Mr Smith

I never argued that China is a model of economic rationalism. We have discussed it in the context of the comparative advantage, a mainstream economic idea that I have argued is amply demonstrated in China’s trade-driven economic growth. And I agree that China could do with balancing its growth profile a bit better. I strong disagree, however, that US-imposed trade restrictions are a desirable or effective way of getting there.

Who in this thread has suggested that Chinese workers not be allowed to organise? (If you think workers get a raw deal in capitalist countries, take a look at their rights and conditions in socialist ones).

Wizofaus

I think you too are setting up a straw man. Can you name an influential economist who has argued deregulation, for example, is “always better, no matter what”? I believe economic rationalism has always been pragmatic, analytical and outcomes focussed, as Faustino has described. The rigid dogma you describe exists in the imagination of rationalism’s opponents, not its practitioners.

OK Rhian

We seem to be getting our wires crossed a bit here. So in order to correct any misunderstanding I refer you to my original post where I only mentioned China once - by way of an example with regard to exchange rate abuses and dangerously sub-standard products.

Not once have I specifically referred to their labour standards in the course of this thread. My reference concerning the right to organise would probably be better directed at those nations where that right is denied at gunpoint and where the likes of Nike choose to outsource their manufacturing operations.

The U.S. legislation I was referring to is still in draft form and it is not a ‘trade restriction’ nor does it involve western-style minimum wage levels as someone else suggested in this thread. It is based on the idea that importers should observe human rights-based labour standards in sourcing their products and that they should not bring chronically faulty, toxic or dangerously defective goods onto the market.

For the life of me I cannot see why that should disadvantage any worthy and efficient producer anywhere in the world. As regards exchange rates I don’t blame any nation with a floating rate for going after others that are openly taking advantage of them. A true free-market theorist would require that everyone eventually float their currency so that equilibrium can occur as profits, wages and foreign reserves increase in nations with a trade surplus.

If you really believe that economic rationalists are not the rigid fundamentalists that the wizofaus and others have referred to then I would invite you to consider the output of the Chicago School, Milton Friedman, Margaret Thatcher and their relationship with General Pinochet. As well as Peter Costello, Senator Minchin, the H.R. Nicholls society, Australia’s “Institute of Public Affairs”, the “Centre for Independent Studies” and the numerous, American right-wing think tanks that have influenced policy over the past two decades. And if you consider that they do not fairly represent true rationalism then the rationalists would have done well to consider the company they keep.

-Mr Smith

Rhian, I would argue a lot of the reason we ended up with WorkChoices was because of this mantra that less regulation was always better. It largely originated from the HR Nicholls society, which has a number of "influential economists" under its wing.
The economists and others who have influenced the Howard Government's decisions to cut funding to education, to sell off all of Telstra, etc. etc. are arguably guilty of the same thinking (I've yet to see a rational argument why it makes sense to sell off the portion of Telstra that looks after what is a natural monopoly - i.e. the bulk of the natural telecommunications network).

Wizofaus, in the late 80s economists in the field were generally advocating the retention of a government-owned telecoms infrastructure provider with competition among service providers. Privatisation of a near-monopoly infrastructure and service provider such as Telstra was of course likely to attract higher bids - the decision was made on revenue grounds, not the kind of public interest economic grounds which "economic rationalists" argued for. Telecoms and media policy hasn't advanced much since. To quote my 2006 submission to a federal inquiry: "I suggest the following principles:

1. Media policy should be directed to the benefit of end-users and the community at large, rather to any particular vested interests.

2. Policy should not discriminate between modes of delivery in terms of content, geographical reach or other factors. All modes of delivery should be able to provide whatever content is technically feasible for that mode – no content should be reserved to a particular mode of delivery.

While these principles would appear self-evident, they are far from the basis of existing and proposed policy." I'd call that an ER approach.

Faustino, it sounds like we're largely arguing about terminology then. Clearly, lots of things have been done in the name of "economic rationalism" that weren't the least bit economic, or rational. If it hasn't been called that, it's been called "free-market reform", or "economic liberalisation" or some such name.

Another example I just came across, in NZ:

"New Zealand began the 1980s with per capita income about 90 per cent of that in Australia.

[It] took the path of radical free-market reform cutting its top marginal rate of tax to 33 per cent in 1988. The following decade saw one of the most miserable economic performances experienced anywhere in the developed world, with virtually no growth in income per person. When the Clark Labour government was elected in 1999, New Zealand's income per person was less than 75 per cent of that in Australia.

The first action of the new government was to raise the top marginal rate to 39 per cent. Despite predictions of doom, and continuous sniping from architects of failure like the NZ Business Roundtable, the economy has performed strongly ever since. There are other factors at work, but if the increase in tax rates had any adverse effect, it has been imperceptibly small."

(From http://www.uq.edu.au/economics/johnquiggin/news/2004-05-20-AFR.htm)

Mr Smith

China: there is no doubt that it is ruled by a totalitarian regime. But the point is that countries that liberalise their economies experience an increase in prosperity and a reduction in poverty. China is an example of this, there are others.

Industrial Revolution: Certainly living standards in the 18C and 19C were quite bad compared to today, but they were an improvement on the pre-industrial era. And over time, conditions got better, as you have noted. But what would have happened if today's standards were applied to the factories then? They would have closed down, people would have lost their jobs, many would have returned to poor houses and prisons, and economic progress would have been retarded.

You say that "rural poverty in 18th century Britain was driven by an acceleration of Enclosure Acts that dispossessed people of their land." And what if capitalists had not offered these people jobs?

Standards: As I have already stated, the US has no right to impose 'basic universal standards' or any other standards on developing countries. You are wrong to suggest everyone benefits from these. If applied they would hurt Chinese unskilled workers and American consumers. I suspect US companies are sponsoring these proposals to restrict foreign competition.