We should be talking about fair trade and not free trade.Would you put a dolphin up against Ian Thorpe or give his opposition a two lap start in an Olympic race?

There should be a tarrif on cheap labour so multi-nationals don't drive people into abject poverty.Labor in Vietnam is now 30 cents per hour.For us to compete we will have to live like them.In addition, all the regulation ,red tape,OH&S in the West further makes competition impossible.Currently it is a race to the bottom.

Why are we spending $ trillions on moving goods all adound the planet.The shipping industry produces more toxic pollutants than all the cars/trucks on the planet.If we made more things at home,energy would be saved, pollution reduced and jobs increased.

Neatly put.

It will be interesting to see whether the protectionists find anything in this article that they are able to argue against, or whether they will try hard to ignore its simple truths.

I notice that Arjay has rushed in with the "we are exploiting the workers" routine, studiously avoiding the corollary that if we slap a "tarrif on cheap labour" (whatever that means), the result will be to price those workers out of their livelihood.

If such a tax had existed twenty years ago, tens - even hundreds - of millions of Chinese workers would still be languishing in abject poverty. Not only that, but our own cost of living would have been higher, without the benefit of the cheap goods that now form a significant portion of our household expense.

I suspect that our anti-free-traders are motivated more by fear, than by logic, and would prefer to see our society back in the little-Australia 1950s. Fact is, that might still happen, as the economic balance in the world inexorably shifts. But protectionism can only hasten that process, not delay or prevent it.

Pericles,

Here's a go...India has just redrawn (manipulated) its "poverty line".....so now unless you're existing on less than the equivalent of 64 cents a day, you're not under the "poverty line".
http://edition.cnn.com/2011/09/27/business/india-poverty-line/index.html?hpt=hp_t2

Nice to see it's so easy to lift people out of abject poverty in developing countries simply by lowering the bar.

Let's keep a realistic viewpoint on the exploitation and sheer waste of resources involved in globalisation - not to mention the loss of traditional knowledge and social cohesion in developing countries. all these things accompany a "modest" rise in affluence.

"Not living in poverty" is an easily manipulated term, it seems.

“The irony of any Australian arguing for protectionism is that Australia as we now know it – a free trade zone between its several states and territories - would not exist were it not for the efforts of earlier advocates of free trade who exploded the economic fallacies on which the case for protectionism rests.”

This is a whopping great red herring.
There were no huge multinational corporations waiting to explore every loophole, in the search to cut costs and increase profits at that time.

Free trade as it is now, is flawed because it does not take into account the level of pay and conditions that apply in each country.
To be a real level playing field tariffs should be applied to imports to bring them up to the cost levels of the receiving country by including the difference between wages and environmental costs.
It would not then be a reason to close down a perfectly good manufacturing system to move it offshore and increase the profits from the sweated labor.

*Labor in Vietnam is now 30 cents per hour.For us to compete we will have to live like them*

Clearly not, Arjay. Now lets take one of our largest imports as
an example, motor vehicles. How many cars on our roads were made
in Vietnam or even China?

There is alot more to trade then just labor, or Germany would not
be one of the world's largest exporters and my lambs would not
be exported all cut up, to 50 countries. So your argument is a bit
simplistic.

Karl Marx saw free trade as 'revolutionary'. Today it is bizarre that people could oppose it: the reality of global economic intergration has advanced so far and is irreversible. From Marx's speech to the Democratic Association in Brussels in 1848:

"...the protectionist system is nothing but a means of establishing large-scale industry in any given country, that is to say, of making it dependent upon the world market, and from the moment that dependence upon the world market is established, there is already more or less dependence upon free trade. Besides this, the protective system helps to develop free trade competition within a country. Hence we see that in countries where the bourgeoisie is beginning to make itself felt as a class, in Germany for example, it makes great efforts to obtain protective duties. They serve the bourgeoisie as weapons against feudalism and absolute government, as a means for the concentration of its own powers and for the realization of free trade within the same country.

"But, in general, the protective system of our day is conservative, while the free trade system is destructive. It breaks up old nationalities and pushes the antagonism of the proletariat and the bourgeoisie to the extreme point. In a word, the free trade system hastens the social revolution. It is in this revolutionary sense alone, gentlemen, that I vote in favor of free trade"

So anybody who doesn't think free trade is the answer must be dumb, racist or greedy. I'm glad we have sorted that out. It must be great to have all the answers.
Reading the article it's clear we didn't have human society until we had money. That all sports should be unisex. That competition always delivers the best outcome. The patent system should be scrapped. That it’s fine thing to be dependent on import as from countries that might change their minds

That doesn't convince, Poirot

>>Nice to see it's so easy to lift people out of abject poverty in developing countries simply by lowering the bar.<<

You surely cannot be suggesting that the new wealth that has been generated in China over the past twenty years is illusory, and that what we are seeing is just a manipulation of the poverty figures?

