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The Forum > Article Comments > Free trade has had its time > Comments

Free trade has had its time : Comments

By Chris Lewis, published 19/10/2011

Let's be honest about future policy trends, even from a lucky country perspective

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This is more like a religious treatise than a rational analysis. There are no solutions offered, just asserted opposition to free trade.

Hong Kong and Singapore are living proof that you're wrong. Free trade generates prosperity, irrespective of whether other countries pursue it too.
Posted by DavidL, Wednesday, 19 October 2011 9:14:11 AM
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...The correlation between public and private debt must surely shed light on the problems caused to the same public by Governments shifting costs across to the community with obsession by “user-pay” as a principal component of public debt management. Another cause of unstainable personal debt is housing. The free market mantra of Governments has totally ignored the social ramifications of our real estate industry free hand to “rort for profit” the public, with a vulnerable human need for shelter. The free hand to rort profits given to this industry, must rate the highest on the list of problems to be dealt with, before our own country falls to the hands of anarchy driven by the desperate. Under-regulation of housing rents throw to the “dogs of capitalism”, a free hand to destitute large slices of our community by the simple principal of “rent rorting” for profit, under the disguise of sound and secure investment. Here is a microcosm of the fatality that free trade has become to society who suffer first-hand under a blind regime of market forces.
Posted by diver dan, Wednesday, 19 October 2011 9:33:00 AM
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I think there are instances where protection is justified.

Especially with strategic industries, knowledge and skills which are essential to an economy. Every country should be able to feed itself, and foster skills in areas like medicine, construction, engineering, agriculture, mining and so on. A country like Australia also has an interest in maintaining its own defence industries and capacity as a precondition for foreign policy independence.

This goes for developing economies too - which may need a period of protectionism to develop their own essential capacities.

That said, no-one is arguing autarky or disengagement from the global economy.

But the rise of China will prompt a recalibration of the world economic order. There is only so much of the world market to go around, and China may ultimately offer developing economies a 'better deal'.

For developed nations this challenge ought mean pursuing a policy of full employment, focusing where possible on the creation of high wage jobs . And that may necessitiate to return to some kind of corporatism: to create those high wage jobs but to maintain stability and contain inflation through co-operation and co-ordination with unions. Full employment means a 'virtuous circle' with higher tax revenues to be devoted to essential services, infrastructure, and investment for the future knowledge economy.

With tens of billions of profits being diverted overseas from the mining industry some kind of public investment in mining is also warranted; as are more robust economic rent taxes.

With less global market share 'to go around' we need to do what we can to 'capture' the benefits of the most profitable sectors of our own economy.
Posted by Tristan Ewins, Wednesday, 19 October 2011 10:20:54 AM
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Had trouble working out just what the article was saying and, certainly, as another poster points out, no solutions are offered..

Okay there are high levels of debt but we've just had one enormous shake out when, one would have thought, all the weakie banks and institutions would have gone to the wall. that's the beauty of shakeouts. They asre painful at the time, but they also get rid of a lot of dead wood..

Sorry but I think the markets and financial system will continue to stagger on..
Posted by Curmudgeon, Wednesday, 19 October 2011 10:28:25 AM
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Yes, i am well aware that the article does not offer concrete solutions.

Change will occur incrementally with a bit of this and that. It may be higher taxation for the rich, as one company CEO called for; it may be a bit of protection here and there. It may be more regulation over time.

No one is going to sit down and say we will do this and that, all at once. But over time, trends of change will be noticed. The mood for change is already happening, although more noticeable in the US and Europe which matte3rs more than Australia. The latter will merely adapt to the new demands.

Like the left looked on as change occurred in the past three decades, this time it will be the right that loses out. There era of dominance will be increasingly challenged and both major parties may take up the policy mantra for change, although the degree will differ as always between Labor and the Coalition.
Posted by Chris Lewis, Wednesday, 19 October 2011 10:59:31 AM
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also, i am always amused that comments should somehow conclude i am anti trade or against markets. I just argue that is the balance that will change. Of course, markets and trade are important. Always have been and always will be.

