Protectionism is generally seen as a dirty word, and I'll agree that most of the time it boils down to nothing more than protecting a favoured industry from genuine competition.

However, when a major trading partner refuses to reciprocate when it comes to open trade and investment, and shows no sign of altering their policies, I think it's fair to impose equal measures.

Actually, I'd like to see Australian trade and investment agreements include reciprocity clauses, particularly with China.

Essentially, if they wish to invest in key Australian industries, then Australians need to have the same opportunities to invest in the Chinese counterpart industries. China preaches about how frustrated they are by how difficult it is to enter Australia's market and the many regulations they face, but it comes across as a tad hypocritical when so many of their industries are off limits when it comes to investment.

Interesting summary of the Western dilemma, now we're the societies strangled by ideology not, as in the past, the Russians and Chinese.
In the 19th century, Britain and the US demonstated to both Japan and China the effectiveness of mercantilist policies, they learned the lesson well.
We can't afford blinkered ideologues like Berg setting our economic policies, there might be a justification for more liberal trade policies if the Chinese played by our rules, they don't.

Another boring eCONomics diatribe warning about the evils of protectionism, when every nation on earth is using protectionism against our export products, against Australian companies seeking to invest in countries like China.

http://forum.onlineopinion.com.au/thread.asp?article=12494#216011

TurnRightThenLeft, Actually the Chinese have been very keen on foriegn investment if it gives them access to somebody elses intellectual property which they can steal for themselves.

WAKE UP, ozzie we have been exponentially screwed ever since we began removing tarriff barriers since 1972.

http://www.youtube.com/watch?v=gc5E6pvDv2Y&feature=channel_video_title

the only mistake in this video is that NOT all parties voted for this crap. Only a few did & still do labour, liberal, RED/greens, nationals, LDP.

Sure, Formersnag, they've enjoyed foreign investment on their terms. Since the 70s it's what's been providing them with the capital necessary to embark on the reforms that have allowed their dizzying growth - but try investing in industries such as media, telecommunications, transport or banking and you discover rather a hostile environment.

The Google incident was one example, but in recent times, the number one search engine in China, Baidu, has come under attack from CCTV, the State broadcaster. Some of the reports were justified, highlighting fraudulent practices, but now CCTV has even opened forums to slander Baid.

Baidu has always cooperated with censorship demands but because it was launched using startup capital from US venture capitalists, (interestingly, in the early days, even Google had a share) it is predominantly foreign owned.

We're witnessing a very interesting clash here indeed - one that offers some salutary lessons for investors in China, who are encountering an increasingly hostile environment.

Since the decline of the West is so much the result of the advice of professional Keynesians, the advice of amateur Keynesians on how to avoid it is hardly in any better position.

It is nonsense to talk of the people “the West” as if they embody one monolithic solidary interest. For the same reason, it’s nonsense to talk of “Australia” as an economic entity. This is because, even during a general economic decline, some people may still prosper
by benefiting everyone else, and still others may prosper at the expense of everyone else.

Chris’s analysis completely overlooks this critical point. Worse, he fails to see that there is a direct conflict of interest between government and everyone else over the supply of money and credit.

Unlike the rest of the population, the people who make their money by government, have an interest in
• endless inflation
• endless public debt, to be paid for even by people yet unborn
• endless interventions in the economy, which consume capital and make society as a whole worse off, all for the sake of politicians’ paying bribes for votes
• claiming or granting a license to print money
• imposing fractional reserve banking on the whole population
• permitting banks to issue credit backed by nothing
• protecting banks from their own imprudence
• protecting them from their customers’ claims for their own deposits
• granting banks immunity from the common law of fraud and contract that would nip the boom/bust cycle in the bud
and remember, all this has been with the full support of governments’ cheer-leaders the Keynesians.

*That* is why we have the economic crises in the West.

Chris talks of “balance” between government intervention and market forces, but he never ventures to define what is the correct balance between mutually beneficial *voluntary* exchanges, and the unilateral coercion of a monopoly of zero-sum takings. Nor does he say how the balance might be known, except by reference to the unprincipled partisan scramble for mutual plunder that is modern democracy with its ethical rationale, in economic redistributions, of might-is-right.

But presumably the Fed’s trillion-dollar handouts to banks, big corporation and foreign governments is part of getting the balance right. In fact, to listen to American Keynesians like Krugman and Australian Keynesians like Saul Estlake, there hasn’t been enough of it!

That’s as to the politics. As to the economics, *one* refutation should be enough for a rational belief system. It should not be necessary to keep refuting Keynesian theory over and over, again and again, in theory and in practice. But some people never learn, it seems, and it just so happens that the ones who keep peddling this rubbish are those who make their money through government, surprise surprise, and their useful idiots.

So the same articles of faith, the same hymns of praise to the State, keep re-appearing from the same Keynesian liturgy.

Credit expansion is a boon; it benefits “Australia” by “boosting the growth of the … economy”. In other words, printing money makes us all richer.

“the ratio of total credit to … GDP increased from 150 to 354 per cent … thus boosting U.S. and world economic growth.”

Wheeee! This getting rich stuff is easy. Thank God for the Keynesians.

“At least prior to the GFC…”

Uh-oh. Looks like there’s a limit to Santa Claus’s generosity after all. Couldn’t be anything to do with the fact that governments have been inflating and spending like crazy, could it?
But don’t worry, the gubbas, secure in their state, will be the last to be adversely affected by the economic disaster their greed for other people’s money has set in train.

“To be fair, Australian governments did maintain a policy mix that generally attracted majority public support.”

And the author knows this … how? This is nothing but the stock fallacy that government presumptively represents society more or better than society represents itself. Only problem is, there’s no evidence or reason to support this brainwashed belief, this Stockholm syndrome, see: http://economics.org.au/2010/08/unrepresentative-government/

“…governments softened the impact of economic reform by increasing public social expenditure…”