March 25th 2000


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Articles from this issue:

EDITORIAL: Telstra - is there another way forward?

COVER STORY: Aged Care: where to from here?

BOOKS: 'The High Price of Heaven', by David Marr

TAIWAN: Taiwan election presents new challenge for Beijing

ECONOMICS: World economy: the rhetoric, the reality

PAKISTAN: Feudalism: root cause of Pakistan’s malaise

BUSINESS: Innovation, technology and the forces of change

Letter: Free trade and predatory policies

AS THE WORLD TURNS

AGRICULTURE: How government kick-started land settlement

LAW: No Native Title on mining leases: Federal Court

POLITICS: SA swings away from major parties

FAMILY: Mr Howard’s "forgotten people": Australia’s families

JUSTICE: The facts behind the furore on mandatory sentencing

COMMENT: The war against drugs is not lost it was never started

CANBERRA OBSERVED: Immigration policy: whose view will prevail?

Letter: Federal control of resource development

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Letter: Free trade and predatory policies


by R.A. D'Arcy

News Weekly, March 25, 2000

Sir,

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.




























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