Gilbert,
I have to agree with your perception that neither capitalism as it's practiced today nor "free trade" (sic) works well.

I would argue that there are so many distortions (externalities) the outcome tend to be more Malthusian and the object is money/power rather than people.

It has been a long held view that production as it is currently measured doesn't accurately reflect the real (true) cost of production.

I would further argue that just because it can be can be delivered cheaply that it is necessarily better particularly for the people at either end of the supply chain.

It is an unsupported myth that only private enterprise can deliver efficiently or appropriately.

What is missing is both a sense of responsibility and the concept of enough.
I would agree that people should be compensated for risk. But I find it hard to take when those who claim high risk and get the return when in adverse times hold out their hands to the public for compensation. In other word's get risk payback when times are good but won't accept the consequences of their risk goes pear shaped.

I also find it unacceptable when a large corporation via its powerful government forces 'free trade'(sic)in a third demanding vertical marketing access that excludes local competitors under the guise of pay back for development. it seems to me that a product either stands on its own two feet in the market without the aid of externalities or fails.

In an ideal world your locality tax makes sense from a human benefit perspective but the capitalist would then cry foul stating economies of scale etc.

your plan in theory would certainly go a way to give a quantum to the real cost of production

Really, examinator?

>>It has been a long held view that production as it is currently measured doesn't accurately reflect the real (true) cost of production.<<

Long held by whom? On what grounds? Whose definition of "true"?

>>your [locality tax] plan in theory would certainly go a way to give a quantum to the real cost of production<<

In what way does the market not already factor in transport costs?

This is nothing more than fluffy thinking. Candy floss for the brain.

Hi Mr Hume,

Free trade tends to benefit those who are already powerful. Such as England in David Ricardo's time.

You say, "Any policy action directed against free trade is directed radically against the fundamental principle of human social co-operation."

The theory of comparative advantage will only work properly where every party is organized to produce what they are relatively best at. This is not cooperation but slavery. What's more, our economy promotes competition as more important than cooperation. In a competitive society, free trade allows the powerful to use their leverage against unprotected, weaker parties.

You say, "GilbertHolmes does not refute the argument for free trade."

That's true. Indeed the mathematical model behind comparative advantage is simple logic. All it shows us, however, is that it is possible for all parties to benefit from trade, not that we necessarily will. The main problem with it is that we are all just living our organic lives, doing what we know, and then comparative advantage tells us that we should actually be doing what we are relatively best at. I think in practice that this generally means major social disruption, unemployment, increases suicide rates etc. None of these 'costs' are measured in the theory.

By balance, I mean that our communities/economies should be open to trade, but also protected against destructive external influences.

Hi Pelican,

"One of the problems inherent in free trade is the idea that we can exploit another country's medieval workplace conditions to the benefit of the richer in the West. So we don't compete on quality but purely on the cost of labour."

Couldn't agree with you more. Free trade is a bad idea anyway, but when different places have different wages and workplace conditions, this does not even represent genuine efficiency but exploitation.

Yes to a single global currency value I say (and minimum wage/workplace standards), but that is for another discussion.

Shadow minister,

"Taxing inputs, say of machinery, discourages local production."

Because it would discourage purchase from 'foreign' owned businesses, (and therefore would also discourage investment outside of one's own community), the locality tax would encourage a community of any scale (and/or the members of that community) to own the assets within it's boundaries.

In the same way, while it would be friendly to small,locally focussed private business, the locality tax would make it difficult to operate megacorps. Instead, major productive assets would tend to be controlled by (hopefully directly democratic) governments.

What I suggest then is that the locality tax be applied to 'horizontal' purchases within the society, in other words, from different countries, different villages etc, but not to 'vertical' purchases, from businesses being run by the governments of which the purchaser is a part. In this way, major infrastructure would be available without the payment of the tax.

"Indonesia is closer to Darwin than NSW. Do you tax products from NSW more highly than here?"

I expect that Darwin would remain as part of Australia. The less boundaries that you cross, the less tax is payable. If the system was applied globally, Indonesia would probably be a part of the same 'geo-region' as Australia and would therefore get preferential treatment as compared to nations further away.

"On top of this the myriad complexities of the tax and policing it will cost much more than it generates"

It seems to me that the tax could be simply applied to an electronic currency. I suggested to Pelican that we look toward moving to having a single global currency value. This single global currency could be electronic and taxed. Along with this electronic currency, I suggest that local cash currencies, issued at perhaps the level of the small city, be issued. Cash transactions (local) would not be taxed.

"and will have the effect of closing local production, as they will lose their external markets"

I think that you will find that free trade has a long history of closing local production, destroying communites etc.

*The main problem with it is that we are all just living our organic lives, doing what we know, and then comparative advantage tells us that we should actually be doing what we are relatively best at.*

Gilbert, there are two sides to all of this. Gilbert the consumer
and Gilbert, who like eveyone else needs to do something to earn
a living. For every $ that Gilbert earns, another consumer has
to think that they are spending their money wisely. That is just
sad reality. If you want to consume, you need to produce what others
want.

So you remind me of some odd shopkeepers I that I have dealt with,
who when I tell them what I actually want, basically imply that
they can't be bothered or similar, to consider my needs as a
consumer, I will just have to put up with what they feel like doing
at the time.

I tend to spend my money elsewhere and those shopkeepers commonly
go broke, blaming everyone but themselves, despite the fact that
they have broken the first rule of business, ie focus on the customer.

Why should customers pay you money, if you arn't doing what the
market, ie customers want?