its fascinating listening to the debate on protection and its pros and cons.

again no one is pointing out the obvious.

ppp, not public private partnerships but purchasing power parity holds the key.

International exchanges used to be set by governments, central banks or linked to some sort of gold/commodity standard. This has been abandoned in most countries, many of which have floating currencies.

This means that the market sets the value of currencies amongst each other. To test whether or not the market is "right" you simply compare a price of a product in country a to the price in country b, the conversion factor should equate to the currency exchange.

The economist magazine runs a big mac index, it gets the price of a big mac in the local currency and compares it to the price of the big mac in the United States (trading currency). From the index created on 9 June 2005 it shows the $A is undervalued by 18%

Effectively the market error in valuing the aussie dollar against the major international trading currency has created an 18% tariff on all products.

So those who argue against tariffs must also argue against floating currencies because the market has effectively imposed an 18% tariff on all goods.

Lets hear from the free traders/economic rationalists on this point

So a company will operate with a lower profit margin to increase your “profit”, i.e. higher wages and conditions?

Rather interesting thought tonyr when you are demanding a higher share?

You won’t, so why should the investors in the company accept lower returns for risk?

Will you keep your “super fund” in a fund that invests in companies with a lower return?

I would not, just as I would not work for a company that paid me less, all else being equal.

“Weapons” spending has got nothing to do with work place regulations, a typical side distraction from the left when the questions get to hard!!

So what’s wrong with the market slasher?
Its acting as a market should, valuing our currency with many factors taken into account.
Look around you, and you will see many examples where the market values a product, both above and below what should be its value.

Just maybe the market has under valued our currency due to the “workplace protections” this country has, making it a far riskier and expensive place to operate a business.

With respect TonyR, I think your concepts of "international trade regulations" are somewhat patronising to the target country, even though you probably don't intend them to be. You show strong leanings towards the control mechanisms of colonialism... the very idea of a bunch of countries sitting around debating what your magic variable "n" should be fills me with dread. Would it be the same for all, I wonder? Or would it become tied to non-trade related issues such as the rights of women, or a ban on hunting foxes? Or on regime change, perhaps, if there is a government of which you disapprove?

You also suggest that the nonexistence of "n" causes "resentment and desperation ... which has considerable costs associated with it." Would you care to cite an example of this that originates within the target country itself?

Nor do you address the impact of these impositions on the "donor" company. How would it affect their decision to invest in that country in the first place? Would this not be detrimental to the possibilities of that country to begin to fend for itself in the world economy?

It sounds as though you would actually prefer to continue to subsidise these countries through direct financial support from your international conscience fund ("n" percent of GDP) than to allow them to make decisions for themselves. That may make you feel warm and squishy inside, but it is actually very damaging to the very people you believe you are helping.

The single most effective element of assistance to these poorer economies would be to prohibit, internationally, the imposition of trade barriers in the form of both import restrictions, and industry subsidies. "All of this is perfectly possible", to use your words, but would be vastly simpler to explain and to implement.

The only problem is that there isn't the political will for it to happen. Only when there is genuine and visible economic advantage - and this would come from individual commercial firms - will you see the required investments in those economies.

Dunart

Weapons spending has everything to do with International Trade and I never said it was directly related to workplace relations. If companies have to accept lower profit margins they also benefit from lower risk and lower operating costs. If international trade is conducted on fairer terms there would be less instability less conflict and less of all the costs associated with these conditions. Consequently governments would have to spend less on law and order, defence and would need to raise less tax and allow companies to retain more of their profits even if the revenue was attained from marginally lower margins.

You seem to have forgotten how externalisation works and how cost externalised only shifted to other parts of the economy . It does not evaporate into thin air just because it has been left off some corporations books.

Pericles

There is nothing patronising about a leveller playing field and the 3rd world would welcome such a move. Most OECD countries would also welcome some mechanism to better manage the bidding war that transnational corporations initiate between rival nation states as well as states with a nation while hooking for corporate welfare. Unfair terms of trade are the greatest rip-off the 3rd world as to endure whereas corporate welfare is the blowback that effects the developed countries.

How about passing international legislation to immediately outlaw tax havens just for a start if they are really serious about having a level playing field. It’s ironic that those who have the greatest leverage on Government pay next to nothing back in tax.

That was a quick about-face, TonyR. You seem to agree with me all of a sudden.

>>There is nothing patronising about a leveller playing field and the 3rd world would welcome such a move.<<

Nothing would make the playing field "leveller" than the destruction of all tariff barriers and industry subsidies.

>>Unfair terms of trade are the greatest rip-off the 3rd world as to endure<<

Errr, yes. Tariff barriers and industry subsidies have a significant impact on terms of trade. They should be the first to go.

What happened to the "n" factor?

Quote from tonyr

“In answer to Dunart's question “who pays” it‘s the Corporations who will have to pay by accepting lower profit margins and less ability to externalise their true costs. They can be profitable but not super profitable as for them to be super profitable is to accept social and environmental destruction. Yes regulation has a cost but nothing compared to the cost of maintaining the current imperial exploitative system with the obscene spending on weapons each year, resources which could be diverted to more productive activities.”

If corporations have to accept lower “profits” as a result of regulations, the best you would have to play with, would be a few %.
For instance, if wage costs were 50% of the final product cost, with the company making 15%, you would have a problem very quickly as it does not take much regulation (and business tax) to push that below 10%, making the company look elsewhere to do business.
Sounds familiar to me, where has all the Australian manufacturing gone?

As for weapons spending, what’s that to do with the argument, as it is funded from tax, and does not have anything to do with business production costs?

You finish about it’s not a question of cost, but about power. So now the cost’s just “disappear”?

Quite happy to have a level playing field.
That would mean no govt regulation that benefits any company or individual.
Total free trade would mean people, capital and business decisions would be made without any govt regulation influence.
Stopping the so called “tax havens” is against free trade principals.