The idea of free trade is based on David Ricardo's 'Theory of comparative advantage'. The basic idea is that: even if one party has an absolute advantage in the production of everything, both parties will be better off if they specialize and trade with one another.

Wikipedia gives some simple examples http://en.wikipedia.org/wiki/Comparative_advantage

Unfortunately, while it makes a lovely mathematical model, our lives do not actually fit well into the pattern. Pursuing comparative advantage to it's logical end would be like pursuing freedom all the way to anarchy or stable governance all the way to totalitarianism.

Unfortunately, the neo-liberal agenda continues to exert vast influence over the institutions of our global society, and the 'free trade' bandwagon rolls on. Free trade is often spoken about in the media for example with the assumption that it is a good thing.

Instead of 'free trade', what we are actually looking for is balance.

On the one hand, we want to enable trade across boundaries. This will enable us to purchase what we don't have and will help ensure that local producers are maintaining their efficiency.

On the other hand, however, we want to encourage people to buy locally produced goods and services ahead of those that are imported. This will encourage diversity, interdependence and self-reliance within local economies.

Looking for this balance, I have been working on the concept of a 'locality tax'. This tax would be increasingly applied on the purchase of all goods and services depending on how far away from the purchasers home the good/service was sourced.

I suggest that the tax be applied down to the neighbourhood scale. As an example then, if a person wished to source an item produced in another country, they would have to pay the tax first to their own neighbourhood, then again to their village, their city, their state, and their nation.

Encouraging local self-reliance down to the neighbourhood scale through a mechanism such as this is not only sensible in economic terms. It will also I suggest, be an important step in our becoming an ecologically sustainable global society.

Sounds like another tax. without question this flys in the face of the whole free trade concept. A tax of this kind would be labeled protectionism, subsidy, trade barrier and on it goes.

For mine the only reason free trade ever got the light of day is because large companies saw that they could produce their product by exploiting poorly paid workers in third world countries and then sell it to the wealthy in the west and make bigger profits. There have been some good examples of this over the years. Also the major economies needed somewhere to expand their consumerist theories and continue the economic growth that is required to sustain their problematic system of economics.

The best way to control the playing field is if we as the consumer buy local first and demand by our practices local manufacture. The reality is that we purchase by whether we like the look of something or if it is the cheapest not what is best for the country. Oh Yea we vote that way too.

Oh I can just see it now. Farmers and other efficient exporters,
lumbered with all these extra costs, to make them totally
uncompetitive globally. They might as well just go out of
business!

I think you need to rethink your theory Gilbert, for one
person's tariff protection is another persons cost.

The biggest beneficieries of free trade are consumers.
If you think that all those poor people would be better
off, paying 5 times as much for their kid's clothes,
think again. So under your scheme, our standard of
living would crash bigtime.

Why do you think that you need a subsidy to make a living?

GH,

What you proposed is wrong on so many levels that it would take several chapters to cover all the misconceptions.

Any relation of Wayne Swan?

Yabby, If you hadn't noticed, the only farmers that are making any money at the moment are the ones owned by megacorps. Encouraging people to buy locally would support small farmers to earn a living selling to local communities.

The idea would be to set the tariff at the appropriate level so that you still alow genuinely efficient industries to find export markets (and so you don't encourage genuinely inefficient industries to flourish locally). If stuff is being produced for a similar cost however, you're encouraged to buy local.

Gilbert, farmers largely produce things, where they have a comparative
advantage. Such as suitable soil and climate. Bananas are best
grown in one area, wheat in another, etc.

All that your system would do is set up a massive and complex,
costly administration system.

Most of what our farmers produce is in fact exported, especially
from places like WA. It is vital that inputs are priced
competitively, a global market place achieves that.

We hear this constant complaint that we can't produce much, because
China does it cheaper. Meantime a country like Germany remains
one of the world's largest exporters, high wages and all.