Alan said 'The point about free trade is that it provides the cheapest goods and services to the consumer. This may entail importing from countries that follow practices that we ourselves reject'.

I am sorry Alan, but time will show (I hope) why Western societies are not going to accept such sentiment about accepting our demise to many other nations with far different values and economic approaches.

As i have said previously, protection from the West will increase; it already has.

I think the IPA would be better off producing articles that can support freer trade, yet also address some of the realities undermining free trade (including the reality that the West will never compete with China based on current policy trends). That is why the EU is increasingly protectionist against China, notwithstanding it sown problems (debt

What a stupid comment Chris Lewis. Why don't you try to understand what you are trying to say before commenting?

David L,

I have been thinking about free trade issues for a while (difficult issue), but you may be right, i could be stupid.

Frankly can hardly believe such rot, you must live on another planet, OK for our industries to be put out of business when we need to compete with child labour, or workplace standards lower than ours, sure we can look after our society with princpals and standards but just let those who don't have any come on in...that sounds like the same old argument used to push free markets into china when they were forced to take cocane "because free markets require it" No logic at all mate, your in the wrong place, history has passed you....Nev...I thnk about 95% of us are stupid...China is Mercantilist at this time, we are stupid if we can not see it... Nev

You can not force people to by australian, unless they do it on their own accord, nothing will change.

What a convoluted article - hardly worth responding, but it is so obtuse I have to try.

Firstly, to take advantage of cheap imports you have to have cash, and that means income, a job, discretionary finances, and sufficient national GDP to ensure effective essential services. The prerequisites rely on a vibrant economy, and thus on competitive industry and production.

How does one ensure competitive industry and production in this level playing field anti-protectionist world? By working smarter, optimising natural advantage and resources, and exploiting niche markets - hence, by "specialising", value-adding as far as economically feasible, and developing mutually advantageous reciprocal trade agreements.

Have we been working smarter? Making mutually advantageous trade agreements? Not sufficiently, or our trade balance would be substantially better - and if it were not for mining exports our trade balance would be in a parlous state indeed.

Can Oz go on, business as usual, until the mining boom collapses? Maybe, in the short term - but what then?

Oz needs development in resource optimising, and this means private and public investment on an on-going basis. Protectionism has been, and is still being used in various countries to enable the development of competitive industry and to facilitate beneficial terms of trade. Has Oz followed this trend, or have we taken our eye off the ball? What ball!

To consolidate the future for Oz it is essential that our governments take advantage of the mining boom and our current agricultural competitiveness to invest in new industry, new value-adding, and a new economic vision. What do we get instead? A Carbon Tax which will benefit no-one, down-scaling of Qantas' on-shore employment, and a collapse of steel production.

So many jobs have gone off-shore, and many more looming. When are we going to wake up and demand that our governments start investing in our productivity future? School halls we didn't want or need, home insulation mangled, solar development shafted, submarine and ship manufacture submerged, and roads, public education and health services sub-standard.

Free trade? It is costing us a fortune.

Seen from the point of view of global capitalism as our ineviatbel dispensation, I see little to object to in this article, though the author's pitch is overly directed at the economic positives--for rich countries like Australia--of the free market, with no consideration given to "economic ethics". The expression is not an oxymoron; Adam Smith never intended that capitalism should enrich only the West, or any monopoly, but that it should benefit humanity in general via an "invisible hand". Smith foresaw the dangers of monopoly, but he was also naive about the tendency of the wealthy to carelessly broadcast the crumbs from their excesses. Smith never imagined the bourgeoisie would sweep away the aristocracy, let alone attain the numbers--nearly whole populations--it has, or that the crumbs would also be collected to become business ventures. I've read half a dozen books on modern capitalism lately and like the author here, they all sell globalisation on the premise that the wealth is not going from West to East, but that corporations are curiously parochial. We can all rest assured that despite global free trade, cronyism is alive and well.
Cold comfort, I should think? Yet according to Smith's "The Wealth of Nations" this should be seen as an outrage. It's the West that's gone out and developed global markets, and we've all enjoyed the business, and the reciprocation of cheap goods for centuries as a result. But now that the ne'er-do-wells look like a threat, we want protectionism. This kind of hypocritical nationalism makes me sick to my stomach.

Of course I see the whole capitalist paradigm, in a closed system, as the untenable madness it is, so my take on liberalism verses protectionism really "is" objective--I wish I could say hypothetical!
According to Adam Smith's enlightened liberalism, Western monopolies and glut are unscrupulous.
It would be nice if for once an economist came out and condemned the selfish immorality of protectionism, rather than assuring nervous investors that the free market will always pay them dividends.
Bloody bean counters!

There has never been any correlation found between a country's GDP or GNP, and its Human Development Index figure.

However, there has been a correlation found between increased exports leading to increased imports (so that overall gains are minimal).

There has also been a correlation found between creating surplus production so it can be exported, and this surplus production eventually creating envoronmental degradation of the country.