Singapore an example of free trade. Oh yeah, perhaps you ought to read more about Singapore and how it succeeds, including the use of cheap foreign labour.
Posted by Chris Lewis, Wednesday, 19 October 2011 11:05:01 AM
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Having said what i just did, I could be wrong and we could just disintegrate into a 'dog eat dog' society where the minority is ignored and house prices remain boosted by rich immigrants while new Australian families suffer.

I just hope that Australians say enough is enough, and demand new ideas that at least rectifies the balance again. I am confident they will. If i did not believe in the power of democracy, then i might as well believe in nothing
Posted by Chris Lewis, Wednesday, 19 October 2011 11:38:46 AM
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Chris Lewis - actually Singapore is a good example of free trade, as is the use of cheap labor. You have some sort of moral reaction to the use of cheap labor, and are assuming that's a bad result of a free market..

It is not. Rather than judging these things by Australian standards, instead ask youself what laborers did before.. are they better off because the job existed? If the wages were higher, would the job still exist (probably not)? Would they thank you if you told them they had to give up their jobs because you insist their employers have to pay more?

Both Japan and Korea started off with cheap labor but as they developed the labor became more expensive, and the basic industrial jobs went elsewhere - that was one of the beauties of the free markets which you so deride.. manufacturing jobs go to the countries with cheap wages (generally) which then develop and stop being cheap wage destinations.

My recollection of your article is that you were saying international markets were not fully free (as I said, its difficult to work out what you were saying). Anyway, that's right, they are not.. but the general direction has been towards the reduction of external and hidden trade barriers.. a lot of work remains to be done but you have to think back to Aus of the 1970s and 1980s with its absurdly high trade barriers to remember what it was like.. Australia has done far more than most, admittedly, but it was bad to begin with..
Posted by Curmudgeon, Wednesday, 19 October 2011 12:28:39 PM
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What am is saying? I am saying that Western leaders never really had the answers. Policies which you assume are righteous, are more the result of ad hoc responses to problems. Come on, Labor cannot even run the HIP program. The Liberal Govt sold Australia's gold at a low.
They do their best, but policy responses are mostly all over the place, in line with how society functions.

Hence, as the problems mount, you will see the same ad hoc approach the other way.

I do not know what world you are living in, but it is already happening. Even Craig Emerson notes that protection is rising, but of course they are all wrong and you are right.

Read the mounting evidence that life expectancy in different regions of London is worsening quickly.

http://www.guardian.co.uk/society/2011/jun/08/life-expectancy-north-south-divide-widens

If you think that the masses are going to accept their increasing squalor while corporate bosses still get near record pay levels, dream on.

Do you think that people will accept the rise of China and cheaper goods forever, while our own productive capacity declines.

Do you think Australians want to rely simply on mining? Do you think record home prices are a good thing by relying on markets alone.

Do you think we should just take the money of corrupt communist party members?

Future policy outcomes will not be decided by arguments about free trade theory, whether it works or not, but by political parties responding to political opportunities, often from real concerns
Posted by Chris Lewis, Wednesday, 19 October 2011 12:48:29 PM
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I found this article poorly argued

It begins with a classic straw man:

“Does anyone really believe that the world will be okay if ...?”

Of course no-one believes that. I don’t believe the “world will be ok” if we stop being rude to each other or give more to charity, either, but that doesn’t mean they are not worthwhile objectives.

Then:

“there has never been a period where all nations adhered to free trade”

So what? Canadians’ “protection” of its milk and poultry industries is testimony to the well-attested power of vested interests to secure rents from compliant governments, not a counter-argument against free trade.

Then, we start to stray from the argument.

Free trade does not require that we abolish R&D subsidies, go into debt (private or public) or maintain fixed of floating exchange rates.