That is pretty short-sighted.

You also made no mention, I notice, of the other side of the equation, which is that the reduction in costs has in fact been passed on to us, in the form of lower prices. This has contributed in no small measure to our own - undeniable - affluence over the same period.

I would be interested to hear what alternative strategies you might have in mind, that would not harm the emerging economies, or cause our own economy to stagnate.

Any offers?

Arjay
Free trade is not the cause of poverty in Vietnam. It is the solution. Vietnam under communism eschewed the benefits of free trade and a market economy. Its population lived in abject poverty and oppression. Now that it is more open to trade living standards are rising, but from such a low base that it will take many years to become as prosperous as its neighbours which embraced the benefits of trade and markets earlier.

I’m old enough to remember when “made in Japan” and “made in Hong Kong” were by-words for cheap shoddy products made by "exploiting" cheap labour. Arguments against imports from these places were much the same as arguments against Vietnam and China today. But trade elevated these economies to first-world prosperity within a few decades, as it is currently doing for China. Look at North Korea, or Albania under Enver Hoxha, for examples of the effects of economic isolationism.

“You surely cannot be suggesting that the new wealth that has been generated in China over the past twenty years is illusory, and that what we are seeing is just a manipulation of the poverty figures?”

And of course the total destruction of the environment in China was so worth the peasants being able to labour away for a few cents per hour and destroy their health in the process?
They will be able to play with the trinkets they can buy on the way to the hospital (if there is one) to die and feel so good to be included in the “modern” world.

Their choice, sarnian.

>>And of course the total destruction of the environment in China was so worth the peasants being able to labour away for a few cents per hour and destroy their health in the process?<<

Not yours.

Jolly good show, Pericles...and we get lots of cheap stuff too !

"eutrophication" - check out China's waterways - not to mention, its air pollution.

http://www.nytimes.com/2010/02/10/world/asia/10pollute.html

Unsustainable.

Trust Poirot to rush in with the arguments for starvation.

I remember when the Chinese were waving Mao’s litte red book, and starving by the millions, under the wonderful Marxist system that you are in favour of. (Oh that’s right, not even Marx agrees with you.)

And now through bitter experience of what a distaster statist collectivism is, they are getting on with improving their lives, and all we hear from the left wing is complaints about how dreadful it is.

India recently passed laws banning child labour, urged on by the ILO and no doubt supported by you. But like you, and like it says in the article, they thought only of the immediate effects of their policy, and didn’t think it through to its conclusions for all groups. The ban was followed by a huge upsurge in child prostitution. Well what did you expect them to do? Starve?

And what about the poor children who couldn’t even make a living by prostitution? Would it make it easier for you to understand what you are arguing for, if the cause of death was entered in the official reports as “Economically illiterate meddling by comfortable well-fed Westerners”?

Arjay, if what you were saying were true, Australians would have to compete with Vietnamese workers by working for 30 cents a day. The reason they don’t do that, is because they don’t have to, do they? This means your theory is wrong.

Sarnian
So the environment in China is "totally destroyed"? There's none left? They have no land, no farms, no rivers, no forests?

Starvation is better than freedom apparently?

You are all back to the fallacy of thinking that free trade causes poverty. If that’s true, why not abolish it altogether?

You guys should try thinking with your forebrains about the consequences of your policies, instead of emoting with your mid-brains about how wonderful you are, paid for at the cost of the starvation of innocent people who don’t deserve to die because of your ignorance.

To reinforce Peter's point, the UN website has a wealth of data on poverty levels, life expectancy, infant mortality and other objective measures of human welfare. All are improving dramatically in tandem with China's stellar economic growth.

"Protectionism by its very logic only ever succeeds in feathering the nests of vested interests while simultaneously striking a blow against the principles underlying freedom and society at home and abroad."

Multinationals, by their very logic only ever succeed in feathering the nests of vested interests while simultaneously striking a blow against the principles underlying freedom and society at home and abroad.

Free trade is basically multinationals who go wherever resources are currently the cheapest.

What happens after they leave is none of their business.

Governments, which are hopefully for the people by the people, should have more long term interests about their country.

No correlation has ever been found between free trade and the Human Development Index.

