhrosty, Friday, 18 April 2014 6:48:22 PM
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Rhian; It depends on what you mean by "better off"
The simple life that you probably think is bad, without working in noxious conditions and having to live away from the home in a poisoned environment can be better.
OK they might have to labour in the fields and live in semi primitive conditions but health wise and stress wise they would be better off.
My problem with using 3rd world countries as our supply is that it is not the level playing field that the economists and pollies promise.
We have to have our timber monitored for FC to sell it abroad so that must be applied both ways.
Any goods entering Australia must be certified as being produced by workers on an equivalent wage and living in good conditions and not creating pollution.
If that is not done then a tariff should be applied.
1st world companies are only shifting to the 3rd world to maximise profits, not for any altruistic reasons.
Posted by Robert LePage, Saturday, 19 April 2014 9:34:58 AM
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"Free trade" is only the name of the "agreement", and has nothing to do with free trade. It's about big business being able to place their manufacturing off-shore, and get it back into the country for less than it costs to produce here, and market their goods here with a higher profit than if they were made here. Also, "free trade" is about incresed profits for big business by pushing the cost of labour down due to being able to keep unemployment high from sending manufacturing off-shore. So big business improves its bottom line in two ways...decreased cost of labour and decreased cost in manufacturing. The added cost of import/export, is nothing compared to their savings.
Posted by Dick Dastardly, Saturday, 19 April 2014 9:04:25 PM
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As long as the price of energy keeps rising, so will the cost of transporting goods around the world. And there simply has to be a cutoff point, where transport costs outweigh any illusionary or temporary savings.
With our huge energy, thorium and uranium deposits, could reap considerable profits, just by utilizing our huge natural advantages, create a fleet of nuclear powered ocean going, semi-submersible, roll on roll off bulk freight forwarding vessels.
Bulk freight forwarding remains one of the most profitable business models in the world!
Making them nuclear powered, would enable cruising speeds in excess of 40-50 knots!
Compare that with the current 14-15 knots of current bulk forwarding shipping.
Making them semi-submersible, would enable them to be much longer than traditional surface shipping, allowing one mile long double Decker trains to be rolled straight on, as still coupled trains, seriously limiting cost and double handling, as well as putting them out of the reach of most pirates, and conferring an armchair ride, regardless of the ferocity of surface conditions, even during the height of a category 5 cyclone!
Our ability to compete would be further enhanced by very rapid rail, an inland shipping canal, and flood gates at the northern end, that utilized huge northern tides, to continually flush the system, and move all untethered shipping around (in and out) via a large two lane, one way system!
We'd not only cut thousands of miles off and quite massive energy consumption, but critical time a well!
Anyone who has run any business will confirm, time really is money!
Some of the savings could be passed on, to make our better products and commodities, much cheaper to the end user, than just about anybody else.
We need to take a leaf out of a war-torn and basically bankrupt post war Japan, grab cooperative capitalism, and thinking like a united country, against the rest of the world!
Rather than just a few precocious, not too bright individuals, trying to get rich via the lowest common denominator!
Rhrosty.
Posted by Rhrosty, Monday, 21 April 2014 11:42:28 AM
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Rhosty and Shockadelic

Your theory that free trade is all about cheap imports is not supported by the data. All of Australia's most valuable import categories are high value-added goods and services, or fuels. Our second and third largest import sources are Japan and the USA - hardly cheap labour economies. Australia's most valuable imports are, in order: travel services, crude petroleum, passenger vehicles, refined petroleum, freight transport services, telecommunications equipment, medicines, goods vehicles, transport services, computers, and technical and other services.

Nor is it true that you can't trade services - six of australia's top 20 import categories, and five of its exports, are services.

http://dfat.gov.au/publications/tgs/index.html

Peasant

Most of Australia's agricultural product is exported, and imports represent a very small portion of our use of agricultural products. Tariffs also add to input costs on things like machinery and fertilisers. On balance, Australian farmers are far better off in a world of free trade, than one of protection.

Robert,
The simple life you extol was nowhere near as idyllic as you suppose. Look at health, infant mortality and life expectancy data in agrarian economies.

Denying third world countries the right to export will make the poor even poorer.
Posted by Rhian, Monday, 21 April 2014 11:43:09 AM
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While we make cars here as good as anybody, our compartmentalized fabrication, makes them dearer than they should be!
You see, dozens of companies make our cars.
In construction, ours are basically metal press shops or body builders.
Each one of these smaller companies, making component parts, pay various taxes, all of which cascade through the entire process, and add thousands to the eventual retail cost!
This only serves as our car manufacture model, due to our extremely complex tax system.
If for example, we had just one low unavoidable expenditure tax, that applied to all expenditure or capital outlays, then the compartmental model would not produce the lowest tax outcome but the highest!
If however, the total car was made on a single site, by just one very streamlined company!
And if you repealed other taxes, like say a no longer necessary payroll tax, PAYG, PAYE, fuel excise and the Ubiquitous GST, we might be able to reduce the end user price by as much as 30%! Another 10% (min) would be made available, by employee co-ops!
And another 20%, by developing economy of scales via an export industry.
There is a niche global market,[ a very large one,] for right hand drive electric vehicles.
We could make them here utilizing our own ingenuity! We lead the world in molded carbon fibre.
We invented the NG powered ceramic fuel cell!
The NG fuel cell is much lighter than the half a ton of batteries it largely replaces, adding a new power to weight ratio, that would seriously complement, the fact that the ceramic fuel cell has an energy coefficient of around 80%, the highest in the world?
Moreover, gas power, would allow these things to be fully recharged, in the time it takes to consume a coffee!
And for the environmentalists, the exhaust product of this NG/ceramic fuel cell combination, is mostly water vapor!
I'm told, that once you have driven an electric car, you'll never want to return to an petrol or diesel variant!
Rhrosty.
Posted by Rhrosty, Monday, 21 April 2014 12:26:18 PM
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