Antiseptic,

"I sell entirely locally, but I rely on parts, machinery, fuel, electricity etc, etc all sourced from elsewhere......Protectionism would not assist my business in any way: all it could do is drive my costs of production up...."

The locality tax system that I have suggested is only applied to purchases horizontally across the society. You could therefore purchase parts, machinery, fuel etc from larger producers (controlled by governments) from within a region within which you live. True that it could still drive your costs up to some extent, but it would also encourage more local people to buy your stuff.

Col,

"Thus the “equilibrium” between “local supply” and “remote” is balanced at the point where people can no longer afford to buy it."

The big are more powerful than the small, if we allow the market to decide, the big will dominate! Unfortunately then, your equilibrium will keep tipping further and further in favour of the wealthy.

Peter,

I am not against counting. I am talking about a judgement call believing that 'we' will be better off if we actively protect our communities against potentially negative external influences. Under the system that I suggest, we will lose some efficiencies, but we will also gain some. Through pitting each against all others, free trade causes the loss of efficiencies attainable through coperation and sharing within an interactive community.

By 'we', I mean our whole global human society, as in 'it will be in our favour if we protect the local economies of our communities.'

I look at extreme freedom as negative in the same way that I look at extreme social cohesion as negative, both are positive when we mix them together.

I'd like to note here that none of you has questioned the basic critique of comparative advantage that I have made:
-It doesn't count the costs associated with adapting productive assets to producing what we're relatively best at.
-the theory doesn't work if capital is allowed to cross borders.

Do any of you have any problems with these two points?

*-It doesn't count the costs associated with adapting productive assets to producing what we're relatively best at.*

Gilbert, it seems to me that you are ignoring the fact that
most businesses are constantly changing. "Adapt or die" are
part of doing business.

Rupert Murdoch spent his life building a chain of newspapers
around the world. Now they are nearly worthless, for most
are losing money. Why? A few college kids in the US
became creative. A couple of them created a funny sounding
company called Google. Another teenage geek had an idea
called Facebook. Along comes another geek with an idea called
an I-pad. Rupert, powerfull as people think he is, has been
done over by a few innovative college kids. His business
adapts, or it dies.

Who benefits from all this, no matter what it costs?

Why, consumers of course. All of us.

GilbertHolmes:"You could therefore purchase parts, machinery, fuel etc from larger producers (controlled by governments) from within a region within which you live."

Except that there is no local manufacturer of the things I need. I am in Brisbane. My sawmill parts come from Victoria. My truck parts come from JApan or China, my chainsaw parts come from Japan, my forklift parts come from China, my panelsaw parts come from Italy, my docking saw parts come from the US, all my other tools and equipment were made in some part of Asia. My fuel comes from who-knows-where, my electricity is produced in the Callide Valley, my logs come from anywhere within a couple of hundred km.

As for "contolled by Governments", please explain how this is going to allow me to keep my fixed costs low enough that I can compete with the much lower production costs of the large players? Further, how is it going to allow those large players to achieve the return on investment that they require to raise funds to improve their processes? Is the Government to also provide low-cost capital? If so, what's in it for me, as a taxpayer?

I could go on...

If this is your justification, GilbertHolmes, no wonder your argument is being drowned in a sea of fact and logic.

>>The big are more powerful than the small, if we allow the market to decide, the big will dominate! Unfortunately then, your equilibrium will keep tipping further and further in favour of the wealthy.<<

There is so, so much wrong with that sentence, it is difficult to know where to begin.

First of all, there is a reason the "big are more powerful than the small". They have become big by providing the customer with value. Ultimately, they will become less powerful, as "the small" out-innovate them. Even Microsoft cannot maintain its anti-customer monolpolistic pricing tactics forever. And history is littered with the bones of once-powerful companies whose time has passed.

There is one rather telling exception to the above.

And that is where the "big" are provided with protectionist government policies. There is no opportunity in that environment for innovation to displace them, as potential competitors are disadvantaged from the get-go.

The market must decide. There is no other reliable mechanism by which supply is able, economically and efficiently, to meet demand. Tinkering with tariffs and disincentives on any basis, let alone the arbitrary one of "distance", can only serve to distort the picture.

Eventually, you will find suppliers holding the consumer to ransom through predatory pricing - logically, this is the only outcome.

If I produce shoes in my factory in Altona, and I'm protected through a range of geographic tariffs from competition (from Canning Vale, say, let alone from overseas) how do you suspect I will price my product?

This is also a problem:

>>I'd like to note here that none of you has questioned the basic critique of comparative advantage that I have made:
-It doesn't count the costs associated with adapting productive assets to producing what we're relatively best at.
-the theory doesn't work if capital is allowed to cross borders.<<

When you provide arguments to support your position, it will be possible to discuss them.

As it stands, they are just unsubstantiated observations.

GH
Even if all you're saying were granted, there is no reason to think that government would be in any better position to fix the problem or produce a better outcome, and lots of reasons to think that
a) it couldn't, and
b) it ould only make matters worse.

I'm not saying everything has to be countable. I'm saying that, given that the most important values cannot be subjected to calculation, that problem inheres equally in any alternative system.

Even though economic calculation cannot take into account externalities precisely because they are not subject to economic calculation, free trade still has net benefits over protectionism with respect to such externalities.

For example pollution. The alternative to operating at a profit is operating at a loss. That is why people are not currently doing what you have in mind - because if they do, they'll be operating at a loss. Imperfect as operating at a profit is, operating at a loss uses more natural resources and is worse for the environment, not better, to achieve the same result.

For example social costs. Yes wagon-wheel makers become unemployed. Yes the farmer has to replace his old timber stockyards.

But this is a result of the far greater number of consumers preferring innovations which make all of society better off than the relatively small number of producers.

The division of labour is the very basis and reason for human society. Without it, we would have evolved to be a solitary species, like the snow leopard. Anything that cuts against it, makes everyone worse off in economic, environmental and moral terms.

The argument against interventionism is precisely that it makes matters worse *when viewed from the interventionists own standpoint.* But when they see the entirely predictable results of their interventions, eg unemployment, famine, domination by big corporations, they externalise the blame. Thus the protectionist approach is not balanced at all, it is biased against the only viable option at every turn.

Col,

Your comment were well expressed. it proves beyond all doubt that you are incapable of objectively looking at anything without reference it back to your learned prejudices.

For your clarification, it is your prejudice that precludes you from seeing that the indigenous societies were nations by definition. Within this nations were clans and tribes, not a lot different to Australia today. All that has changed is the names, their goals and functionally were the same (save our obsession with Capitalism). Cearly neither Capitalism (as practiced) nor Socialism have all the answers and as such the full (correct answer) must lie elsewhere i.e. a third option.

Much of your argument are based on the above learned prejudice driven myopia and is devoted to proving your success in material biases.

In simple English, I agree with Gilbert that FTI is misplaced because it doesn't account for the reality i.e. It is a more a cause of friction than benefit to the third world, therefore misplaced.

The rest of what I said was merely clarification. How you extrapolated that into I want us all to going back to 'archaic tribalism' grass huts etc is a function of your prejudices not what I was saying.

My views DO NOT exclude a BETTER FTI.

Instead of defending the (in)defensible broken system how about looking at the areas that clearly need fixing.