I am a protectionist and proud of it.
The globalization of the world industry, which in effect means moving factories offshore to countries that give big tax breaks and allow the payment of miniscule amounts to labour, is a festering wound.
“A narrower range of often poorly-made goods” means that Eslake does not consider Australians capable of emulating peasants in Asian countries and doing skilled work.
So we are only capable of quarry work to supply those doyens of industry working for a few dollars a day with the raw materials to produce the high quality goods we desperately need.
Might I suggest that it is purely profit that drives the export of our and the other “developed countries” manufacturing offshore.
We have seen many of our icon industries close and move away because “they can no longer compete with imports”.
Of course that can’t. How can any business compete with the so called level playing field, where wages for a start are so mediocre?

No we must protect our core industries and the sooner the better.

Australia is supposed to be the “clever country” so is it smart to turn us into a nation of shopkeepers and quarrymen?

Our industries must be able to compete on the world stage, not just the domestic one. Gov't subsidies, derived in part from a mining resources tax, should be applied. Taxing imports is not the way to go as that only benefits industry serving the domestic market, not the world market.

Even the proceeds of a carbon tax could be applied to this. The CT is really just an addition to the tax base that reduces reliance on income tax, company tax, and the GST. This broadening of the tax base gives the Gov't more flexibility in responding to the situation than ever.

Bluescope Steel is an operation that should be able to wring efficiencies in all areas, especially in the distribution its product which follows archaic practice in trying to keep it all in-house.

Interesting use of the word “force”, there, Saul.
“But there’s not much difference between that traditional form of protectionism and the idea that businesses should be 'forced' to buy Australian-made products in preference to imported goods that are cheaper...”
But it's okay to 'force' businesses and all taxpayers to pay more to cover unemployment benefits, etc.?
And again: “...forcing Australian consumers or businesses to pay higher prices for a narrower range of often poorly-made goods...”
Yes indeed, the cheap shops are just full of high quality imported goods for crazy prices... Spend a lot of time in the Warehouse, or even Big W, Saul?
And again: “Forcing ‘struggling’ Australian households to pay higher prices for kids’ clothes...”
I think every shopper (unfortunate enough to not be an economist) understands 'you get what you pay for'; and 'buy cheap, buy twice'. As an economist, I would have thought you would be able to argue your point more effectively by offering proof, instead of just using one word emotively.
Before we can claim to be progressive, we need to first have a goal; then demonstrate we are heading towards that goal. Using an increase in GDP proves nothing. A good flood or bushfire can do that.
How about forgetting established doctrine for half a mo, and checking some facts? Like comparisons to other economies -many if not most of which still offer some form of protection to their domestic businesses? How about checking how much tax is spent in more equitable societies on unemployment benefits, and the constabulary and corrective institutions?
What about a general happiness index, instead of GDP?
I'm old enough to remember when 'made in Tokyo' was synonymous with 'lasts until Boxing Day-if you're lucky'. There's no getting around the fact that if you keep giving someone else money...
They're going to end up with all the money.
And you're going to end up paying just as much for imported goods, as you would have if you had made them yourself.

“The best thing that the Government can do to assist businesses and workers in the manufacturing sector … is …. to assist them in improving productivity.”

Oh that’s a good one (wipes tear of mirth from eye). So now Julia Gillard is going to assist entrepreneurs to improve their productivity? Saul does not explain how they are to do this, but it should be obvious that governments have no general residual capacity to increase the productivity of businesses.

But we can think of dozens of ways the government is actively reducing the productivity of businesses – lemme see, how shall I count the ways? Income tax, GST, capital gains tax, fringe benefits tax, superannuation laws, fuel tax, occupational licensing, so-called OHS laws, and every kind of interference in other people’s business of which government does not and cannot have superior knowledge.

The only way government can assist businesses in improving productivity is to reduce its own depredations against them.

“The Government should also be seeking to extract the highest share it can of the proceeds of the exploitation of Australia’s natural resources, without deterring the investment required for those resources to be exploited”

So the government should tax mining, but the tax should not deter the people paying it from the activity being taxed? This is economic and ethical nonsense.

BTW, they’re not taxing undiscovered rocks in the ground. They’re taxing them after private concerns have raised the capital, explored, surveyed, put in roads, built towns, extracted them, marketed them, sold them, and shipped them. And now all of a sudden, they are owned in common! Economically, this theory is no better than communism.

Saul ignores the possibility that the funds from mining will better serve the wants of the Australian community by being left untaxed.

“using the revenue flow over time to enhance Australia’s productive capabilities, through well-targeted investments in infrastructure and skills formation.”