It does not require us to abolish social security or introduce compulsory savings and investment schemes. This is frankly silly scaremongering.

There is nothing in this article even presenting an argument as to why free trade might reduce welfare.

Incidentally, the Guardian article does not show life expectancy worsening, it shows life expectancy improving more slowly in some areas than others, leading to rising disparities. Not the same thing.
Posted by Rhian, Wednesday, 19 October 2011 3:17:17 PM
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Chris Lewis - go back and look at the UK article you cite. It doesn't say what you think it says - it says that people are generally living longer but there are variations depending on people's income. There is nothing new in that, or even surprising - its always been the case - but you seem to think there has been some sort of change and that the difference is big enough for people to notice.

Nor is thre any reason to think that voters in general would take drastic action over conditions as they are now. Markets boom and bust, its what they do. Most people understand we are in a bust part of the cycle, and that conditions will improve..
Posted by Curmudgeon, Wednesday, 19 October 2011 4:14:54 PM
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http://forum.onlineopinion.com.au/thread.asp?article=12758#220368

DavidL, Singapore's eCONomic growth went from 30% to -9% in the 12 months from the late 2008 GFC.

we are heading towards the same armageddon.

http://www.afr.com/p/business/companies/china_puts_the_squeeze_on_iron_ore_xDicc4yVyUSAQbuJ6dTX7I

http://www.afr.com/p/world/analysis_china_growth_may_not_be_ZZRTiLbAss959bXEPhQ2ON

Those 2 fools http://en.wikipedia.org/wiki/Wayne_Swan & http://en.wikipedia.org/wiki/Andrew_Fraser_(Queensland_politician) along with Captain Bligh & Juliar Dillhard keep ranting about billions of mining investments in the pipeline.

But http://en.wikipedia.org/wiki/BHP_Billiton , http://en.wikipedia.org/wiki/Rio_Tinto_Group & http://en.wikipedia.org/wiki/Xstrata are all multinational mega corporations.

if they have a choice between opening their next coal mine in Mongolia or Africa with no carbon tax, super profits tax, lower wages, etc & opening it in Queensland where they will have to pay an army of "inner city urban professionals" to write an EIS, environmental impact statement the size of a phone book?

Where do you think their next mine will be built?

If what has already been mentioned in the article is not enough for you DavidL?

Have a look at what Chinese "free trade" is doing for Angola?

http://www.sbs.com.au/dateline/story/about/id/601361/n/Angola-s-Labour-Pains no labouring jobs for Angolans, they even had a Chinese interpreter onsite so that a European Engineer's instructions could be passed on to the Chinese labourers.

Oh & dont forget the farms bought up by Chinese farmers so they can supply the labourers with Bok Choi. There were a few jobs for locals harvesting the Chinese food.

http://forum.onlineopinion.com.au/thread.asp?article=12758#220371

diver dan, correct, watch http://www.devine.com.au/ estates over the next few years, "no deposits, no legals, no worries" young dink couples buy these houses on a 100% mortgage, but as our eCONomy comes unstuck & they with it, you will be able to buy their reposessed homes as little as half price.

http://forum.onlineopinion.com.au/thread.asp?article=12758#220378

Tristan Ewans, put the bong down, globalisation was invented by you & your kind for the glorious counter revolution, watch, read & learn.

http://www.youtube.com/watch?v=gc5E6pvDv2Y&feature=channel_video_title Lima declaration, thank you comrade Whitlam.

http://www.mailstar.net/xTrots.html thank you again comrades Whitlam, Hawke, Keating, Krudd, Dillhard & Trot's from the SWP.

http://forum.onlineopinion.com.au/thread.asp?article=12758#220381

Curmudgeon, sort of agree with some of what you said, the best thing that could happen now would be for ALL governments to default on their debts so that the 6redsigns family & other international banksters go broke.
Posted by Formersnag, Wednesday, 19 October 2011 4:44:26 PM
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http://forum.onlineopinion.com.au/thread.asp?article=12758#220383
http://forum.onlineopinion.com.au/thread.asp?article=12758#220385
http://forum.onlineopinion.com.au/thread.asp?article=12758#220388

Chris Lewis, correct but i think it is high time we went back to full tilt, protectionism like we had between 1945 & 1972.

i would do it differently to a tarrif barrier, like we had.