There has also been a correlation found between free trade and an increasing income gap between the rich and poor in a country.

There has also been a correlation found between free trade and loss of local culture, customs, traditions, sense of community and even loss of local languages.

There has also been a correlation found between free trade, deregulation and privitisation, and eventual loss of ownership of the country by its people.

But we are told to believe free trade is a very good thing.

Chris,
I think that you are right! Although the free market has its undeniable pluses there is a lot of space for abuses but I am afraid that there are things about this theme that we cant comment without proofs .

I realise the answers to industry are increasingly difficult in a globalised economy, and that the principle of freer trade is an important principle for a fairer world.

I also admit that, even with the best of my efforts, i may struggle for the answers, albeit it will continue to comment in a way that tries to take account of various arguments and realities.

But I do believe that free traders, those openly committed to an ideal, should also try to provide more evidence about why we have nothing to fear from recent trends. I suspect they cannot, and that it may be all too hard for them to shift ground.

Agreed Chris Lewis,
I would also ask them to expound--apropos the "principle [that] freer trade is an important principle for a fairer world"--on why we have nothing to fear about depleting and decimating the planet's natural and biological resources in pursuit of an ever-expanding fairer world.
Of course I don't believe neoliberal economists give such matters a thought, and they have no interest in a fairer world, that's just the spin that still lingers since enlightenment days. Their interest is in economic growth and creating new markets, ignoring the manifest reality that endless growth in a closed system is impossible.
The idea that neliberalism is creating a fairer world is also contradicted by the fact that the gap between rich and poor has never been so great, and continues to grow.
All the minor technicalities get ignored.

Squeers, i do not know why some die-hard liberals cannot call a spade a a spade, and recognise severe policy limitations.

If they did, they would also enhance their credentials, even though many of them get quite a bit of attention in major newspapers.

I will again reiterate my commitment to liberalism, but a type of liberalism that recognises our flaws, faults and failings of past history.

Having said that, I am currently writing a piece on freer trade which indicates my concerns at recent policy trends, and the benefit it now gives to authoritarian China.

I think whatever the West does, including what i will suggest, will hardly be a win-win situation.

I don't think we ever get truly win-win situations in such a competitive and complex world, and the environment looks like a disaster in the longer-term.

I look forward to your article Chris, but I wish there was more media attention given to this looming impasse that mainstream economists refuse to recognise, there being for them no constraints and nothing that market-driven innovation cannot overcome, not even physical limits--presumably we'll just build another planet!
Such talk falls on the deaf ears of economists, but even academics, intellectuals, religious leaders and the media in general refuse to broach the subject. "It's academic", they say tacitly, "since this is our immutable reality", and the populace goes along with them, it being left to the "lunatic fringe"--environmentalists, maverick scientists and sundry "eccentrics" to flail there arms about or retreat into cynicism, thence to be ridiculed as hand-wringers and alarmists.
Yet since no one can plausibly deny the reality of our already severely degraded physical limits (though the Matt Ridley's of the world are agog with indifferent optimism), or that we are rapidly approaching them, it is in fact the obverse that is academic: whether we support free markets or protectionism and welfare. Same deal. Of course few on either side is objective about micro or macro economic reform, but supports whichever system suits their perceived best interests and ideological persuasion; but it's academic in any case since both are predicated on constant economic growth and must hit the wall.
By continuing to ignore that wall in favour endless ideological debate that is academic (while the neoliberal trend continues unabated), both sides are guilty of propagating popular ignorance, along with their own educated ignorance, and maintaining the status quo and our doomed materialism.

Squeers, I agree with much of what you say.

However, you may also be disappointed with my argument, given the heavy emphasis i place on national economic interest.

Nevertheless, one of the points i will raise about the rise of China is the model it applies, much less tolerant of national and international environmental considerations given its own needs, its mercantile approach, and lack of regard for an open pluralist society where power is more dispersed.

While my argument is not intended to save the world, obviously because economic growth is also a near obsession for Western societies, I am concerned that we (Western and other societies) will move further away from a more balanced policy mix. We are now seeing an almost laughable reliance on mining, including searching for gas in our cities.

China is certainly the elephant in the room, politically as well as economically (India's more a Rhino, a much less shrewd beast), and I suspect the Cold War is alive and well, having morphed into an economic war of attrition. Given that the realist paradigm I'm critical of, that the West has successfully made uncontested and global, does seem irretrievably bent on playing itself out to the bitter end, attrition would seem to be the only strategy for an opposing ideology to follow. If you can't beat 'em join 'em. Help to bring on the global catastrophe and beat them at their own game. Indeed, 'tis probably better for the environment that the inevitable collapse is sooner rather than later, and for China that "it" is in the best shape to take over in the aftermath. China has a track record of long campaigns, and throwing the sheer weight of numbers at what look to most like insurmountable obstacles. Capitalism could well be a temporary detour, for China, on the road to communism. This is of course the US's abiding fear--and I don't think they're paranoid!
I think your argument, if I may pre-empt it, is naive; "open pluralist society" is nothing but patronage to keep the masses in harness, a cohesive ideology starkly contradicted by material and economic reality. Indeed I often marvel at the way social progressives actually think humanist society is the raison d'etre of capitalist materialism. It's not, of course. Economic growth is. All the rest is byproduct--feeding the chooks. And if you think that's nonsense, how do you explain the fact that our enlightened governments are knowingly and enthusiastically growing the human herd beyond any hope of sustainability, or anything other than dying en masse?
Indeed the West is just as ruthless as China could ever be, in its exploitation of boundless human credulity--at least the neoliberals make no such pretence, or pay no more than lip-service to delusion, witness this article. Besides, when crises set-in, the West will be just as authoritarian and cold-blooded, perhaps worse.
We're only the good-guys in our wonderful imaginations.