Please don’t make us laugh. How is the government going to know how to “well-target” an investment? If they had that general ability, private property would not be necessary.

sarnian/Luciferase/Grim/Peter Hume

Look, where have you guys been for the past few decades? Australia went down the protectionist path for decades before abandoning it, for the very good reason that it didn't work. All that ever happened was that the manufacturers would sit behind the high tariff barriers and complain that they had to be higher. They didn't try to innovate or invest in better systems, instead they spent their energy "gaming" the protection system.

Local industry ossified. It was just an expensive dead weight kept there for political reasons, and only those with no knowledge of how the system use to work (or didn't work) would advocate a return to it.

Admittedly manufacturers are doing it tough at the moment, but even they don't want a return to the old system (I've spoken with a few). Helping them lift productivity is all that can be done, and it shows the naivity of one poster that he laughed at the suggestion.

The old system was dumped for very good reasons. Time to update yourselves.

Saul states 'However, it’s much more likely that the ‘mining boom’ will last at least until the end of this decade, and possible into the early 2030s. If the history of other countries is any guide, China won’t begin to move out of the commodity-intensive stage of economic development associated with urbanization and industrialization until 2019 at the earliest, and possibly not until 2024. India, which only entered this stage of development in 2007, won’t begin to exit it until 2032 at the earliest.'

Think about this, the IEA clearly stated Peak Oil occurred in 2005, we have an ever declining energy resource key to all components of modern society. With declining and more expensive oil, it won't matter whether or not we need protectionism, globalisation is dying, current economic policy is failing and government, industry and spruikers don't want to, and won't accept this reality.

Our economy is now in a perpetual no growth situation that may see some slight upticks, but the general trend will be down, governments and economic policy experts cannot work this out and have no models to work from. We are in the very early stages of systematic global decline, per capita energy has been in decline since 1979 and is heading off a cliff. Saul, like all economic 'experts' fails to see or acknowledge this, to all our detriment!

A very good article, Saul. Sadly the economically illiterate are
rather common on OLO. But the Australian public have overwhelmingly
voted with their wallets on this one.

Something like 85% of the public prefer imported cars. Interestingly
virtually none of these are made in China, which negates Sarnians
argument.

I did in fact post a link some time ago on OLO, showing that only
around 20% of our imports came from China, in 2010. Germany, France,
Japan, USA and a myriad of other countries are our trading partners.

Tariffs only increase production inputs for the remaining efficient
export industries, such as agriculture. If agriculture can be
efficient, perhaps city people should get off their butts too and
not hide behind trade barriers.

Saul of course believes in the good old 'level playing field'. I don't any more.

I see of other countries in and out of the WTO excepting parts of their economies from the LPF and manipulating their curracies giving themselves advantage. I'm less enamoured with the LPF.

We've advantages. We own and supply the highest quality minerals, particularly iron ore, and coal in the world. Distance and our effective Unions are two other advantages.

He's a suggestion.

Put a GST on exports of minerals and coal. Ten percent, 20% or whatever. Exempt all totally Australian manufactured goods from our internal GST.

Goods made overseas using Australian minerals or from power produced by our coal then come much closer to locally made goods especially when the costs of transport to and from the overseas factories is included.

Encourage waterside and maritime unions to act against overseas owned and operated shipping lines, transporting imported goods, when employing cheap Asian labor.

Other countries exporting iron ore and/or coal will soon fall into line with our policies.

Who will complain. The miners? Hardly, they aren't the ones paying the GST and the public would ridicule them for defending overseas entities.

The WTO? What right do they have to determine our tax policies?

The shipping companies? Hardly they'd be sure to use appropriate labor at costs closer to our own to maintain their market share. Yeah sure the costs would go up... the cost of imported goods go up.

The countries buying our minerals and coal? Hardly, could they replace our quality minerals and coal and maintain the same smelting efficiency and cheap cost of production? No.

They could retaliate but how? By putting an embago on our imports from them or by raising our costs of their goods? Yes of course they could and who would that benefit? That's right our manufacturing sector.

Yep I'm no economist nor a believer in a level playing field when it isn't level. I do however believe Australians are an innovative and capable bunch who would easily overcome any unforseen import shortages or adverse financial actions.

http://forum.onlineopinion.com.au/thread.asp?article=12521#216830

Sarnian, correct, What industry/jobs will there be when there are no rocks left in the quarry?

The gold will all be gone in 5 to 10 years.

