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Re: Australian economy

Postby Lefty » 10 Nov 2017, 10:31

Hmm - appears that most of Peru's exports are things that Australia is already either a significant exporter of or fully self-sufficient in.

Apart from minerals that we don't need because we are swimming in them, other important exports of Peru include:

Fruits and nuts (including grapes, mangoes, avocados, bananas and citrus fruits)
Animal fodder and animal pellets
Coffee (Peru is one of the world’s major coffee-producing countries)
Fish
Vegetables (including asparagus, artichokes, paprika peppers and onions)

There doesn't look to be much here that we don't already produce in spades.

Maybe they've opened the door to dirt-cheap Peruvian labour?

Interestingly.......
Notable illegal exports of Peru include cocaine and counterfeit money. Peru is the world’s largest producer of cocaine alongside Colombia (the two countries keep on overtaking each other). It is also considered one of the world’s most sophisticated producers of counterfeit money, including dollars that end up in the USA.

http://www.newperuvian.com/major-imports-exports-of-peru/
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Re: Australian economy

Postby Squire » 10 Nov 2017, 13:02

Lefty wrote:Hmm - appears that most of Peru's exports are things that Australia is already either a significant exporter of or fully self-sufficient in.

Apart from minerals that we don't need because we are swimming in them, other important exports of Peru include:

Fruits and nuts (including grapes, mangoes, avocados, bananas and citrus fruits)
Animal fodder and animal pellets
Coffee (Peru is one of the world’s major coffee-producing countries)
Fish
Vegetables (including asparagus, artichokes, paprika peppers and onions)

There doesn't look to be much here that we don't already produce in spades.

Maybe they've opened the door to dirt-cheap Peruvian labour?

Interestingly.......
Notable illegal exports of Peru include cocaine and counterfeit money. Peru is the world’s largest producer of cocaine alongside Colombia (the two countries keep on overtaking each other). It is also considered one of the world’s most sophisticated producers of counterfeit money, including dollars that end up in the USA.

http://www.newperuvian.com/major-imports-exports-of-peru/


You are implying that Australian trade negotiators are incompetent and that you and your mates from your local pub could do a better job.
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Re: Australian economy

Postby Lefty » 10 Nov 2017, 14:39

You are implying that Australian trade negotiators are incompetent and that you and your mates from your local pub could do a better job.


You only just realised this now?


What I am actually saying is that given our penchant for rushing to blindly sign agreements that keep turning out to be contrary to Australia's interests, one is justified in at least suspecting that this will yet again be the case. Until I see evidence to the contrary.
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Re: Australian economy

Postby Squire » 10 Nov 2017, 18:27

Lefty wrote:
You are implying that Australian trade negotiators are incompetent and that you and your mates from your local pub could do a better job.


You only just realised this now?


What I am actually saying is that given our penchant for rushing to blindly sign agreements that keep turning out to be contrary to Australia's interests, one is justified in at least suspecting that this will yet again be the case. Until I see evidence to the contrary.


The answer to that is that you and your mates from your local pub should enter the political arena, get elected, and act out your fantasies.

Whining, blithering, and blathering never solved issues.
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Re: Australian economy

Postby Lefty » 10 Nov 2017, 18:35

Squire wrote:
Lefty wrote:
You are implying that Australian trade negotiators are incompetent and that you and your mates from your local pub could do a better job.


You only just realised this now?


What I am actually saying is that given our penchant for rushing to blindly sign agreements that keep turning out to be contrary to Australia's interests, one is justified in at least suspecting that this will yet again be the case. Until I see evidence to the contrary.


The answer to that is that you and your mates from your local pub should enter the political arena, get elected, and act out your fantasies.

Whining, blithering, and blathering never solved issues.


Complaining only occurs once one understands that an issue actually exists in the first place. Call me when you reach this stage.
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Re: Australian economy

Postby Squire » 10 Nov 2017, 18:53

Lefty wrote:
Squire wrote:
Lefty wrote:
You are implying that Australian trade negotiators are incompetent and that you and your mates from your local pub could do a better job.


You only just realised this now?


What I am actually saying is that given our penchant for rushing to blindly sign agreements that keep turning out to be contrary to Australia's interests, one is justified in at least suspecting that this will yet again be the case. Until I see evidence to the contrary.


The answer to that is that you and your mates from your local pub should enter the political arena, get elected, and act out your fantasies.

Whining, blithering, and blathering never solved issues.


Complaining only occurs once one understands that an issue actually exists in the first place. Call me when you reach this stage.


No darling! You call me when you get on the political stage.
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Re: Australian economy

Postby Lefty » 11 Nov 2017, 06:16

This is a political stage for discussion of political topics.