Squeers, fair enough, but that is probably where will disagree.

I do not deny the West's past, but i do believe the West is the best option for the world; i may be wrong (or naive) but see little to be optimistic from greater influence by any authoritarian nation.

Chris,

But the West is authoritarian in a global sense - or do believe that the IMF and World Bank haven't morphed into henchmen for the global corporate agenda?

China has simply trumped the U.S. at its own game - and cheap Chinese imports are helping to keep the American economy buoyant at present (and even with that, it's struggling to keep its head above water).

This discussion is quite irrelevant, free trade and its stablemate
globalisation are already starting their decline.
Bunker fuel costs which are what oils the wheels of gloabisation are
imposing greater burdens on shipping costs.
The cost is made worse because often the bunker fuel has to be mixed
with diesel to make up the quantity.
Ships designed for 25 knots are running at 15 knots to save fuel.

Anyone who thinks globalisation has a future should read this;

http://www.energybulletin.net/stories/2011-09-16/odac-newsletter-sept-16

This a quote from the linked article;
This in turn poses a terrifying question: Would this higher price
tolerance mean developing economies could keep developed economies in
growthless stagnation by paying oil prices that were just above those
that bring developed economies to an economic halt?
End quote:

Additionally we should stop the purchase of farming land by foreign
companies and governments.
Saudi Arabia has abandoned it plan to grow wheat.
We should take the opportunity to offer wheat in exchange for oil.
That is where international trade is going quite soon.

Bazz
There is a slight problem.

Only 1% of Australian land is suitable for long term, intensive agriculture.

That is, only 1% of land area has regular and reliable rainfall, and has deep, well drained soils that have enough fertility to last for many years without salination or errosion.

At 23 million people, we can't even feed ourselves over the longer term.

*This discussion is quite irrelevant, free trade and its stablemate
globalisation are already starting their decline.
Bunker fuel costs which are what oils the wheels of globalisation are
imposing greater burdens on shipping costs.*

I don't think so Bazz. You could look it up, but all the figures that
I have seen, seem to show that per tonne/mile, shipping is an
incredibly efficient way of moving things. Those large iron ore
carriers for instance, per tonne delivered around the world, use
very little fuel indeed, which is why it can be done so cheaply.
Even if that rates doubles, its still relatively cheap and more related to
the supply/demand of ships. Slowing ships down would
make sense at any time, depending on the daily charter rates.
Its pointless going flat out, if your ship sits idle at the other
end and you waste fuel. A bit like when you are driving. The flat
foot costs money and there needs to be a good reason to use it.

So ships at any time would calculate what the present most efficient
speed is, governed by the daily charter rate, which fluctuates wildly.

Most energy is actually consumed in the so called last mile. Bazz
drives 5km to the nearest McDonald's for his lunch. Work that out
per tonne/mile and you'll get a shock!

The Kiwis did a study on lamb. They could show that less energy
was consumed, growing a leg of lamb and shipping it to England,
then British farmers consumed growing it in England, due to their
higher intensity farming methods.

West Australia already sells wheat to Saudi Arabia, but I don't see
why it needs to be a swap for oil. The market does that far more
efficiently.

Vanna & Yabbie,
Thanks for the comments.
Well 1% seems a very small proportion, but never the less whatever it
is we need to keep it for our own purposes.
I have just read another article about Saudi's problem, they are
leasing land in Ethiopia to grow their wheat. The local farmers are
getting pushed off their land for the Saudis.
We will be in a bad oil supply position and we need to have some ammo
to enable us to get enough oil.
If we let China and Middle East countries control the land we could
go hungry and be using rickshaws, OH and I saw a pedal rickshaw being
used in Fremantle I think it was. Sign of the times ?

Yes Yabbie, water borne transport is definitely the most efficient.
That is why the canals were so sucessful until railways arrived.
But is was cheap energy that made that difference.
However the alternative to ships are aircraft.
The cost of shipping a container across the Pacific has risen so much
that bulky cheap products such as steel and furniture are already
returning to the US from China. It is the volume/price factor.
I recently was in a furniture shop to order a settee and I asked the
salesman how much in the showroom came from China.
His reply surprised me, only one set of table & chairs. Everything
else was local manufacture.
Might be interesting to have a look around in big retailer's showroom.

