Letter: Free trade and predatory policiesby R.A. D'ArcyNews Weekly
, March 25, 2000
May I comment on M. Hassed's letter on free trade in News Weekly
(March 11, 2000).
Extremes in economic policy are neither practical nor useful. Pursued to its limit, unrestricted free trade simply leads to the industrial and commercial barons going flat out until monopolies and oligopolies become rampant predators.
This was exemplified in oil and rail in 19th and 20th Century America. We are seeing a similar trend in banking and communications emerging in Australia now.
Extreme application of protectionist policies, however, can also cause harm.
No sensible country pursues a policy which is largely to its detriment. If one were to apply a free trade policy based on comparative advantage rigorously to the Australian economy, only some rural and mining industries, perhaps some tourism, would survive.
Manufacturing industry would largely disappear, unemployment would increase further and prove intractable.
We would become, once more, highly dependent on overseas suppliers for all manner of goods. Our labour force would become even more unskilled, and opportunities for developing many talents would vanish.
The much-maligned Tariff Board in Australia did not aim to protect all industry which sought assistance.
What it did was to apply criteria in an attempt to help industries which had reasonable prospects of success by giving aid. This was to overcome cost disadvantages arising from the general state of the economy, compared with that of overseas suppliers.
Pretty clearly, some industries could only succeed with massive assistance, and were refused. Others could develop - and did - with moderate assistance.
Most countries understand they need a wide area of feasible economic activity if the aspirations of their citizens are to be met and if development is to occur.
It is unreasonable to expect that a country with a small population, a vast area and high wages can survive without some policies offsetting the many cost advantages mature and developed economies enjoy, through their development and higher population contributions.R.A. D'Arcy,
Burleigh Waters, Qld
- Editor's Note: The writer worked for some 25 years at the Tariff Board, later the Industries Assistance Commission, in both research and projects.