At the end of the day, free trade will marginally improve the standard of living of the very poor countries, but at the same time reduce the standard of living of the rich countries by a very sustantial amount. There can be no other possible outcome. You are living in la la land if you think otherwise. The current economic turmoil is just a foretaste of things to come.

David

Peter Hume,

Thanks for that..."starvation" not being an emotive word.
And yes, China has marginally improved the lot of many many of its people, but the sheer cost to the environment renders the continuation of such a model unsustainable. India has enjoyed stellar growth as well, but hasn't been nearly as successful at looking after its population. It falls way behind China on the Global Hunger Index.

I'm just wondering, Peter, what your thoughts are about libertarian capitalism regarding China's success. It seems China's industrial revolution has a lot in common with Britain's before reforms were enacted.

A useful insight, Poirot. This could indeed be a valuable and salutary model, that we can examine in forensic, dispassionate detail, and possibly learn something.

>>It seems China's industrial revolution has a lot in common with Britain's before reforms were enacted.<<

The genesis of Britain's industrial revolution was, in some commentators' eyes, the introduction in 1709 of coke smelting to the ironworks at Coalbrookdale in Shropshire. It set the pattern of high energy-consuming processes supplanting manual labour, and was further assisted by innovations on the land that reduced the labour requirement there also. This allowed the mass migration from the land to the industrial centres.

http://www.fatbadgers.co.uk/britain/revolution.htm

The resulting increase in pollution is also well documented. London's "Great Stink" of 1858 highlighted the problem of effective sewerage, which was tackled by Sir Joseph Bazalgette's system of concrete-lined sewers in the 1860s. But air pollution was not fully conquered until the mid-twentieth century. I have personal memories of some dramatic London smogs, which eventually led to the Clean Air Act of 1956.

So, if we look at the timeframe involved in that industrial revolution, what we learn is that we need to think in terms of many decades. We need to come to terms with the less attractive by-products of China's successful transition to a more comfortable lifestyle - one that as developed nations we have aspired to over the centuries, and ultimately achieved.

The question must be asked. What, apart from indignantly flapping our arms about, should we do about it?

To gain some perspective on the question it may be useful to ask what, in hindsight, should the rest of the world have done about the impact on Britain's environment of its industrial - and economic - development?

Any thoughts, Poirot?

Pericles:
Not really their choice, but the choice of the government that enforces the “plan for industrialization.

Peter Hume:
OK I was exaggerating a bit but the prospects for a cataclysm of extreme problems is there and it will not be good for the people involved.

Rhian “To reinforce Peter's point, the UN website has a wealth of data on poverty levels, life expectancy, infant mortality and other objective measures of human welfare. All are improving dramatically in tandem with China's stellar economic growth.”

Just like the lucky people in the US who are living in their cars with zero health care and no future.

Vanna:
I agree wholeheartedly.

The way to go would be for the population of China and other “3rd world” countries, to improve their industrialization, without going for mega exports but to satisfy their home markets in an environmental way.
This would improve their living standards gradually but would not leave room for the multi nationals to go in and pillage the country and the labour force purely for their own profits
By placing tariffs on goods from them, we would be doing them a favour. So the price of the latest electrogimic would go up here? We can manage with out or even produce our own.

*So the price of the latest electrogimic would go up here? We can manage with out or even produce our own.*

Actually Sarnian, it is the poor who would have most to lose.
No more cheap kids clothes and shoes. No more computers or the
internet for the poor, only the rich could afford the price.
No more affordable powertools for the pensioners plugging away
in their shed on some project, enjoying their retirement.
The list goes on.

The real consequences of your intended actions would be one of
"Screw the poor".

Sarnian
Please explain the link you thin exists between Americans living in cars and China’s welfare gains from economic growth.

Actually, I agree that China would do well to pursue a growth path that focuses more on environmental protection and domestic consumption. In fact, that’s the way they are aiming to go with their latest 5 year plan. But their top priority will remain economic growth, because overwhelmingly that is what is raising their citizens out of poverty. And exports give them benefits in improving technologies and competitiveness as well as raising incomes. China may rebalance their model, but they won’t abandon it, because it works.

VK3AUU
Your claim that “there can be no other possible outcome” that trade making rich countries poorer is simply nonsense. Read any year 11 economic textbook or look at the data – over the long term, rich countries have got richer, and poor countries that trade have got less poor. The evidence is overwhelming.