No everything will become local in the future.
Suggested reading;
"Your World is About to Become a Lot Smaller" by Jeff Rubin.

Yes Yabbie, we do not need to do a wheat/oil swap today, but tomorrow ?
We need to have control of the wheat to do the swap.

Australia is a large exporter of commodities. These exports increase the value of the Australian dollar making our manufactured goods uncompetitive. Commodity prices, unlike manufactured goods are highly volatile. Our economy could be booming for a decade and then struggle for the next fifteen years.

Protectionism is much more than just tariffs and quotas. The Asian tigers offer many inducements to entice foreign manufacturing investment.

Australian manufacturers are highly mechanised and leveraged operations. Hikes in interest rates to control inflation, a common phenomenon in the last 40 years, detrimentally affects manufacturers much more severely than people servicing sectors of the economy.

The Australian government's free trade agenda is causing unnecessary economic pain to Australians, by constricting the economy and increasing the nations population size.

tet,
You are correct.

Another characteristic of free trade is that local investment tends to drift to other countries, which may seem to be a better investment at the time, but this drift of investment to other countries then keeps back local industry.

What the worker may then have to do is to work longer and longer hours for less and less money, in the hope of attracting investment back into their region.

Great system, for some.

*The cost of shipping a container across the Pacific has risen so much
that bulky cheap products such as steel and furniture are already
returning to the US from China. It is the volume/price factor.*

Yeah Bazz, but container rates arn't just governed by the price of
oil, but by availability of ships. Shipping is real boom/bust
industry. When they are short, lag times to build more is a
question of years, so rates go through the roof, whatever the
price of oil. But I remind you that we ship out tens of thousands
of tonnes of hay and straw from Fremantle, all in containers, to
feed Japanese and other cows and racehorses.

Things like furniture can be flatpacked. Note where Ikea make
some of their furniture, all in highly modern factories. The price
of oil and even labour, would be a smallish component in the final
price, its all about logistics and marketing.

*We need to have control of the wheat to do the swap.*

Well we do. He with the biggest cheque book wins control from the
farmer. Its the same for oil.

*but this drift of investment to other countries then keeps back local industry.*

Not really Vanna, because of course other countries also invest
capital here. I don't see why choice is such a bad thing. Just
like you can choose to holiday in Australia or you can choose to
go to Bali etc.

Australian interest rates are high because Australians have never
been much good at saving, the tax system discourages it. So our banks
have to import large amounts of overseas capital, which comes at
a price of higher interest rates. But Australians are the world's
biggest gamblers, so clearly we prefer to try and get rich quick and
blow around 20 billion $ a year on trying.

Free trade for all, bye Australian and NZ.

Yabby,
So overseas companies invest here do they?

And what do we have to do to attract their investment?

Eventually we give them lots for very little cost (similar to the QLD government recently offering mining land to an overseas company for no royalties), or we undergo continuous cuts in wages, so that we can say "Invest here because there is cheap labour".

This is why free trade has so often increased the gap between the have and have nots.

If you are lucky and are on the right end of the stick, then you can make mega bucks.

If you are unlucky, then you become slave labour and work for almost nothing, and many have now become slave labour.

Vanna, foreign investors invest here for the same reasons that our
companies invest in other countries. They think they are good at
something and expand their horizons beyond a single country, in order
to make a profit.

Why do BHP go and drill for oil in the gulf of Mexico or mine
for potash in Canada? They try and use shareholders capital in the
most efficient way, to generate returns. No different to you
choosing to invest your savings for the best return that you can,
balancing risk with likely returns. The higher the risk, the more
profitable it needs to be, to make it worthwhile.

*This is why free trade has so often increased the gap between the have and have nots.*

Nonsense. I can show you many Australians who have earned great
incomes all their lives and they blow the lot. So they are have nots.
Others save their pennies from a young age and eventually become
haves. The gap will keep increasing as some keep spending the lot
and some keep saving and investing.

If Australians invested the 20 billion which they now blow on gambling
and instead invested it in large corporations, how many more haves
do you think we would have?

*then you become slave labour and work for almost nothing, and many have now become slave labour.*

Oh yeah? Some of the highest wages on the planet, the world's biggest
houses, the worlds biggest gamblers, some of the world's cushiest
working conditions with more bells and whistles then just about
anywhere, they are slaves? Think again Vanna.

Yabby,
Already Chinese and Indian companies are looking for other places to buy their coal and iron ore, if costs in Australia increase. So we have to reduce our costs to keep them as customers, or we have to reduce our royalties and taxes.

That is another one of the wonders of free trade.

Any comparative advantage is often only temporary, and some other country can quickly gain the comparative advantage.

You can never tell what is around the corner with free trade.

Free trade does not enable long term planning, and does not enable long term security.

