If it looks like socialism and smells like socialism, it must be socialism.

Protectionism is socialism.

Good article.
Will "full employment" ever be possible given the increasing substitution of technology for labour and the competition from overseas where labour is very cheap? The assumption that "full employment" (which today includes both parents and older folks) is possible or desirable needs to be questioned.
As the article shows, our productive industries have been crippled at the expense of profitable, yet ultimately parasitical industries.
A whole generation has been sold on making profits from inflation, not realising that income without work must ultimately be paid for...by someone, somewhere. Fast easy wealth is a nice gig to be in, but any get-rich-quick-without-work process should not be lauded as anything less than easy money scams.
Meanwhile our irreplaceable national assets such as minerals and farmlands are being sold to overseas interests faster than governments can keep up. Unions are lost: they cannot make public traction even in an era when corporate spin flips from "skills crisis" to "job losses" from month to month depending on the issue being attacked.
Setting the cost of money using a secretive bunch of industry insiders is a sick joke: it seems that free markets and price setting are only for the poor: finance gets to rig the market for it's benefit and no-one seems to mind this!
Sadly, our political system is also broken with bipartisan policy dead and the media encouraging hype and misinformation. I fear that we will ultimately be forced to change by the government that buys us or conquers us: We certainly are not showing any signs of mature enlightened leadership, and empowered individuals are getting rarer as the parasites reap from the younger gens.

Everything in the author’s article hinges on this proposition, which is incorrect.
“Theoretically, [neo-classical economics] implies that a flexible labour market will adjust the wage rate so that the existing production base employs all those willing to work. … The philosophy does not recognise involuntary unemployment such as occurred during the. Because the full employment assumption excludes involuntary unemployment, neoclassical theory cannot provide a solution when it occurs.”

It’s not correct because neoclassical theory is a theory of the unhampered market, in which real wage rates rise during a boom, and fall during a recession. But the unemployment in the economic depressions the author refers to, is because governments in support of unions actively prevent real wage rates from falling.

“How then can the Keynesian case arise? … In only two ways: (1) if people voluntarily agree with the unions, which insist that no one be employed at lower than the old money wage rate. … [T]he unions’ raising of real wage rates causes unemployment. But this unemployment is *voluntary*, since the workers acquiesce in the imposition of a higher minimum real wage rate, below which they will not undercut the union and accept unemployment. Or (2) unions or government coercively impose the minimum wage rate. But this is an aexample of a *hampered* market, not the free market …. "
Rothbard “Man, Economy and State” at p.781
http://mises.org/Books/mespm.PDF

Therefore the author’s original statement is incorrect, and since everything that follows in his article hinges on it, the entire argument fails.

To talk of the need for government to promote full employment while coercively preventing it is obviously self-contradictory.

And to talk of government ensuring rising living standards while they are actively promoting an agenda – ‘sustainability’ – which is opposed to it is also self-contradictory.

And any talk of government managing the economy is simply a cover for more of the policy of permanent inflation which has caused the economic depressions the author refers to, and now wants to cure with more of the same monetary snake-oil that caused the problems in the first place.

Sorry, my quote of the author omitted part of a sentence the whole of which should read:
"The philosophy does not recognise involuntary unemployment such as occurred during the Great Depression, 1970’s-1990’s, or, the GFC."

Sure Free Trade has its faults but so too has Protectionism.

Protected industries have a huge political risk attached to them. The industrialist wishing to invest in new equipment knows that a change in government policy could destroy his viability. This enhanced risk often results in a failure to invest in new technology which in turn makes the protected industry even less competitive.

A failure to invest in new technology is the death knell to manufacturing.

Wattle,
Technology means nothing if your stock supply runs out. An oil refinery can have the latest technology, and then the oil wells run out.

Free trade basically means multinationals, who do have a habit of using up a country's resources and then moving on to the next country.

All looks good in the short term because their share prices remain high or are increasing.

Peter Hume has a point, but I’m not sure I buy his theorising.

Free trade rewards productivity. China is much more efficient at producing steel than Australia. That wasn’t true a decade ago, but it’s true now. They’re lifting a massive population out of poverty, and at the same time facilitating economic development in more advanced economies by providing something we need, at lower cost than we could manage ourselves.

Which is very inconvenient for BHP. If you don’t like Free Trade, the response must be to impose tariff barriers on Chinese steel which are high enough to keep BHP sales up and their blast furnaces profitable. In past, we spent megabucks keeping globally inefficient industries viable. That has the effect of keeping employment up ... temporarily. We pay extra to make sure union jobs are safe. Government’s obliged to play that game, unless they can use a commitment to Free Trade as their excuse for letting BHP suffer. Or fail.