Some people cannot make it into the "smart state", we need MORE ordinary jobs for people who do not have the intellectual horsepower &/or self discipline to do 7 to 10 years at uni as we can no longer afford to keep them on welfare for life.

http://forum.onlineopinion.com.au/thread.asp?article=12758#220396

Curmudgeon, before 1972, we had full employment, some goods were not perfect, but everybody had a job & our nation was stronger, richer, more independent, it is the old "lesser of 2 evils" argument.

http://forum.onlineopinion.com.au/thread.asp?article=12758#220397

Chris Lewis, now you are getting somewhere, but we dont even have a "mining" industry, that would indicate refining/smelting & export of steel, etc.

Exporting raw rocks is quarrying.

If you can afford fancy decorations try buying some "Italian" marble which is quarried in SA, then exported back to the land of OZ as finished product.

http://forum.onlineopinion.com.au/thread.asp?article=12758#220413
http://forum.onlineopinion.com.au/thread.asp?article=12758#220424

Rhian & Curmudgeon, fine, look at life for the ultra poor in the USA who dont have socialised medicine like we & Britain do. Life expectancy is "not good", same as it is "not good" for Aboriginal people for different but similar reasons.
Posted by Formersnag, Wednesday, 19 October 2011 5:26:41 PM
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We should be looking at fair trade.The shipping industry of 80,000 vessels produces many time more real pollution than all the vehicles on the planet.It is a waste of energy and a cause of real toxic pollution.

We don't need most of the junk we buy from China.It is of poor quality and costs a fortune to dump.It is time to look at quality of life,spending time with family and a real education.

It is all about corporate greed rather than catering for human need.
Posted by Arjay, Wednesday, 19 October 2011 7:43:03 PM
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Formersnag

... and removing tariffs requires us to get rid of public medicine why, exactly?

Like Curmudgeon, I accept that there is a disparity in life expectancy between rich and poor. But the trend for both is improving. If the poor are living longer and the rich are living longer still, life expectancy is improving but inequality is increasing. They are not the same thing.

In Australia, the gap between life expectancy for indigenous and non-indigenous is appalling. There are major problems measuring indigenous life expectancy, and comparisons over time are hard because methodologies have changed. However, it is almost certain that life expectancy for aboriginal people is improving, as it is for non-indigenous people
Posted by Rhian, Wednesday, 19 October 2011 8:25:03 PM
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*we need MORE ordinary jobs for people who do not have the intellectual horsepower &/or self discipline*

If that were the case Formersnag, they'd clearly be knocking down
doors to grab jobs at the meatworks, hardly intellectual jobs.

The reality is that meatworks rely on 457 workers, as Aussies don't
want the jobs. You can't go putting people on drugs onto a meat
chain either, employers have a duty of care to be concerned about.

Next thing you'd send broadacre farmers broke, by massively
increasing their input costs. You already rode the merino into
the ground with high costs, now you want to do it to crop growers
too, who rely on China for reasonable cost herbicides plus other
inputs.

Then you want to deny poor people affordable household appliances,
kiddies clothes and all the rest.

You need to think again Formernag, for the public are clearly voting
with their wallets every day on this

China is a breathe of fresh air for our economy. Without them,
mineral prices would still be on the floor. They now buy 25'000
tonnes of lamb from us, which is making a huge difference to the
market. Trade is benefitting both economies. If some of us can
compete in the global economy, its time for the rest of you to get
off your butts and do the same.
Posted by Yabby, Wednesday, 19 October 2011 8:40:20 PM
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