Chris,
I'm not optimistic at all, but try to adopt a perspective roughly equivalent to an alien passing-by and looking down incredulous; do you think s/he could discern the good guys from the bad guys? I tend to back the underdog.
The alien would of course be unable to make sense of any of it, and would probably report back to the mother ship that a miraculous living planet in the desert of space was beset by a particularly nasty organism--perhaps recommending it be fumigated. I look forward to your article, Chris, and will consider it on its terms--so shan't be repeating the above.
Though that might leave me with little to say.
We all have to call it according to our lights.

*Already Chinese and Indian companies are looking for other places to buy their coal and iron ore*

Sure they are. Easier said then done. Have you seen the massive
infrastructure investments in our NW for iron ore? Its taken 40
years to build and these are now tier 1 assets, so lowest cost
producers, through capital investments and economies of scale.

It now costs BHP something like 25-30$ a tonne to mine and load
a tonne of iron ore, versus a sale price of 160$. So there is
plenty of margin, or they would not be increasing their investments.

To go and invest mega billions in ports and railways in places like
Africa, only to have the local dictator change and change the rules,
is not for the faint hearted, as Rio have discovered. So I would
not panic just yet. Even if prices drop, substantially, they are
still well over the cost of production.

*You can never tell what is around the corner with free trade.*

You can never tell what is around the corner for the world, Vanna,
never mind free trade. So you have to forget being a control freak
and change as times change. Get your fundamentals right. Then you
can invest, as BHP, Rio, Chevron and the rest are doing. 500 billion
Dollars worth.

A diversified economy spreads the risk, today's Australian carries
a story about the liberals planning to build some dams up north
and doubling our food production, to feed 120 million instead of
60 million.Such industries can't go ahead with overpriced inputs.

An efficient public service would be nice, but that would be dreaming.

As EU politicians are discovering, all their dreaming about the
EU actually working, might well be at the point of collapse. So
much for politicians trying to go against the market with their
plans. The law of unintended consequences is never far away

We should be talking about fair trade not free trade.Our Govts here tie our hands with ridiculus regulation,taxes and red tape and expect us to compete with countries that not only don't have this but workers who work for less and $1 per hour.

The carbon tax will further send off shore what little industry we have left.A service industry is not needs based.People can do many things themselves and jobs in harder times will just evaporate.

There is no point in having dirt cheap goods and food if you don't have a job and thus an income to buy them.

Yabby said;
To go and invest mega billions in ports and railways in places like
Africa, only to have the local dictator change and change the rules,

However China has done it !
If the local dictator gets difficult they will simply give him more.

The rules are being changed.
When I first heard about peak oil and its effects earlier in the 2000s
it was hard to get my mind around it. There were not many books and
it was all about the physical shortages that would occur.
Now in hindsight the experts on the subject are describing the
economic effects before physical shortages occur.

The "Arab Spring" came about because Egypt's oil production peaked
and declined, reducing government food subsidies and the demos in
the square were originally about food prices.

The US got itself into trouble when petrol got so dear that it was
buy food (more expensive because of ethanol), petrol or mortgage.
Although fuel was eating their GDP they kept borrowing.

Europe same thing, fuel ate their GDP and they kept borrowing.
Same here, fuel is eating our GDP and we kept borrowing.
That is why NSW, Victoria and Sth Aus are in recession but WA & Qld
are digging holes and getting loads of money in exchange.

The first book I read was by Kenneth Deffeyes an oil field engineer
and one of his predictions was recessions and rioting in the streets.
However he predicted this to occur after oil production peaked.
It has recently been suggested that economic peak oil occurs before
the geological peak oil. The suggestion is that rising oil prices eat
into GDP which is normally used to repay loans and interest.
Since the early 2000s the price of oil has risen 4 to 5 times.
That has had an impact.
Read this, it might explain some things;

http://www.energybulletin.net/stories/2011-09-16/odac-newsletter-sept-16

Squeers and Poirot,

Sometimes i watch shows about how the West dumps all of its used computer products in African countries and am ashamed as i watch young kids and adults forage in dangerous environment burning of the plastic for a tiny bit of copper or something else.

I also know that many of your products are produced in developing nations where the squeeze on them to produce at a low cost forced even more exploitation and/or env degradation.

However, i still maintain, perhaps i am too optimistic, that open societies are more likely to bring attention to such issues, and perhaps temper our abuse of other people and the environment over time.

Yabby,
The top 5 coal producers are USA, FSU, Australia, Indonesia and South Africa.

An importer can easily switch between countries, depending on whatever deal is being offered to them.

So now we hope that China or India don’t stall in their consumption, or swap countries.

The US had much manufacturing infrastructure, now mostly idle or derelict, with official unemployment at 9%, (but unofficial unemployment at 20%), and jobs at 0 growth, and 1 in 6 on food stamps.

Australia had much manufacturing infrastructure, but we let that go in favour of primary production and mining.