The iron ore will last a bit longer but not that long.

http://www.youtube.com/watch?v=s2HTtFURkyw&feature=related other economies are moving towards protectionism, if they have not already.

http://forum.onlineopinion.com.au/thread.asp?article=12521#216832

Luciferase, agree, some of our "cheap" food imports did not come from China or NZ, but Europe because they are being dumped here after EU subsidies "manufactured" them.

http://forum.onlineopinion.com.au/thread.asp?article=12521#216833

Grim, true, some of our maunfactured goods were in fact reasonably good, but what is the worst of 2 bad options? Mass unemployment with some cheaper products, or full employment for all with some more expensive products?

http://forum.onlineopinion.com.au/thread.asp?article=12521#216834

Peter Hume, spot on, http://www.youtube.com/watch?v=gc5E6pvDv2Y&feature=channel_video_title have you seen this one Pete?

http://forum.onlineopinion.com.au/thread.asp?article=12521#216845

Curmudgeon, as a fellow conservative i often agree with you on many issues, but between 1945 & 1965 we had full employment despite a tsunami of migrants & a baby boom.

Some of our manufactured goods were not perfect, but we were a stronger, healthier, more independent nation in every way, shape & form. There are also other ways to improve productivity while still having "protected" industries, other ways to achieve protection without a tarriff barrier.

http://forum.onlineopinion.com.au/thread.asp?article=12521#216852

Also true, without cheap oil there will not be vast numbers of ships going backwards & forwards "trading".

If transpotation becomes more expensive & it will, local cottage industries become more viable.

http://forum.onlineopinion.com.au/thread.asp?article=12521#216853

Yabby, Ah the good little Fabian/Trotskyist rides again, all critcism & no answers to any problem.

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

enjoy Yabby, economic treason may one day soon be a retrospective crime.

Yabby’s a Fabian/Trotsyist? Gee, I have misread him over the years.

Saul is quite right of course. We do neither manufacturers nor consumers a favour by trying to reintroduce sheltered workshops. And Yabby is right – the real damage protectionism inflicts is on the competitiveness of exporters, who must pay higher domestic input prices while being price takers in international markets for the goods they sell.

I will happily pay more for higher quality Australian goods, but that’s my choice. And the Australian alternative will not remain higher quality for long when Australian producers no longer need to use quality to differentiate their products from cheap inferior imports.

The resource expansion is transforming our economy. On balance this is mostly a good thing, though there are some negative impacts. We should manage these and also be realistic about what government can and should do. There is a growing cargo cultism that presumes every manufacturer is entitled to a share in the spoils of the resource sector

Geoff of Perth
Perpetual no growth situation? Its a two speed economy with considerable consumer hestitation but its definitely growing. Try again. As for this resources limitation business you're scaring yourself with, that stuff has been endlessly refuted. As has been pointed out many times, known reserves of resources vary with price, not consumption.

yabby -quite correct..

imajulianutter
Although I don't disagree with most of your post, the bit about a GST on coal is surprising.. you did realise the heavily amended Federal resources profits tax is now in place, or about to go in place. Differnt states had differnt versions of the tax before the Federal version. It applies to coal and iron ore and is far more than GST.

Formersnag
Your arguement ignores a lot of economic history. The protection system (tariffs, quotas, agarian socialism ect) was still firmly in place when the economic dream ended in the 1970s, and remained in place for a full decade and more afterwards. High unemployment and bad economic performance was one of the reasons they got rid of it.
In other words, Australia got away with the old system until the 1980s or so, with no incentive to change, then it really started to drag.. NZ didn't do the same things we did, or did not do enough of them, and its economy has done worse than ours.

hi Curmudgeon,

of course there are taxes present but the difference between a GST and a tax on profits is?

The buyer pays the gst and mining companies cannot minimise the gst.
With the tax the mining companies pay the tax and can minimise the amount they pay. The smaller miners who don't have the diversity of the majors are not disadvantaged.

*but between 1945 & 1965 we had full employment despite a tsunami of migrants & a baby boom.*

Ah Formersnag, perhaps you are getting older, so some of the memory
cells are going. Or perhaps you just never really understood how
it all ended and why. At that stage, Australia of course rode on
the sheeps back all the way, iron ore exports were banned at that
time. Things really peaked in the 50s at the time of the Korean
war. Lo and behold, then nylon was invented, then other fibres were
invented and things went down for the industry from there. Australia
tried every Ponzi scheme imaginable to keep the goose laying the golden eggs,
but of course it collapsed in a big heap and today is
only a shadow of its former self and has taken a good 20 years to
recover somewhat.