Poirot,
India is behind China on many human welfare indicators because its growth, though strong, is not as strong as China’s and because it moved into a higher growth path later than China. India’s GDP per capita (at PPP) was higher than China’s until about 1990. But by 2010 it was about 60% lower.

There is substantial evidence that India's relatively weak growth was because India's governments have been slower to move away from excessive protection and over-regulation that characterised India’s post-war economy:

http://www.nato-pa.int/default.asp?SHORTCUT=1472

The comparison between India and China strengthens the argument against protectionism.

Poirot, Sarnian, Arjay
You are only stating your false belief that productive activity is what causes poverty, and what causes wealth is restricting productive activity.

The idea that employing people at the market rate for their labour is exploitative depends on the idea that the fair rate of pay is greater than the market rate of pay. But no-one ever ventures to say the *principle* by which that could be determined. Everyone wants to be paid more for his work.

The part that you keep not getting is the unintended negative consequences of interventionist policies. Full socialism definitely does cause mass starvation, and the only thing making partial socialism viable and humane is the remaining capitalism, otherwise full socialism would be viable and humane.

But you haven’t established that the market rate is *not* the fair rate.

Marx figured that the workers were entitled to more than the market rate, by a process of reasoning that the total value of all final products is ultimately imputed back to the labour factors of production, and labour alone. But even this line of reasoning would only justify increasing wages above the market rate
a) for the working class worldwide as a whole and
b) given the total abolition of private property.

It would not justify the interventions you advocate including minimum wage laws. Why not? Because they cause greater poverty than they relieve!

If you were correct, the problem could be solved by making the minimum wage in China equal to the minimum wage in the West. Please answer: Would that improve or worsen the condition of the working class in China?

The pollution of water, and the fact that rivers are owned by the state, is not some kind of strange coincidence. China still has water socialism, that is all. Without consulting everyone’s lowest common denominator – money prices - how are the state commisars to know whether the pollution is too much or too little?

Your argument about sustainability amounts to saying people should starve now, so people won’t starve in the future.

Rhian, it is only the rich people in the rich countries who are getting richer. Those who are less well off are certainly not. The evidence is indeed overwhelming.

David

David, perhaps you'd care to provide some of that "overwhelming" evidence

To begin, I suggest you look at real wages and real consumption , real per capita income, and the broader economic welfare measures I have already mentioned - life expectancy, infant mortality, education etc.

If you can find evidence that any one of these that has moved backwards in Australia since we began reducing trade barriers in the 1980s, I'd be interested to see it.

David, I read the article, what you are referring to is largely
a question of social welfare, as distinct from the economy. Yes,
there are all sorts of sad cases out there, for all sorts of reasons.

In the case quoted, somebody with brain injury should really be
taken in by sheltered workshops etc, for employment. Ice and
the increase in meth use is another reason for poverty, because some
people simply become unemployable. Employers have to abide by OHS
rules and machinery and drugs just don't mix.

The other issue is tobacco. By what I've read, people with some
mental issues like schizophrenia have incredible issues with trying
to quit, so the Govt screwing up prices to force them, is not
helping, but rather helping create poverty, as seems to be the case with your quoted Harry.

I know pensioners who live in the country, don't smoke, grow a
few vegies and can live very well indeed on similar money as your
Harry is receiving. The thing is, the Govt spends about 120 billion
$ a year on social welfare, how much more should they spend?

Back to the economy, all the figures that I've seen agree with
Rhian's point that real wages in Australia have never been higher.

David
I accept there is poverty in Australia. But

1) The article makes no mention of whether poverty has got better or worse over recent decades.

2) Even if poverty has increased, that doesn’t necessarily mean that people are worse off in absolute terms.

Poverty in countries like Australia is not an absolute measure, like the UN’s US$2 a day benchmark for absolute poverty. In Australia poverty is usually gauged by a relative measure, comparing the incomes of those at the bottom of the income structure with the rest (most commonly the Henderson poverty line). If every household in Australia tripled its income overnight, the number of people in relative poverty would remain exactly the same.

For example, ABS data show that in the ten years to 2007-08, average real disposable household income for people in the low income group increased by 41%, while average real income increased by 46% for middle income people. This means that absolute living standards for low income earners rose substantially, but because other groups’ real income rose even faster, relative poverty may have increased.

http://www.abs.gov.au/ausstats/abs@.nsf/Lookup/by%20Subject/1370.0~2010~Chapter~Household%20economic%20wellbeing%20(5.3)

Your argument requires not only that poverty exists (as the article you link to argues, and which I accept), nor even that poverty has increased (which the article does not discuss), but that ABSOLUTE poverty has increased – that is, the real incomes of people on low incomes are declining. And that is clearly not the case in Australia.