Now the profits per acre on many farms have been in decline for some years, meaning that farmers have often flogged the land to increase their falling profits, and the soil erosion in the WA wheat belt is an example of the results. Many farms elsewhere in Australia are barely viable also, and Australia is now importing large quantities of food, hoping that farms in other countries remain viable.

“But everything is cheaper” claims the free trade advocate. “An importer can just rock hop from one country to the next to get the best prices”

Until resources run out in each country, and then everything suddenly becomes much more expensive.

*If the local dictator gets difficult they will simply give him more.*

In that case Bazz, those resources are not going to be cheap. China
is spending a fortune in Africa with no certainties, so they are
hardly going to get a bargain.

Yes, energy users are paying more for energy and energy producers
are benefitting from that. So what? Are only Westerners entitled
to live well? If Europe and the US had not borrowed so much,
they would not have a problem now. No different to households who
spend more then they earn and max out on the Visa card.Just much
bigger.

The latest Economist is recommending a book on the state of energy
globally, which they claim to be accurate. Its being released on
the 20th Sept, so I'll download a Kindle version.

*An importer can easily switch between countries,*

So Vanna, is the price of coal dropping?

*The US had much manufacturing infrastructure, now mostly idle or derelict*

Not really Vanna, they still have a huge manufacturing industry,
increasingly automated with robots and the rest, so requiring fewer
workers. But their building industry is stuffed right now, so
until they start building things like houses again, unemployment
will stay high. People are busy paying off debts, for past sins.
There is a price for that. Its the same in Australia.

*and Australia is now importing large quantities of food,*

We export two thirds of the food that we grow and we import other
foods. The difference is that we export boatloads of commodities
and import processed foods. So what? My tinned guavas come from
South Africa, my passionfruit pulp from Peru. What is wrong with
you people to think that we should only be exporting and not
importing anything? Virtually all the lamb that I produce is
cut up and goes to about 50 different countries. Farmers in
Australia benefit. They spend money, other Australians benefit.

Yabby,
Having worked on SCADA systems for about 10 years, I know that there is a limit to how much productivity can be wrung from automation.

In fact, automation can be so difficult to achieve for some tasks, that automation can actually cost more than manual operation.

Productivity is like squeezing the juice from an orange. The more juice squeezed, the more difficult it becomes to squeeze any more juice.

I don’t think anyone is against trade, but trade does have to be properly managed or there are long term consequences, and we shouldn’t be throwing off all regulation and trading with just anyone.

But I would agree with you on some points.

We are increasingly becoming an obese, feminist, cultureless and consumerist society, that has little or no pride, and is now willing to sell the country off to the highest bidder

OK, Bazz, vanna and Yabby, we have had lots about the pro's and con's of free trade, and pretty well have to accept that Oz is not an island as far as the import/export facts of life are concerned, but the question I have is this - is Oz doing it right, or do you have any suggestions as to how we might do it better?

In one area I have great concern, and that is I am a firm believer in not selling off the farm to meet the bills. I wish I could also extend this to include our natural resources - mining etc - meaning that I would hope we could maintain maximum Oz interest in these resources so that the product would be almost totally Australian, as far as royalties and returns are concerned. Question is, am I dreaming in these interests?

My thought is that if we sell off the farm, then we lose our future as an independent nation.

Your thoughts?

Saltpeter,
I can’t speak for Yabby, as he seems to want to do it with anyone.

Instead of free trade, there can be co-operative trade between chosen countries.

It does require considerable diplomacy, and quite a lot of co-operation and democracy.

Countries are chosen, and the criteria is not just the price of products, and there can be a limit on what is traded with each country.

For example: If it is decided that a particular country is not harvesting timber sustainably, then no timber is imported from that country, and attention is applied to make the timber industry in this country sustainable.

Quite a lot of good government is required, and quite a lot of co-operation is required between trading countries, but ultimately there is no alternative.

*I know that there is a limit to how much productivity can be wrung from automation.*

Rather then you Vanna, I'll take note of what some of the world's
leading companies are doing. John Deere, Mercedes, BMW etc, all
using automation to improve both quality and cost and production.

In Australia, the meat industry is finally catching on. Results have
been amazing, but no, its never easy, I know. The world is more
complicated, for that we need to train more skilled people, or we'll
simply be left behind.

But there are good reasons why today you can buy an Australian made
fridge, for no more $ then you paid in the 80s, despite inflation
and your wages rocketing in that time. It used to take 3 weeks wages to
afford a fridge, now it takes half a week. Thank automation.

*meaning that I would hope we could maintain maximum Oz interest in these resources so that the product would be almost totally Australian*

Salpetre, so buy some shares in BHP. They will send you a dividend
cheque every 6 months. Already half a million Aussies get one. If
more did, rather then blow 20 billion $ on gambling, both Australia
and you would be better off.