Meantime Australia suffered massive trade deficits, a mollycoddled
manufacturing industry which was better at lobbying for more tariffs
then anything and Keating was left to pick up the pieces of the mess
and declare that Australia had to change direction, or we'd land
up as a banana republic. He was correct of course.

Today we have more jobs then ever then. Because the little woman
does not want to stay home anymore to darn your socks, she's out
there making a quid to pay for that next overseas holiday. Australians
are travelling overseas in record numbers, are wealthier then ever
before, live in houses nearly twice the size which they were in
the 60s and have average real incomes higher then they ever were.

I doubt if people will fall over themselves to go backwards.

imajulianutter

I think you've misunderstood the nature of the resources taxes.. they are designed to do what you think a GST will do, but have a much larger affect.. it would make no sense to impose a GST on top of the resources tax, and the advantages from companies having no incentive to evade it would be very slight.. a company big enough to pay a resources tax is already subject to a lot of scrutiny from the ATO.

I understand where you're coming from but as an idea its a non-starter.

I think that there should be a tarriff on the wage diffential between here and other countries.It is about time multi-nationals paid people a living wage.

People who work like slaves in factories should be paid enough to save and consume the goods they produce.Then places like China will have a growing domestic market which we can then sell to.

Wages are only a part of the equation, and so is innovation.

I know that certain companies operating in other countries could not operate in Australia, because they could not meet our environmental regulations, nor could they meet our workplace health and safety regulations.

Dumping waste materials into the environment, and dumping injured workers is not that acceptable in this country.

I notice Saul Eastlake will not address the protectionism afforded the private Central Banks on the planet.The the USA Federal Reserve has a monopoly om the creation of new money from nothing to equal increases in inflation + growth.This wealth belongs to the US people and countries around the planet who they loan to.

The Fed cannot be audited.it created this financial mess and this is why Dr Ron Paul the Congressman for Texas has written a Book called 'End the Fed'. The Fed has created from nothing over $ 15 trillion since 2008 and loaned it all around the planet to special interest ghroups,depreciating the US $.Most of this money has now gone into productive enterpriese.The US real economy is cash starved and shrinking yet the banks continue to make record profits.Most of this money has bailed out the big non productive end of town,further inflating the worthless derivative market.

Ron Paul wants to have competing currencies but still it allows private companies to create the new money that really belongs to all people a not the select priviledged few.

Correction,"...most of this $ 15 trillion created by the Fed has gone into NON productive enterprises."

Yabby:"Because the little woman
does not want to stay home anymore to darn your socks, she's out
there making a quid to pay for that next overseas holiday."

And we're spending enormous amounts of money from Government revenue to satisfy her want. Shame she's not very productive (about half as productive as her hubby, according to Goldman Sachs) and that she's doing stuff she used to do anyway as a matter of personal pride in the family. At least she's "contributing"...sort of.

42% of female apprentices study hairdressing, according to the ABS.

On the subject of protectionism, I'm not at all supportive. While I have made a living for the past 8 years out of sullpying timber to the building industry, the fact is that timber from overseas is cheaper and it's better, in many cases, than anything I can produce with the forest resources available here. So I'm getting out of the business. If the Govt was to prop up people like me with tariff barriers I'd be better placed to compete, but I'd still be supplying an inferior product. Who benefits?

My next venture will be in the food service industry. People have to eat and there's no competitive pressure from overseas (or from within the home, what with "the little woman" so busy dressing hair. Perhaps rehctub and I can do some business.

http://forum.onlineopinion.com.au/thread.asp?article=12521#216855

imajulianutter, correct, there is not now & never was a "level playing field".

http://forum.onlineopinion.com.au/thread.asp?article=12521#216862

Rhian,

#1, the only reason why we need to export anything is to pay for our imports. if you stop or reduce imports, you can stop or reduce exports. i am well aware of what a "current account deficit" is, i remember dicussing it with Don Chip in "1984" & both of us predicting the "recession we had to have" 6 years before it happened.

#2, improving quality/service can be achieved in other ways, we are an innovative people.

#3, i would end all "corporate welfare" tomorow & replace it with something else similar to a tarriff barrier but different enough to encourage competition between multiple players within our economy, together with limited exports of top quality Australian products for exchange with top quality products from other nations.

http://forum.onlineopinion.com.au/thread.asp?article=12521#216863

curmudgeon, i am with you & julian in that a reasonably priced/structured resource rent tax is a good idea, we just can't trust closet communists to get it right, there is always devil in the detail with luciferians.

i am not forgeting history at all. the dream ended in 1972 when Comrade Whitlam willfully committed economic treason.

