January 11th 2003

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Articles from this issue:

COVER STORY: Paid maternity leave: who benefits?

CANBERRA OBSERVED: 2002: when the chickens came home to roost

EVENTS: Claudio Betti to visit Australia

BIOETHICS: Embryo battle was worth the fight

STRAWS IN THE WIND: To America with love, from Osama bin Laden

LETTERS: Real world (letter)

LETTERS: Comparisons (letter)

PROFILE: Dr George Pell: Australia's leading churchman

SOUTH ASIA: India's ethnic conflicts

COMMENT: In the wake of the Cultural Revolution

BOOKS: The Life of Matthew Flinders, by Miriam Estensen

Books promotion page

Real world (letter)

by Murray Smith

News Weekly, January 11, 2003

I found Mr Colebatch's letter in the last edition 'The panacea of free trade' needing at least some response from the sugar industry, especially in relation to some errors of fact.

Firstly there is nothing keeping Brazilian imports out of Australia at the moment other than the export parity price that our local product is sold for on the domestic market.

In other words domestic consumers are enjoying the world's cheapest sugar.

Even with a 3 cent levy it will still be amongst the cheapest in the world and would probably be cheaper than what competitors could land their product in Australia and then store and distribute to consumers.

At this point in time it is only the Australian sugar industry that is playing by the rules of 'free trade'. The result has been the redistribution of wealth away from growers.

Most developed nations today espouse Friedman-like theories of free trade and undistorted markets, but in the shadows implement protectionist policies for base political gain.

As Colin Teese points out, free markets are nothing without 'perfect competition', and I can assure Mr Colebatch's that the international sugar market in no way aligns with any preconceived notion of perfect competition.

Reflection on the influence of past economic theories is great, but let's just remember that it is the surrounding environment (e.g. world wars, famine, government intervention on grand scales, and now possibly the war on terror) that has influenced the relevance of economic theories as much as the subsequent implementation of the theories themselves. Besides which, it is always easier to appear smarter after the fact.

There is clearly a need to be able to be flexible in implementing economic policy that whilst being cognisant of the world environment delivers equity whilst maintaining the ideals of Australian society that we consider are non-negotiable.

It is time we moved on from referencing 'free trade' and instead developed the concept of 'fair trade'.

Perhaps Keynes summed it up best in the 1930s when he wrote:

"The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Practical men, who believe themselves to be quite exempt from intellectual influences, are usually the slaves of some defunct economists. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.

But let's leave the last word for George Bernard Shaw when he observed,

"If all the economists were laid end to end, they would not reach a conclusion."

Murray Smith,
Manager, Tableland District,
Mareeba, Qld

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