What's your opinion of the newly-signed Australia-Peru FTA?
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Re: Australian economy

Postby Squire » 11 Nov 2017, 17:41

Lefty wrote:This is a political stage for discussion of political topics.

What's your opinion of the newly-signed Australia-Peru FTA?


I support all FTAs because they are in Australia long-term economic interest.

Australia's economy accelerated after Tariffs were reduced. Australia's problem is that Australian industrialists do not have an export mind-set and therefore will never become internationally competitive by economies of scale despite the advantage of having cheap international transport by backloading on ships which would otherwise leave empty to return to their port of origin.

Tariffs have never benefitted the public in general and their effect is highest on the poor. Unfortunately, Australians who suffer from intellectual poverty believe tariffs are a magic tool to cure all economic ills.

Please don't thank me.

https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/rp/rp9900/2000RP07

This general tariff reduction program was extended in 1991 as the key plank in a new initiative entitled Building a Competitive Australia. This announced the phase down of general tariff rates over four years from 1992 to 1996 from 15 and 10 per cent to a single rate of five per cent. In addition, tariffs on PMV would be reduced to 15 per cent by the year 2000 and for TCF, quotas would be terminated in 1993 and tariffs phased down to a maximum of 25 per cent by the year 2000. These tariff cuts were to be accompanied by measures to enhance labour market and training programs and to exempt inputs to goods production from wholesale sales tax.

The above announcements in 1991 were accompanied by some of the strongest statements made by Australian politicians in favour of trade liberalisation. Interestingly they were made at a time of economic recession and high unemployment. Prime Minister Hawke stated:

Mr Speaker, the most powerful spur to greater competitiveness is further tariff reduction.

Tariffs have been one of the abiding features of the Australian economy since Federation. Tariffs protected Australian industry by making foreign goods more expensive here; and the supposed virtues of this protection became deeply embedded in the psyche of the nation.

But what in fact was the result?

Inefficient industries that could not compete overseas; and

Higher prices for consumers and higher costs for our efficient primary producers. Worse still, tariffs are a regressive burden-the poorest Australians are hurt more than the richest.(16)

Treasurer Keating was equally damning of the tariff:

The package of measures announced today ends forever Australia's sorry association with the tariff as a device for industrial development.

By turning its back on tariffs, Australia will be further propelled in its quest for international trade and efficiency, a search begun with the opening up of the economy in 1983 when we floated the dollar and abolished exchange controls.

As in all nations before it, the pursuit of trade and competition has instilled in Australia a thirst for greater efficiency at home and a larger dominion abroad.(17)

The recession continued through 1992 and Prime Minister Keating introduced a range of measures to facilitate business growth and generate employment. These were outlined in his One Nation statement on 26 February 1992 and the Investing in the Nation statement on 9 February 1993. Measures announced in these packages included accelerated depreciation for plant and equipment, reduction in the company tax rate, measures to facilitate major projects and a number of incentives to encourage exports and innovation, as well as a range of initiatives to assist training and job creation. These positive measures no doubt helped to detract attention from the critics of trade liberalisation and the across-the-board progam to reduce tariffs announced in 1991 continued to operate as scheduled.

By the end of the Keating Government in 1996, most tariffs had been reduced to five per cent and the scheduled reductions in tariffs for PMV and for TCF up to the year 2000 are continuing as planned. The Howard Government's commitments concerning tariff assistance for these two industries beyond 2000 and also Australia's long term commitment to free trade under APEC are discussed in Industry Policy in Australia, September 1999.(18)
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Re: Australian economy

Postby Lefty » 13 Nov 2017, 07:10

I support all FTAs because they are in Australia long-term economic interest.


Even when they have been clearly demonstrated to not be in Australia's interest? If something is in Australia's interest then I will support it but it's pretty silly to make blanket statements - that our elite policy makers share your black and white view of trade and it's effects is part of the reason we are in trouble. In particular, signing agreements where there is little or no reciprocation is NOT in Australia's interests and it's difficult to fathom why someone would insist that it is.

Australia's economy accelerated after Tariffs were reduced.


Australia's longest and strongest period of economic growth occurred when tariffs were solidly in place, during the Keynesian era. I'm not arguing that they were the determining factor in the strong growth, just noting that long periods of strong growth have occurred with tariff regimes in place.

It is overly simplistic to claim a direct causal link between strong growth and tariff reduction.

The time frame you are giving here exactly matches the normal recovery from the last severe recession Australia experienced and the subsequent rise of private sector credit growth as a prime driver of the economy. It would be difficult to measure the exact effect of tariff reductions over this period since the economy would have accelerated anyway as part of recovery from a downturn and then being ultimately supercharged by the process of the private sector indebting itself to the eyeballs. Without this process, reducing tariffs would have made little difference to the economy.