EG, our cattle farmers were hard working & efficient in the 1970's as they are now, Comrade Whitlam destroyed it overnight by radically inreasing the dollars value overnight.

Just as Comrade Dillard repeated the trick, overnight by using faux concern about animals to justify killing off the "live" trade. Both the Loony Left & Raving Right hate small & medium sized business because it is too independent, innovative & democratic.

Big business, (especially when it is foreign owned multinationals) is just as evil as big unions & big government.

Give me Clive Palmer & Twiggy Forest over Rio Tinto, BHP Billiton or Extrata any day.

High unemployment & bad economic performance was "manufactured" by Comrade Whitlam simultaneously lowering the tarriff barrier & raising the dollar value.

Well, Saul, what a convoluted and totally useless article.

Your final "gem":

<Seeking to preserve, as if in aspic, the composition of Australian economic activity and employment as it was in some year gone by ...>

How can anyone "preserve" something which by definition has passed into history? Piffle, piffle and more piffle. In any event, the whole purpose of the exercise is supposed to be to find a way forward, not to lecture us on what we shouldn't do.

Why is it that someone who starts a statement with <It’s an inescapable truth that...> is almost always just about to feed you a large slice of twaddle?

The mining (more specific than "resource") boom is an opportunity - an opportunity to develop long-term industries and jobs for the time when the boom declines, and before oil shortage propels massive development of alternative methods of maintaining essentials and of doing business in manufacturing, transportation, energy production, etc. "There is a time in the tides of men, which, taken at the flood...."

We don't need tariffs, embargo's, quotas or overt protectionism, but we do need good governance, vision, enterprise and determination. Oz, and every other nation, should be looking to both a reasonable level of self-sufficiency and to maximising its natural advantages. We have a host of natural resources but we fail to value-add. We use all sorts of excuses for this, but the reality is that Italy could make good use of our animal skins (hides) to make fine leather, and Italy is not a third world country, Japan could weave our wool, and the USA make high quality steel from our ore - so why can't we do these things? Do we always have to look too small, to just give up when the going gets tough? Come on, we're way better than that!

So, come on CSIRO, come on SydUni, ANU, UNSW etc, and come on Julia and Tony, and let's get the wagon back on the tracks! No nation becomes great by resting on it laurels, but by thinking ahead, and by investing in the future.

http://www.cattlefacts.com.au/ArticleAustBeefHistory98Comp.htm

There you go Formersnag, a bit of education in your old age.

The cattle industry crashed in the 70s, because Australia had
lost the British market and oversupply subsequently crashed the
US market.

But I know, I know, some of you don't like the facts interfering
with your story telling.

If this is as good as we get from a leader of a think tank, well Aust is doomed and will merely become a quarry for the developing world.

There goes any job prospect I ever had at the Grattan Institute.

And Saul, do you have any detailed study of economic patterns over the last 20 years to show that all is well? I think that is what Aust realy needs rather than feel good simplistic opinion pieces.

Please if there is anyone out there that wants to undertake a comprehensive study of freer trade and recent policy developments, please sponsor me. no one will work harder in aswering such a question.

Saul Eslake

According to Gerald Ford, if a wage earner or his wife got into the habit of speaking or writing about their economy all day long, they would have no economy to live from.

So, any person who spends his/her time to think and write about an abstruse subject, be it economy, politics or religion wastes the time necessary to producing for his/her maintenance and has to parasite on others.

Probably at the university you studied your economy no one knew or took care to tell you that the only currency in life, anyone’s life, is time.

Hence, in writing this comment to your script I am economically negative.

That is according to the limited economy of wealth production which seems the only economy that concerns you.

Formersnag

“If you stop or reduce exports, we can stop or reduce exports” Quite right, and we’d be much worse off as a result. The fact is we’re good at producing some things, other countries are relatively good at producing other things. If we specialise in producing what we’re good at and swap some of it for things other countries are relatively good at, we both win. Economic self-sufficiency is a recipe for poverty, which is why so few countries try it (North Korea is the only exception I can think of).

“We are an innovative people”. Not when we’re protected from competition. There’s a reason why there was almost no overseas demand for Australian cars when we had high levels of protection in the car industry. Few people with a genuine choice would prefer them to the foreign-built alternatives.

“I would end corporate welfare” – I agree

Chris Lewis

Are you serious! If you want studies try the Reserve Bank, and the competition commission for starters. Even the unions stopped arguing for a return to protection, years ago - because the evidence was overwhelming that free trade was by far the better option.

If you want to insist the protection is the way to go then go ahead but remember you will be virtually alone.