The uncomfortable conclusion is that Australia needs to change its economy to accommodate China. And India, Brazil ... the whole developing world, in fact. The good news is that we’re well positioned to do that. Resource extraction hotting up to replace manufacturing. We could profitably do more refining, if we don’t overprice energy. Agriculture is another area where we can shine. We’ve the technology and sophisticated workforce to produce pharmaceuticals, chemicals, rare earths. We can sell good quality education to Asia. We can change.

We’ve done so before. Wool used to power the country ... before we moved on. It’s time to do that again. Without Free Trade, though, government would spend the next 20 years propping up BHP, Holden ... and another thirty antiquated corporations that can no longer compete. Worse, we’ll fail to develop new industries to serve emerging markets in our region: infrastructure design, banking and related services, medicine, contract R&D, IT ... lots more.

Economics is much too important a subject to leave to economists. And only a complete eejit would leave it to politicians. Free trade works, full stop.

Before anyone takes Peter Hume's position as ethical or realistic you should read his link to Rothbard.

No body wants to go to that place where we argue that "no act of government can what so ever increase social liberty"...That Peter is Fringe Anarchist at best..in fact self described as such...."therefore we must call for the abolition of the state"

To suggst that we do not use empiaracle data to decide the direction we travel is foolish to say the least and let the invisible hand fix...it....what a lovely picture of boom and bust and human suffering you present.

And to use Say's law "supply creates demand" and asume that the price of exchange of goods "when every businessman is in control over his price tells" me you have had very little time in the real wrold where monopoly and market power issues decide outcomes.

Interesting to see Mr Rees pointing to the G7 and the G20...wonder Peter Hume if you can tell me how many of the G7 who have most closely followed your fringe ideas are in good health...the G20 seem to have the high ground right now....notice Itally is in trouble now...wonder if they will try to save their economies by shrinking demand and contracting their economies...wonder if unemployment will become a problem?...not in your world Peter, we'll pay them less..and less..perhaps nothing, can they pay for the production to keep employment going.

Nev

Free trade and globalisation is the biggest con of the last century. Dumping, subsidies and closed shops (EU) still operate within the scale of FT. But it is so much more.

OzAndy makes many valid points and I agree wholeheartedley so won't be too repetitive.

Some forms of protection are not akin to socialism - this is lazy debating. Trade can continue to operate without the burden of vested interest 'free' trade. Trade can and has been conducted within the parameters of national sovereignty and issues of biosecurity, food safety, food miles, exploitation of labour, sustainable farming in the developing worlds etc.

Free trade has opened up new paths for nations with the biggest influence to bully and coerce others. The bullying by US lobbyists to pressure Europe, resistant to GM, into taking GM products was a typical example of how the FT fraternity operates. My way or the highway.

And it has nothing to do with neoclassical theories but purely self-interested investment opportunities.

Well, I suppose the opposite of Free Trade needn't be protectionism. Free Trade is never wholly free (biosecurity, political dramas with trading partners, etc.) and protectionism is never really absolute (outside North Korea.) This argument would be a bit more interesting if anyone could point to a successful and fully socialist regime, anywhere, any time. Lord knows it's been tried often enough, but no joy. History's pretty clear on this point: politicians and the nomenklatura are always an order of magnitude more venal than the worst of the robber barons, far harder to dislodge, and much more prone to kill. Modern nation-states are already too powerful, for the most part. They can barely be trusted with political power, even in a democracy. Give them control over the means of production, and you're on a one-way street to perdition ... or bloody revolution, whichever comes first. Even the benign economic interventionists in the EU have painted themselves into a corner ... with the best of intentions, of course. Free Trade has its shortcomings, sure. The problem is that every alternative humankind has tried has been worse. Good luck to the next generation of utopians, then. Just don't expect me to vote for your next experiment.

Nobody is interested donkey in Socialism...or government hold ing the means of production and distribution, it always astounds me that the more we remove the rules and regs that manage our economy, the more likely we are to fall into danger like right now..we have been going down this path for 30 years or so and especially the g7 group of nations and they are the most in trouble...the system is a failure..you would tell me that 1929 was the result of too much protection..when in fact the level of protection prior to the crash was lower than later, the eveidence is the crash was caused by the failure to manage...a mixed economy is what we need not chaos or anarchy. Your a minority now.
Nev

Nev
If we take away your name-calling, misrepresentations/lying, and logical incoherence, there's nothing left of your argument.

The question is whether you can actually refute the arguments, not whether you can go into a little tanty in your emotional reaction to them.

To refute them you would need first to understand them, but I suggest you start by understanding correct spelling and grammar before you get into the tertiary stuff.

But in the meantime, I suppose your wild misrepresentations will satisfy you?

By the way, a mixed economy is what we've got now ... you know, Greece, USA - all that wise management by the government. A mixed economy is only the chaos of socialism by instalments.