Diversion as an example: did you know it's a myth that wattle flowers cause hay fever? Everything thinks they do because about the time everyone starts sneezing, the landscape comes alive with small trees covered in brilliant yellow blooms. They're so obvious to all that they must be the cause, right? Wrong. Wattle pollen is large and heavy and requires insects to pollinate, it's far too big to drift on the wind. The real cause is the billions of tiny, dull and completely inconspicuous grass flowers, whose tiny pollen grains drift on the wind in countless numbers that occur at the same time as the wattle.

One gets the blame because it is obvious to all while the real culprit is so inconspicuous that hardly anyone notices. Long-winded way of saying that correlation does not automatically equal causation.

Tariffs have never benefitted the public in general and their effect is highest on the poor.


The poor are typically poor because they are without employment. Signing one-sided FTA's does little for employment. Has it benefitted thousands of Australian auto and related workers? Are they better off because we signed agreements that gave foreingers unfettered access while ours was hampered by the same agreements? Will the cost of cars to the general public really fall dramatically now?
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Re: Australian economy

Postby HBS Guy » 13 Nov 2017, 07:16

I am asking for our tariffs to match those of our trading partners. The FTAs are a joke because they do not benefit Australia. Who has the US–Australia FTA mainly benefitted? Clue, begins with ‘U’
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Re: Australian economy

Postby Lefty » 13 Nov 2017, 11:00

HBS Guy wrote:I am asking for our tariffs to match those of our trading partners. The FTAs are a joke because they do not benefit Australia. Who has the US–Australia FTA mainly benefitted? Clue, begins with ‘U’


You wouldn't think it would be too big of an ask would you? To require that an agreement create equal footing rather than simply assume that foreign competition being given almost unrestricted access to our markets will always benefit us even when they do not reciprocate. To sign such agreements is madness! For sure, the "benefits" of the original US-AUS FTA have flowed very largely one way - and it ain't our way!

Trade is good for us when it is good for us and not good for us when it is not - a ridiculously simple fact. But this fact is lost on those who regard trade in the same manner as a religion, who hold an unshakable belief that all trade is automatically good, regardless of the outcome. In these people's minds, all bad outcomes can be ignored as though the reality of them did not exist.

Trade is meant to serve a purpose - mutual benefit. If it does not serve this purpose then it is pointless for those on the losing side of the equation.
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Re: Australian economy

Postby Lefty » 13 Nov 2017, 11:30

Why record low interest rates can't last

This is an interesting one. I'm skeptical that they can be raised by any great amount without the economy ending up derailed - this is the reason why.

The long period of low interest rates in a deregulated credit environment has helped household debt swell to levels without precedent - which in turn requires continued low interest rates for the cycle to continue because the bulk of the debt is long term (mortgage debt) and will take decades to work it's way through the system.

Small and well-spaced interest rate rises have done little to derail the US recovery, he says


Australia and the US are not comparable in this regard. Firstly, the US household sector deleveraged to a reasonable extent in the wake of the GFC while Australia's household debt continued to balloon. So a good chunk of the debt was reduced by the time US interest rates started rising - from a policy rate of just above 0% to the current 1% - still a little lower than ours.

Second, Australia's household debt is based on a system that is fairly unique - the variable rate mortgage. When policy interest rates fall, the cost of variable rate mortgages (roughly 90% of the mortgage stock) typically falls to at least some extent. This - I believe - made Australian monetary policy one of the most effective in the world when the GFC hit. Other central banks may have slashed policy rates but it was only new debt that became cheaper, with existing loan rates usually being fixed and no one in their right mind wanting to borrow money no matter how cheap it was made. But in Australia, exisiting debt becomes cheaper as well.

But this can be a two-edged sword. It means existing debt also becomes more expensive when rates rise. There can be an option to lock for a certain period but by the time most people make that decision they - as consumers - are already worse off.

In short, I feel the RBA has limited scope to raise policy rates without dampening and ultimately stalling the economy but if they try I guess we'll find out if that's right or wrong.
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Re: Australian economy

Postby Lefty » 13 Nov 2017, 12:15

Hmm - just realised that second links takes you retail sales. Go down the list beside the chart and click on household finances.
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Re: Australian economy

Postby Squire » 13 Nov 2017, 13:50

Australia could become the leader of a ragtag bunch of third world countries by applying an across the board 20% tariff.

https://www.investopedia.com/ask/answers/040115/which-countries-have-highest-tariffs.asp

Highest tariffs
Country Weighted mean applied tariff
Bahamas 18.66%
Benin 17.22%
Bermuda 15.61%
Gabon 14.54%
Laos 14.19%
Chad 13.92%
Central African Republic 13.88%
Dominica 13.72%
St. Kitts and Nevis 12.28%
Ethiopia 12.14%
Source: World Bank, 2015 data


Conversely, Australia could join the league of high GDP per capita, low tariff, nations with Tariffs around %0.