Arjay

Although I'm not familiar with the book you cite, you either misunderstood it, or it was nonsense to begin with. The Federal Reserve creating $15 trillion or whatever it was, and lending it out to special interest groups? I think you're getting confused over the present US Federal debt. Can the Federal Reserve actually create money or is that the US Treasury? I think its the treasury but mostly they don't (its what they call printing money), they borrow. Ordinary banks create money supply all the time by the act of lending, but they hae to follow rules set by the treasury/reserve (and international agreements now).. is that what you're thinking of??

Yes, i am deadly serious.

Why would i just want to rely on the Reserve Bank for telling the whole story, warts and all.

There are many facets to policy trends in recent decades, not just the status quo stuff in line with what govts and reserve banks do in regard to the economic demands of the day.

In other words, think tanks should weigh up all the evidence to call a spade and spade to help indicate what policy trends will means in coming years. This requires an enourmous amount of work. Even more importantly, it takes an open scholarly approach that is not afraid to rock the boat.

I, for one, hardly think the evidence thinks that we are all ok.

Why do you think the debate is shifting? Are all of the players advocatign change idiots, or are there real reasons why the balance over govt intervention and market forces may again alter. I think there are valid reasons for challenging the current eco orthodoxy.

One, i have never advocated all-out protectionism.

Two, i hardly think i am alone. I even have some support from OLO readers, notwithstanding Peter Hume.

Three,I am going to do a comprehensive study of recent eco trends, and will let readers make their mind up.

Ah, the Aust lucky country mentality lives on; export coal and steel and she shall be right mate. Oh, i forgot, we had dodgy international student courses (hairdressing and cooking), and we still have the live cattle trade.

“...are wealthier then ever before, live in houses nearly twice the size which they were in
the 60s and have average real incomes higher then they ever were.”
“I doubt if people will fall over themselves to go backwards.”
Except that in the 50's and 60's, one breadwinner on an average wage, working 40-45 hours a week could support a family and a mortgage. Now it takes 2 breadwinners working an average 76-90 hours a week. In the majority of cases, almost all of one wage goes just on the mortgage, while the other breadwinner pays for the bread.
In the 70's, my parents were paying $22. a week (converted from 11 pound, before they introduced variable interest rates) on their very respectable house, when I was paying $50. a week rent on a pretty average house.
The so called 'average' wage has increased, but the median wage, no so much. If 2 median wage earners have the bad taste to marry each other, rather than a high wage earner, their chances of ever owning their own home are slim indeed.
Going backward? We should be so lucky. Onya, Chris Lewis. I'll be happy to donate all my surplus cash. (don't try to spend it all at once).
The only reason Aussies aren't competitive in manufacturing is because we lack about 60 years experience, and infrastructure investment. With Peak Oil a stark reality, this nonsense about shipping raw materials OS, then importing manufactured goods back made from those very raw materials, is going to have to stop; particularly as ships are the largest contributors to pollution and GW.

Chris Lewis

In my earlier post I incorrectly referred you to the competition commission (actually the ACCC). I really meant the productivity commission. Search on free trade - you'll have to go back a ways as the debate is quite old now.

In saying you would be alone, I forgot about a few Don Quixote-like individuals who still tilt at this particular windmill. John Quiggin is pushing this line, I believe, and he's an economist. So there you go, you guys can meet in a small room. Invite the other posters from OLO.

But the plain truth is Australia has been down the protectionist path and abandoned it, because it did not work.. it can work in some circumstances. It worked for a time for Japanese car manufacturers because they were competing fiercely behind the trade barrier. But all it did in Aus was to make the manufacturers waste energy gaming the system. And that's all that happens with any assistance mechanism in Aus, at any rate.

Not only the unions but even the manufactures don't want the old system back (I've spoken to a few). If you want to dream go ahead..

Its interesting that nobody is mentioning plain old union greed, as
a reason why many companies would think twice about investing in
Australia.

http://www.theaustralian.com.au/national-affairs/laundry-staff-on-420k-a-year/story-fn59niix-1226027697866

We've seen that attitude right here on OLO. Screw em for all you
can get. We have some of the world's highest wages, highest
minimum wages, cushiest working conditions with every bell and
whistle imaginable. Work choices did attempt to address that,
but to no avail.

So why should I and others invest our hard earned savings in
Australian manufacturing, if you lot want to then screw the company
for every dollar that you can get?

The above is a great example of union power gone mad, yet once again.

,"...most of this $ 15 trillion created by the Fed has gone into NON productive enterprises."

Arjay, aren't "NON non productive enterprises those that employ non productive people?

Isn't the ratio of productive people over unproductive ones the index defining social wealth?