Vanna seems to like controlling things in his life, but I have yet
to see where these smart public servants are, who are going to make
the wise decisions and do the controlling. Personally I'm not
a control freak and wishful thinking does not work so well

Yabby,
Well I was actually involved in writing the code for various SCADA systems, and no matter how good the SCADA system, it relies on field equipment and instrumentation, and if the field equipment and instrumentation is not reliable enough, no computer will help, (and only certain things can be measured with instrumentation BTW).

There are quality control measures applied for manufactured goods, (even for coal), but the future is for an extra measure or requirement, that is, sustainability.

If an exporter wants to export something, they will have to show that their product meets quality criteria, and also meets sustainability criteria. Countries would also co-operate to ensure products being bought and sold are sustainable.

So instead of "free trade" agreements where anything goes and damn the consequences, there are more dignified and civilised "co-operative trade" agreements between selected countries.

Only the unwise would be accepting a trade deal when the item being imported is not sustainable.

And of course the Yabbies of this world would not be just interested in short term prices, and how much they could get in the shortest possible time.

*If an exporter wants to export something, they will have to show that their product meets quality criteria, and also meets sustainability criteria.*

That's interesting Vanna, discriminate against exporters. I would
have thought that laws should apply equally, if products are
exported or not.

Australia is free to negotiate whatever free trade agreements that
it likes. But sometimes we are just not very good negotiators,
because some trade agreements also apply all sorts of restrictive
clauses.

Yes indeed, only some things can be measured, but that does not
mean that automation in manufacture is not going ahead on a large
scale. I was flipping channels last night and thought of you.
The National Geographic Channel was showing a rerun of Ikea production
methods in Sweden. It showed the company which makes their Billy
bookcase and has been doing so for 40 years, with over 40 million
units sold globally. Its a near totally automated operation and
if they can manufacture bookcases and market them globally from
Sweden, then clearly there is still plenty of scope in manufacture,
for those with ability.

Saltpetre, I have been thinking about how to answer your request for
how we should proceed.
I have heard one comment today on selling the farms to foreign govt buyers.
For arguments sake a Chinese government organisations buys up 10 or
15 farms, as they have done and wants to ship out a wheat harvest.
However the available wheat due perhaps to drought is insufficient to
feed ourselves and the govt puts a ban on exports.

However the Chinese govt orders the wheat to be exported anyway and they do so.
Will the Australian govt issue an arrest warrent for the head of the Chinese govt ?
This is a real issue which should be raising some concerns in many countries.
It may not be as dramatic as that, perhaps they might bring in animals
that turn out to have foot & mouth or a crop disease in seed.
I just suspect that this has not had any attention.

Yabby,
Trade (originally) meant you export something you have plenty of, and then import something you don’t have.

That was originally, but the system has become rather contorted.

If we form a co-operative trade agreement with another country, we would be required to show that the products that we are exporting to them are of suitable quality, and are sustainable.

When they export something to us, they must show that the products are of suitable quality, and are sustainable.

A dual edged sword, and it means that this trade between countries can go on forever, and the countries enjoy good relations with minimal possibility of war or conflict.

However, such a system would not be suitable for multinationals who favour a trash and burn method of trade, going from one country to the next, in a continuous search for a new country to plunder.

I also wonder if the Billy bookcase company showed you how many instrumentation fitters, systems analysts, PLC programmers, mechanical fitters and electricians they employ to remove people from the production line, and replace them with automation. I've worked with all of them, and don’t be fooled by a company that says it is fully automated.

No such thing.

Vanna, so why should exports be treated any differently then products
produced for the local market?

The problem with your idea is that the whole thing would bog down
over the word "sustainable". No mining exports, eventually the
minerals will run out. No agriculatural exports, eventually
the minerals in the soil will run out. No manufacturing exports,
eventually the energy systems which we currently use will run out.

Lawyers would have a feast with your laws and would be the only
ones landing up making a quid.

Of course automated factories have technical staff or contractors to
keep the systems going, I took that as a given. But technology is
also constantly improving, so what was a problem becomes less so.
The fact remains that when automated systems are going well, they
can dramatically reduce the cost of production. They don't pay
people peanuts in Sweden, yet they can still grow the wood,
knock out those Billy bookcases and ship them around the world,
retail them here, all for an extremely affordable price to the consumer.
No wonder consumers flock to Ikea.

Yabby,
"The problem with your idea is that the whole thing would bog down over the word 'sustainable'."

The whole world will bog down if it isn’t sustainable.

There are now too many people, and if a country tries to exist by getting hold of another country’s resources, then eventually both countries can go down.

As for automation, been there done that, and we tried everything from advanced multifunction controllers (IE parallel computing), to AI systems that were incorporated into the process control loops and reporting systems.

Automation is still limited as to what it can do, but the biggest stuff-ups I saw where with management decision making, and they decided to invest money in projects that were not viable over the long term.

That is, these projects were not sustainable.

The reasons why the last GFC occurred are an example of what I am talking about on a larger scale.

*There are now too many people,*

I fully agree with you Vanna, so you are preaching to the converted.
It is for this reason that I have been preaching family planning
for everyone in the world, since I was a student in the 70s.
But given that the world does not seem to care, I am not about
to have sleepless nights about it. Reality will hit them one day,
perhaps well after I've fallen off the old perch.