Just thought I'd toss this into the mix.

Poverty and income in America - circa 2011:

http://www.newyorker.com/online/blogs/johncassidy/2011/09/poverty-figures.html

Poirot

Yes, I’ll accept that the growth in living standards we’ve enjoyed in Australia has not been matched by the USA. The US is (we hope) emerging from their worst recession since the second world war, and this will have distorted their data recently. But even so the evidence of sluggish growth in incomes for middle income families was there before the recession.

If free trade were the cause, then you’d expect countries that reduced trade barriers to have the worst growth in living standards (the reverse is true); or trade exposed countries to be more vulnerable (The USA derives less GDP from trade than most developed economies), or similar patterns to be evident in similar economies (European developed and emerging economies do not record this phenomenon - nor do Canada, Australia or New Zealand, although Japan’s growth has been fairly anaemic).

Most economists I have read do not attribute the cause to free trade or globalisation. Paul Krugman, for example, attributes it to US domestic policy and political characteristics and policies.

And even the sluggish US growth does not justify David’s alarmism, which says that living standards must deteriorate, not merely stagnate, with free trade.

Rhian: The link is that the US is the biggest economy in the world and should have benefited from globalization.
I do not think the millions there who are living in poverty, would agree with that. So why would anyone want to emulate a country and system where there is enormous poverty except for a minute percentage that are very rich.

Yabby: you say maybe if there were no more cheap kids clothes and shoes. No more computers or the Internet for the poor, only the rich could afford the price.
No more affordable power tools.

We could get stuck in and make them ourselves. Are you going to give me the old furphy about: you cannot compete because of the economy of scale?
If we were making them for ourselves, we would have more jobs and would not have to compete with sweated labour from Asia and Africa.

The other point is that with the approaching “peak everything” we will have to learn to manage with out all these things. In the bad old days woman had sewing machines and made a lot of their clothes themselves. We used to have very proficient shoemakers.
As for the pensioners battling away in there sheds, if they are able to do that, there would be paying jobs for them to do instead of being thrown on the scrap heap or used as the excuse to bring in hundreds of thousands of migrants, to support out “aging population”.

*We could get stuck in and make them ourselves.*

We could indeed Rhian, so then with our high costs and small
population, those things would be so expensive that the poor could
not afford to buy them. They would suffer the most.

So now to solve it, you want to force women back to their sewing
machines and drag old pensioners from retirement to force them
onto the production lines.

Perhaps our present system of them deciding for themselves what they
want to buy and where they want to work, is the far better option.
They are clearly voting that way, with their wallets and their feet.

Next, you'd be forcing efficient industries like agriculture, who
export most of their production, to pay far higher prices for their
inputs, making them less competitive and sending many to the wall.
Hardly clever thinking.

Sorry, that was Sarnian, not Rhian.

Yabby, at the rate Coles and Woolwsorths are importing cheap food, we won't have any farmers left soon.

David

*Yabby, at the rate Coles and Woolwsorths are importing cheap food, we won't have any farmers left soon*

Oh nonsense. Australian farmers still export two thirds of what
they produce. But we export commodities, boatloads of wheat, oats,
barley, meat, sugar, etc. We import some processed food, so
what?

Countries like China for instance, used to buy none of our lamb.
Now they buy 25'000 tonnes of it, along with huge volumes of
milk powder, lobsters, wine and all the rest. Trade is a two
way street, both benefit.

If there were no global markets, farmers would soon go broke.

ABS data released today show 38% real growth in incomes of low-income Australian families in the past decade:

http://www.abs.gov.au/ausstats/abs@.nsf/Lookup/by%20Subject/1370.0.55.001~2011~Main%20Features~Household%20economic%20wellbeing~18

Also improvements in education levels and life expectancy.

VK3AUU
still looking for evidence of the falling living standards you're so certain of ....

Rhian, I suggest that you go and talk to the Salvo's and other aid organisations and see whether their clientele is diminishing. Unfortunately (for you) statistics don't tell the real story. If you sort out individual cases from averages, you then get the real picture.

David

David
So what? That doesn't establish any argument against free trade. Obviously you didn't read the article. You're just re-circulating the same old fallacies.

Besides, the increasing clientele of Vinnies doesn't prove there's too much free trade, it proves there's not enough, otherwise you're back to the fallacy of asserting that we'd all be better off if free trade was abolished, and the whole economy was centrally planned.

You have not even begun to deal with the issues.