I can assure you that Economists produce nothing nore than hypothesis fit for idiots.

But no one should advocate going back to the past; i never have. All i have said is that the balance needs to change a bit.

Of course there are strengths and weaknesses in all sides of the debate, including by bosses and unions.

But Australia needs research to improve our understanding of where we are heading based on recent trends. I am going to have a go, although i am sure it will take much of my spare time.

Whereas once i was referred as a lunatic right winger when published 4 times in Quadrant in 14 months, now i am one with John Quiggin.

Ah, how times change; yet my argument has always been consistent. Aust, and the Western world, will go along with the madness, until they are all sick of living in debt.

Yes skeptic,the non productive enterprises like central banksters and the derivative markets.The derivative market is at least three times bigger that the real economy and your super is tied up with this mess.This means many could lose 2/3 rds of their super.

Geoff of Perth, is absolutely right. It is impossible to continue with constant growth for ever and it will stop globalization.

The assumption that growth is perpetual and will continue forever is the downfall of this article.
It does not take into account the diminishing resource of oil, which peaked in 2005 and has leveled since then. The global population has continued on its inexorable way and is tipped to reach 9 billion, before it too plateaus.
Globalization will decline as the world economy depending on cheap oil also declines.

The world's motor vehicle count is now over 1 billion; vehicles in China grew by 27.5 percent to 78 million last year.
It took 24 years to go from 500 million to a billion vehicles and that the global vehicle fleet grew by 35 million last year, those 35 million new petrol tanks that hit the road last year should give some insight into why it will become increasingly difficult to keep up with new demand for oil.

In round numbers, global oil production in the year 2008 was 30 billion barrels, and the population was 7 billion.
The consensus is that in the year 2050 oil production will be about 2 billion barrels.
The same amount of oil production occurred in the year 1930, when the population was 2 billion

In the year 2030 there will be 13 billion barrels produced.
The figures are there and cannot be disputed but the BUA lobby is ignoring them.

It will not matter whether there is protectionism or not, the level of imports will drop.

The world's 80,000 ships produce manytimes more toxic pollution that the world's 900,000 cars.Wouldn't it make sense to keep production at home thus reducing pollution and saving our limited energy sources?

Geoff of Perth,reflect upon this reality.We no longer have the 4 state banks and the Commonwealth that used to create new money to equal increases in growth.

When we now have an increase in population and productivity we have to borrow the money to equal it from OS central banks who just create it with a computer key stroke as debt.

So now,the more growth and inflation we have,the more debt we incur.Has the penny dropped yet?

http://forum.onlineopinion.com.au/thread.asp?article=12521#216952

Yabby, for once you are getting sensible. the solution to union greed is easy, you arrange for changes in superannuation so that 100% of every employees retirement funds are held in their employers shares.

2 benefits employees will think twice about damaging their employer & retirement funds. Secondly with all employees attending general meetings with large blocks of votes the shareholders will be more able to oversee the shenanagans of the board & senior mamgment.

The only problem with that is it would also reduce commissions for fund managers, many of whom are greedy trade union delegates.

http://forum.onlineopinion.com.au/thread.asp?article=12521#216950

curmudgeon, in your third paragraph is the REAL answer which all free traders ignore. Japanese car makers were not the only industry in the world competing fiercely with each other behind the tarriff barriers. Many Australian industries were not a monopoly, duopoly or cartel but competed fiercely with each other behind the tarriff barriers.

http://forum.onlineopinion.com.au/thread.asp?article=12521#216913

Yabby again, i am well aware that the exchange rate was not the only cause of the collapse in Beef Cattle prices in the 1970's, it was however the coup de gras delivered by vengefull closet communist idealogues.

http://forum.onlineopinion.com.au/thread.asp?article=12521#216922

Rhian, i am well aware of the economic theory behind radical, extreme, raving right wing, globalised free trade. What you forget is the the half truth in those arguments was used as an excuse to shut down every industry in the land of OZ other than quarrying.

What do you propose doing when we reach the bottom of the quarry & there are no more rocks to sell?

Australians have been inventing all manner of wonderful things which are used worldwide. Are there heaps of billionaires in Australia living on royalties from their "intelectual property"? Or was it all stolen by industrial spies or given away in some foriegn aid project?

WAKE UP EVERYBODY.

Do you want your children to have NO option other than driving mining equipment, tourism (do you want fries with that?), trading with international banksters in derivatives & other service industries which will fall with a mining bust?

Formersnag, you insist on using 19th century thinking to address
problems of the 21st century. The world has changed, ignore that
at you peril.