*As for automation, been there done that*

Where you have been Vanna, others are still going and they are some
of the world's most successfull corporations. They continue to go
there, with great results, despite all the difficulties. That is
the reality of it and as technology keeps improving, I doubt if it
will slow down.

Yabby,
I have used parallel processing (16 cpu chips operating at once in the same box), artificial intelligence, relational databases, elaborate trending and reporting systems, and even hot off the press beta software to get more productivity out of SCADA or process control systems.

In most processes, there still remains a need for manual supervision, and in some processes, there requires considerable manual intervention and manual override to get the most out of the process.

I know of a factory that was automated to specifications, but that factory went bust and will probably be sold shortly.

Why?

A series of draughts wiped them out, but the draughts weren’t so bad, it was the cost of pumping water.

Sustainability is more important that automation.

*Sustainability is more important that automation.*

Well Vanna, whilst the global population keeps increasing by
a quarter of a million extra people, every single day, you
won't have sustainability. Nature will just have to sort
it out with a big crash, given that as a species we are not
smart enough to address it. So be it.

*A series of draughts wiped them out, but the draughts weren’t so bad, it was the cost of pumping water.*

I'm assuming that you mean droughts here, rather then draughts.

The thing is, because your project did not work out, does not change
the fact that globally, manufacturing has and will continue to head
towards automation for the goods that we produce. That will affect
employment levels in manufacture and where those larger capital
investments are made. A small market like Australia will have a
much harder time to justify that sort of expenditure and globalisation
makes perfect sense in terms of using capital resources in the
most efficient way. Consumers benefit and we are all consumers.

Vanna & Yabbie, interesting discussion.
Way back when before computers in control systems I was there too.
However Vanna, industry will be changing but will be coming much
simpler. The very large corporations will gradually find that they
cannot cope with with complex systems and just in time will no longer
be possible.
The Ikea's will also be replaced by the local furniture maker.
The oil based glues may continue as the marginal costs would be small
but the lavish use of plastics will fade away.
Rising unemployment & lack of money will gradually reduce industrial
activity and the finance industry, as it is misnamed, will revert to
be more of a money minder.

Can the level of electronics needed by present day systems survive.
For a while, but if one critical material becomes unavailable the
whole internet and telecommunications systems could become unstable.

It is known as systemic collapse.
It is managing the coming long descent that politicians should be
engaged in, not worrying about minor problems like how warm it is
going to be in 50 or 100 years time. That will be the least of our worries.

Bazz,
I would agree.

Global Warming (or I think the latest speak is Climate Change) may or may not occur, but reduction of resources is continuously occuring.

I think Australia has seen enough loss of forests, loss of topsoil, loss of wildlife, loss of coastal habitats, loss of river systems etc, and most of this is because of a desire for continuous growth, which is considered a good.

Sustainablity is now more important than prices and increasing profits.

Yes indeed Vanna.
We can expect in the next 2 to 4 years that unemployment will rise
significantly and credit supply and governement largess will dry up.
Oil prices will be such that the economy will be unable to generate
enough cash to do other than keep running in the one place let alone
undertake new infrastructure.
I am afraid because the politicians would not listen we have left it
too late to undertake some really useful infrastructure.

I saw a reference that the coalition is studying whether it would be
possible to turn Northern Australia into a food bowl for Asia.
They were looking for projects for damns to cover the dry season.

Unfortunately they are too late, we will not have the money to do it.
By 5 years they may have trouble paying pensions.

If they want to stretch the time of reckoning out they should have
started a program of converting cars and trucks to natural gas 10 yrs ago.
There is just not enough time to get all the service stations setup
and the pipelines enlarged.

We need to duplicate the interstate rail lines and electrify them
by yesterday at the latest. The way it is going we will not be able to
afford the rails, let alone the power supply.
In thirty years time we will have a very poor electricity supply so
much so that buildings over three or four floors will be redundant.
The CBD of Sydney and Melbourne will be basically a wasteland.
I don't think Coles & Woolies will be operational, except perhaps as
a space for farmer's market stalls.
Actually thinking about that it might be good idea for now, hi !

Just finished reading James Kunstler's The Long Emergency.
He is certainly either a pessimist or realist, I can't decide which
but everyone should read it and at least have an idea of what could be.

Bazz
Well yes, I have heard of the theory of what has been done in recent decades to increase profits.

First the wrecking of the trade union movements in many countries so as to reduce worker’s wages as much as possible.

Profits increased but plateaued.

So then globalisation, which meant items could be produced cheaply in one country, and then sold for much higher prices in another (eg certain brands of sports shoes).

Profits increased but plateaued.

So then easy credit was tried, with the hope of increasing profits again, and the banks were to be bailed out by the public if they went bust.

The 1st GFC was the result, with another to probably follow.

But throughout resources are being continuously depleted.