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The Forum > Article Comments > An acid test for liberal democracies > Comments

An acid test for liberal democracies : Comments

By Chris Lewis, published 15/12/2008

How far will Western societies reform if it is at the expense of hard won working conditions or social welfare?

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The author wrote:

"The promotion of freer trade was hardly the wrong policy approach. After all, a free exchange of trade, capital and ideas are critical to a progressive world, notwithstanding justified concern today about income disparity both within and between nations as well as environmental degradation."

Free trade is the wrong approach. It allows the free movement of trade, capital and ideas as the author writes. However, it does not allow the free movement of labour. Even with all restrictions off people are not as free to move as capital. There is nothing wrong in placing penalties on companies which wish to sell their products in the developed world and produce those products with the cheap labour of the undeveloped world.
Posted by david f, Monday, 15 December 2008 12:09:57 PM
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I agree with most of this article.
Free trade between developed states has always been dubious. Free trade theory is based on the concept of comparative advantage and there are few real comparative advantages between developed economies. e.g. Forty years ago the USA had a comparative advantage in the manufacture of large commercial aircraft. It lost that advantage once the European Union came into being and Europe recovered from the lasting effects of WW2. The USA still has a comparitive advantage in its vast areas of fertile grain growing areas.
Australia has a comparative disadvantage in that its population is sparse and spread over a large area with long distances between densely populated areas. Should we not therefore protect our productive industries, and their employees, (provided the industries are following near best practices) from those disadvantages, particularly as developed countries without those disadvantages tend to use dumping prices until they win but only until then.
Service industries such as health funds and superannuation managment and financial services are parasitic in that they add to the costs of manufacturing industries competing, or trying to, against dumping or manufacture in countries with what are, virtually, slave labour working conditions.
We have already lost our shoes, clothing and white goods industries and our automotive industry is under severe stress. Do we all want to wait on tables or be financial clerks or boundary riders on the squatter's fences?
Posted by Foyle, Monday, 15 December 2008 12:33:13 PM
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"Crisis? What Crisis?" wrote the author a few months ago. How's that coming along now Chris?

Free trade has never existed in any real sense and it isn't about to get any freer any time soon.

The so-called "simplistic left" of which I get the feeling the author was once a member of and is always keen to distance himself from as far as possible is increasingly being proven correct regarding the excesses of neo-liberalism.
Posted by Fozz, Monday, 15 December 2008 9:13:36 PM
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It is interesting to hear the neo-marxists claiming that this is the end of capitalism, when the banks in socialist europe are in many cases worse off than those in the capitalist USA.

I believe the real problem is much simpler than politicians make out. The real problem is that we are living beyond our means, as evidenced by the enormous foreign debt we have accumulated, both in the US, UK, Australia and many other western countries. It is only Norway, Switzerland and a few others who have had the foresight and prudence to restrain themsleves, and they shall reap the benefit.

What we in Australia need is a considerable reduction in our standard of living, but done in a way that solves other problems. Anyone with foresight knows that the current drop in the price of oil is but a brief respite, and that any attempt to recover from the coming depression will be prevented by peak oil.

The best thing to do would be to double the cost of transport, by increasing petrol taxes up to the european level, and doubling the cost of public transport fares. The resulting income could then be used to finance public works out of current income, with no new borrowing. This way we could start to wean ourselves off the car, before the need to do so becomes vital. Our local car industry should be allowed to fail, and the skilled workers thus released used for public works.

It is only by means such as this that we can turn our external position around and start paying off our enormous debt. The longer we leave it the harder it will be.
Posted by plerdsus, Monday, 15 December 2008 9:21:59 PM
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Dear Plerdsus,

Your advice is contradictory. You make sense in advocating freeing ourselves from the motor car. However, increasing transit fares would have the opposite effect.
Posted by david f, Monday, 15 December 2008 9:31:37 PM
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Nice piece Mr Lewis. Pragmatically centrist, the kind of area which provides more food for thought than an ideological spray.

Your analysis of the challenges is spot on, though I did note a ray of hope in the end there - you mentioned that renewables could be one way that developed nations can draw a line in the sand and use that to hold on to their advantage in the global market.

This is going to be a key element, I think. When you really stop to think about it, the signs are all there. It's all drawn together in a neat little bow.

Firstly, observe exhibit A: http://www.nytimes.com/2008/08/24/magazine/24Obamanomics-t.html?pagewanted=7&_r=3

This article came out in August, and is the closest thing to a total breakdown of Obama's economic approach. (It's all a fascinating read, but I'd draw your attention to page seven and the 'Virginia' example).

Essentially, it points out how the tech boom provided the US with an opportunity to maintain their economic advantage.

Now - it's clear to me that developed nations are going to do whatever it takes to hold on to their privileged positions.
The problem is that most protectionist moves are seen for the hypocrisy that they are. With the might of China and India growing strongly, what possible way is there to put protectionist measures in place that allow developed nations to crack down on trade whilst simultaneously holding the image of the moral high ground?

Why, the environment of course. It's really quite brilliant and by the looks of things Obama's already got this potential in his sights.

It's still western hypocrisy and maintenance of our cushy lifestyles, but for the first time, it dovetails with a more sustainable approach. It only remains to be seen what form it takes.

I'm guessing trade restrictions and tariffs based on some kind of environmental ranking. It will begin of course, with carbon trading schemes before moving on to a broader set of trade regulations.
Posted by TurnRightThenLeft, Monday, 15 December 2008 9:41:05 PM
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