Trying to predict the future has been shown to be doomed to failure.
Australia already tried it once, it landed up a disaster.

You also forget how manufacturing has changed. Today the production
of everyday commodity items is highly automated, involving huge
machinery costs, commonly very specialised machinery. A market
of our size, simply does not justify the investment. Try to go
back to making things by hand, nobody will be able to afford them,
your standard of living will crash.

Besides, all you would do is kill off efficient industries, who
would have to buy your overpriced inputs, a lose lose situation.

The internet is changing the world and is opening up all sorts of
new opportunities for those who want to get into niche manufacturing,
which is where the money is. We still employ a million or so in
manufacture today and there are plenty more opportunities for those
who now want to market their goods globally, via the net.

From Carman's Muesli to Matrix Composites, all companies developing
their specialised products, where price is not the driving factor.

But to go back to making Australian toasters, because you used to
do it, is backward thinking.

As a matter of interest, we have no idea how many mineral reserves
that Australia has, for a good part of the country has never seen
a drill.

If you want your kids to do ok, don't just educate them to flip
burgers, but give them some qualifications. Qualified Australians
are doing very well, both here and overseas.

Yabby is yet again being delusional.Qualified slaves would be a better term.We exist in modern day reality of debt serfdom which most people like Yabby cannot wrap their brains around.

Speak for yourself, Arjay. If you are living a life enslaved to
your debts, then perhaps you should spend a bit less time on
conspiracy theories, get off your arse and pay them off.
Personally I have no debts and am enslaved to nobody, unlike
yourself it seems.

The problem arises of course, because of the way that you see
money. Its merely a means of exchange. Like any other commodity.

If you don't trust money to hold its value, so buy goldbars,
wheat, rocks, real estate, anything that floats your boat really.

But of course we know that conspiracy theorists need something
to worry about to keep themselves occupied. Fair enough. Just
leave me out of it.

http://forum.onlineopinion.com.au/thread.asp?article=12521#217048

Yabby, basic principles like 2 +2 =4 never change only technology does.

Are you seriously suggesting that we would not have any mobile phones in the land of OZ if we were still buying our telecommunications from the PMG department? Like my parents did in the 1960's an excellent service by all accounts & reasonably priced. i don't remember my parents complaining about the size of the telephone bill.

I bought a coffee from a masters degree barrista last week, i will be again on Monday, the poor bastard has a mountainous HECS debt to jump over & has learned more selling coffee than he ever did at UNI.

Soviet proverb, "the present we know, we are doing it, the future we know, we are building it, only the past keeps changing".

i repeat, what do you propose we do when the quarry runs out of rocks?

Greece & Dennmark are dumping EU subsidised food on our farmers right now, what do you propose doing about that for example?

Gold reserves are due to run out in 5 to 10 years?

Apart from a couple of tiny examples of niche manufacturing you still have not proposed ANY economy wide policies to do anything other than quarrying.

And don't forget "fire blight", ever since your marvelous globalised "free trade" began growing, diseases of all kinds have been arriving. Feral pests like "fire ants" arriving by accident since 1972, outnumber the introduced ferals like "cane toads" before 1972.

Formersnag, manufacturing has become so globalised and specialised,
that you could not afford to build the various factories required,
to make the parts for things like smart phones.

But let me give you an example of something that you can perhaps
relate to. Headers, used by farmers to harvest crops. We used to
make them, but they were simple, low capacity machines. In the end,
they simply could not compete with modern and complex technology
developed by John Deere. Deere have moved even further ahead. Today's
farmers need the best and most reliable equipment to harvest ever
larger acres. Why try and lumber farmers with second rate equipment
which will cut their efficiency? We are much better selling the
Americans lamb by the tens of thousands of tonnes, which we are better
at producing then them and buying their John Deere headers. Its a win
win.

There are heaps of niche industries developing, which you most likely
have never heard of. We export sandalwood oil to the perfume houses
of Paris, worth over 2000$ a litre. We have started exporting
truffles to France! The list goes on. What we need is alot more
entrepreneurs to develop new niche industries. Our policies should
be those that encourage them to thrive, not restrict their operations
with red tape.

Perhaps your Masters chappy did it in philosophy, not the wisest
choice. We need engineers, accoutants, doctors, dentists, even
line operators, for Aussies don't want the jobs or have never bothered
to gain the skills.

The question of wether fire blight comes into the country is a
scientific one. I have no problem buying goods from NZ, they buy
plenty of ours. As it happens, we also own a great many of their
big banks, who all send their profits back to Australia. Trade is
a two way thing