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The Forum > Article Comments > Diversity and self-reliance vs specialization and trade > Comments

Diversity and self-reliance vs specialization and trade : Comments

By Gilbert Holmes, published 9/11/2010

Beware the hidden costs in free trade.

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I would agree that the culture of a country or region often comes down to what it produces.

Think of Bordeaux, and many people will think of wine. Think of Milan, and many people will think of fashion. Think of Silicon Valley, and many people will think of software.

BUT think of Made in Australia, and the mentality of many people is to now think “Buy Imports”.

Why, because we have been repeatedly told by academics and politicians that imports are best.

Now, we not only have a very minimal manufacturing base, we have minimal culture and identity.
Posted by vanna, Tuesday, 9 November 2010 9:03:26 AM
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Free trade is good, when it is fair.

It doesn't take too long to realise that fair, free trade is not very common at the moment.

I tend to prefer free trade as it brings so many more opportunities and chances but your example of banana farmers is spot on. Simply looking at the economic benefits of free trade is flawed, unless we all turn into mindless, emotionless automatons. Having said that, I'm not a big fan of subsidies that unfairly favour one group. Tricky positions to balance.

Also, like your idea of a "technofix" - hopefully something will come around. Just looking and comparing the technologies and skills available 200, 100, 50, 25 years ago...optimism is not dead yet.

http://currentglobalperceptions.blogspot.com/
Posted by jorge, Tuesday, 9 November 2010 1:45:39 PM
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If Gilbert is, as the blurb says, 'expecting his first child', he is probably not of an age to remember the results of protectionism in Australia during the 60s and 70s. Think unreliable, high-priced, dangerous cars, high-priced, shoddy goods that were difficult to repair, and Australians prevented by law from buying Australian-made goods so they could be sold at a higher price overseas. Return to that situation? No thanks. And, after all, why should I care more for the banana farmers of Queensland -- who are, after all, in a comfortable country with a reasonable unemployment benefit -- than the banana farmers of Sumatra, who presumably need my dollars much more?

Moreover, if the costs of restructuring an industry are genuinely more than the money saved by buying from overseas, then it is the taxpayer, not the consumer, who should subsidise the failing industry, since it is the taxpayer who would otherwise have to foot the bill for restructuring. But I find it hard to believe that a credible case can be made out for propping up dying industries -- at anybody's expense.
Posted by Jon J, Tuesday, 9 November 2010 3:33:32 PM
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It seems that way on the outside but, can we afford any more manufacturing with our population base. We are still coming out of a downturn yet our unemployment is not all that bad at this time. How about that..
Posted by 579, Tuesday, 9 November 2010 3:50:59 PM
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Jon J,
"unreliable, high-priced, dangerous cars, high-priced, shoddy goods that were difficult to repair,"

I lived through the 70's, and I can't remember anything of the sort, and I think that this type of statement is a part of propagating a myth.

There are Australian standards that manufactured goods have to abide by, and many of those standards were around in the 1970's.

In fact, there was considerable resistance to buying products from asian countries because they were considered of worse quality than Australian products.
Posted by vanna, Tuesday, 9 November 2010 9:01:41 PM
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Short of dismantling global capitalism, it seems to me the least conscionable thing we can do is stoop to protectionism again, unless we're prepared to be self-sufficient in all commodities, and not just the ones we specialise in. We should be thinking beyond the selfish notion of what's good for our prosperity and considering the impact, especially on poor trading nations, of protectionism. Apart from the dire impact of tariffs on poor countries, tariffs beget retaliatory tariffs and the only ones who prosper in that scenario are wealthy nations that have the manufacturing base to to starve out the little fish. Indeed this is an old scenario and the genie is out of the bottle. Apart from resource-rich nations like Australia, these days the west would probably suffer more, as the once poor countries are now big fish. So while the author's idea is vested in reigning in rampant consumerism, I think it's naive. One of the benefits of free trade is it forces diplomacy and cooperation, or at least communication, and thus initiates global, if fraught, stability. Free trade is probably largely responsible for comparative world peace of recent decades.
In practice, protectionism is a form of insular nationalism, however commendable the motive. Today, alienating the global community and going it alone would soon provoke resentment and probably invasion.
The free market would indeed probably be (as an inhuman equation) the fairest means of distribution---if it were not bounded (in a closed system). As it is, free trade is bound to get bound-up, that is binded, as the limits to growth are reached, markets shrink and wealth stagnates in rich polyps. At which point the rest of the world, malnourished, degenerates, peacefully or is put down---and perhaps a new feudalism begins.

The dream of reforming the system is pure utopianism; it won't happen, can't happen.
Posted by Squeers, Wednesday, 10 November 2010 7:20:09 AM
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