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Yes, tariffs can be too low : Comments
By Nicholas Gruen, published 12/8/2008Research indicates that reducing automotive tariffs to 5 per cent does more harm than good.
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Posted by Remco, Thursday, 21 August 2008 6:45:52 AM
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Tariffs were introduced to kickstart industries in the nursery phase.
It worked and is working in other developing parts of the world.
BUT what demonstrably happened is that those industries remained in that nursery phase and DEPENDENT on beggar thy neighbour taxes. They remained small from inevitable fragmentation suffering from diseconomies of scale. Uncompetitive.
Nowhere it the truth of this better shown than in Australia's car industry with ONE manufacturer per just ONE MILLION of population. (17% of twenty million of population served by three companies). Producing yesterday's cars - legacy of yesterday's thinking.
Politicians like Fraser and Howard were too gutless to create the conditions for reform. The latter even giving $50m to GM to produce a V8.
An albatross around the current government.
Nowhere to go.
A legacy and a mirror of Australia's over-governed country with 13 layers of government that too is yet to rationalise.