*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.