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Australian economic performance is a testament to the power of protectionism. Nobody likes to admit it but Australia's relative isolation in the world as a deve

Australian economic performance is a testament to the power of protectionism. Nobody likes to admit it but Australia's relative isolation in the world as a developed nation it the best trade tariff the world has ever seen and helped them develop local industries that are more labour intensive and thus provide better income distribution than most other nations. The relatively recent revolution in container shipping is eroding the effects of the high cost of importing goods into their market, but that has dovetailed perfectly with China's hunger for their natural resources. It is exactly the kind of perfect storm that every politician loves to crow about their policies being responsible for when the reality is that geography and external forces have more to do with it than anything else.

jacques_chester 15y ago
I'm not sure if Australian consumers of the past 2 centuries would share your sanguine view of protectionism.
nl 15y ago
helped them develop local industries that are more labour intensive and thus provide better income distribution than most other nations That's just not true, and our high unemployment rates (until recently) show it. Australia has always been an importer of manufactured goods. Our car industry was supported by old fashioned import tariffs. Prior to the mineral boom, Australia's wealth came from mostly agricultural exports (eg wheat and wool)
- JamisonM 15y ago
  Well, the most comparable economy in the world to Australia's in structure is Canada in terms of the mix of activities. Australia, for as long as OECD has been collecting data, has always had a lower unemployment rate than Canada (and Canada has liberalized trade at roughly the same pace, starting in the 80's). You can look that up here: http://stats.oecd.org/index.aspx?queryid=251 http://stats.oecd.org/index.aspx?queryid=251 I would define a high unemployment rate as one higher than a comparable peer nation, so I do not think Australia can be considered to have had high unemployment by that measure.
femto 15y ago
Nothing could be further from the truth. Australia has been at the forefront of trade liberalisation [1,2], unilaterally cutting tariffs for about 20 years. If anything, our current growth is a product of this liberalisation. Income inequity is increasing, but the relative equality of income results from a unionised history (less so now), with the concept of "a fair go for all". [1] http://www.wto.org/english/tratop_e/tpr_e/tp279_e.htm http://www.wto.org/english/tratop_e/tpr_e/tp279_e.htm [2] http://www.theaustralian.com.au/national-affairs/push-on-doha-gets-nod-from-leaders/story-fnapmixa-1226180923588 http://www.theaustralian.com.au/national-affairs/push-on-doh...
- JamisonM 15y ago
  I suppose I should better state my premise: Trade liberalization is very much in Australia's interests because its geographic isolation has provided a degree of natural protection for domestic industries (not so now since shipping has improved) while liberalization also provides the market access that Australia needs anyway since it is a large exporter of raw materials. The growth is absolutely a product of liberalization, accidents of geography and timing have made it so.
brc 15y ago
Completely untrue. Australia economic growth only got going after trade liberalisation was properly implemented and removal of tariffs. Further, the improvements in living standards are directly attributable to lower cost imported goods. There are still pockets of protectionism around, but in world terms these are quite small. There is nothing like the agricultural protectionism of the US and EU, for example. I do agree with you that luck has a lot more to do with it than good management.
- JamisonM 15y ago
  I was not clear in my original posting, what I really meant to say was the trade liberalization was very good to Australia because it needs market access and geography provides a natural barrier to local market access. Removing Australian tariffs on goods was beneficial to other countries but the reciprocation was worth a lot more to the Australian economy because it produces so much that it absolutely must export (or leave in the ground/waste). For example if you are Japan trading access to the car market in Australia for unencumbered steel imports Australia wins, Japan needs a lot more steel for their manufacturing base than Australian consumers will ever need Japanese cars. (Yes, that example is a bit contrived, but I think it demonstrates my point.)

jacques_chester 15y ago

I'm not sure if Australian consumers of the past 2 centuries would share your sanguine view of protectionism.

nl 15y ago

helped them develop local industries that are more labour intensive and thus provide better income distribution than most other nations That's just not true, and our high unemployment rates (until recently) show it. Australia has always been an importer of manufactured goods. Our car industry was supported by old fashioned import tariffs. Prior to the mineral boom, Australia's wealth came from mostly agricultural exports (eg wheat and wool)

JamisonM 15y ago
Well, the most comparable economy in the world to Australia's in structure is Canada in terms of the mix of activities. Australia, for as long as OECD has been collecting data, has always had a lower unemployment rate than Canada (and Canada has liberalized trade at roughly the same pace, starting in the 80's). You can look that up here: http://stats.oecd.org/index.aspx?queryid=251 http://stats.oecd.org/index.aspx?queryid=251 I would define a high unemployment rate as one higher than a comparable peer nation, so I do not think Australia can be considered to have had high unemployment by that measure.

femto 15y ago

Nothing could be further from the truth. Australia has been at the forefront of trade liberalisation [1,2], unilaterally cutting tariffs for about 20 years. If anything, our current growth is a product of this liberalisation. Income inequity is increasing, but the relative equality of income results from a unionised history (less so now), with the concept of "a fair go for all". [1] http://www.wto.org/english/tratop_e/tpr_e/tp279_e.htm http://www.wto.org/english/tratop_e/tpr_e/tp279_e.htm [2] http://www.theaustralian.com.au/national-affairs/push-on-doha-gets-nod-from-leaders/story-fnapmixa-1226180923588 http://www.theaustralian.com.au/national-affairs/push-on-doh...

JamisonM 15y ago
I suppose I should better state my premise: Trade liberalization is very much in Australia's interests because its geographic isolation has provided a degree of natural protection for domestic industries (not so now since shipping has improved) while liberalization also provides the market access that Australia needs anyway since it is a large exporter of raw materials. The growth is absolutely a product of liberalization, accidents of geography and timing have made it so.

brc 15y ago

Completely untrue. Australia economic growth only got going after trade liberalisation was properly implemented and removal of tariffs. Further, the improvements in living standards are directly attributable to lower cost imported goods. There are still pockets of protectionism around, but in world terms these are quite small. There is nothing like the agricultural protectionism of the US and EU, for example. I do agree with you that luck has a lot more to do with it than good management.

JamisonM 15y ago
I was not clear in my original posting, what I really meant to say was the trade liberalization was very good to Australia because it needs market access and geography provides a natural barrier to local market access. Removing Australian tariffs on goods was beneficial to other countries but the reciprocation was worth a lot more to the Australian economy because it produces so much that it absolutely must export (or leave in the ground/waste). For example if you are Japan trading access to the car market in Australia for unencumbered steel imports Australia wins, Japan needs a lot more steel for their manufacturing base than Australian consumers will ever need Japanese cars. (Yes, that example is a bit contrived, but I think it demonstrates my point.)