[quote]Lowest tariffs
Country Weighted mean applied tariff
Singapore 0.00%
Macao (China) 0.00%
Hong Kong (China) 0.00%
Switzerland 0.00%
Georgia 0.30%
Botswana 0.54%
Mauritius 0.63%
Chile 0.64%
Iceland 0.77%
Namibia 0.87%
Source: World Bank, 2015 data/quote]

UK's case exemplifies the effect of tariffs as a percentage of government revenue which rose from 10% in 1920 to 25% currently which reflected the decline of UK manufacturing and UK's economic wellbeing in comparison to other countries.

ImageImage

Lefty, please explain how tariffs have helped British industry and British economics?
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Re: Australian economy

Postby Lefty » 14 Nov 2017, 06:36

I have no formal training in macro-economics. However, I took a strong interest in the subject about 10 years ago and maintained that interest for years, corresponding daily with economists, market researchers and those who worked in the high levels of finance. So while I'm far from being an expert, I think I have at least a rough, basic idea of what makes things tick.

I get the sense that you are simply grasping at anything you think supports your argument and posting things you don't understand because they look good to you. Without contextual information many of the stats you have posted are likely meaningless on their own. You posted a list of dismal places with higher tariffs and then posted a list of places with few tariffs - do you understand that some of those places are equally dismal?

You're using places like Namibia and Botswana as poster boys - do these names not mean anything to you? Would you go there for a holiday? Chile is a poor country. Georgia is a strife-ridden former Soviet republic. Hong Kong is not a country but a city state.

Such comparisons are meaningless without context.

When did the UK "decline in comparison to other countries" during that time period? What point are you trying to prove with those charts? That a decline in the British Pound versus the US Dollar shows that they were worse off compared to everyone else? Do you understand that large global events over such time periods can have effects - such as the abandonment of the Bretton Woods system which had pegged the major currencies - including the British Pound - to the US dollar at a fixed rate and in turn to physical gold? You understand that manufacturing-led economies often like to have a lower-valued currency because this tends to favour exports?

You're just bundling up a bunch of places, some of which are poverty-stricken with high tariffs, some of which are poverty stricken with no tariffs, some of which have no meaningful industrial base but are financial centres instead, some of which have economies based on international organised crime, some of which protect their industries with non-tariff means....it doesn't really mean anything.

Again - trade is good when it benefits both parties overall and not good when it doesn't. You cannot apply a black and white blanket rule and expect everyone to benefit.
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Re: Australian economy

Postby Squire » 14 Nov 2017, 13:03

Lefty, it's very evident you have no qualifications in economics, whereas I have a degree in engineering and a Bachelor of Commerce degree majoring in economics. I have worked in engineering because it was more lucrative than relatively low-paid and few positions in economics.

I recommend you read the full article below on the Brigden committee to understand how the effects of tariffs are determined.

Whether or not tariffs are an appropriate means of stimulating national manufacturing depends on the state of economic development of the nation, and the economic circumstances of the time. Furthermore it is arguable that a low and falling exchange rate is a better stimulant than tariffs, which also have undesirable effects.

You should read the full article on the Brigden Committee report of 1927 which recommended tariffs on manufactured goods at that time when Australia's exports were wheat, wool, gold, and other primary products. The conclusions at that time were that free trade would force labor out of manufacturing into the primary industry and the increase in the supply of primary industry goods for export would force down prices.

In fact, I did an assignment on that subject and received a 95% mark. I analyzed the committee's decision and demonstrated that it was correct, rational and appropriate in its determination of the prospective effects of tariff reductions given the national and international economic circumstances of that time. From the 1920s the world was moving toward free trade and Australia was being pressed by UK to accept free trade. UK was Australia's major source of manufactured goods in the 1920s and 1930s and for a long time after until the 1970s.

https://www.une.edu.au/__data/assets/pdf_file/0009/67356/econwp94-17.pdf

Here is an excerpt from the article:

... II Brigden’s Case for Protection
The nature of Australia’s export and import trade gave rise to the importance of the
question of tariff protection as an economic policy. Australia’s exports mainly
consisted of raw products of pastoral, agricultural and mining industries. On the other
hand, her imports were primarily manufactured goods. Consequently, the debate was
concerned with the protection to manufacturing industry.
As a preview, it is worth summarising some of the protectionists arguments in the
1920s. In order to achieve as large a national income under free trade as under
protection, it was necessary to expand production elsewhere to compensate for the
loss of protected manufacturing output. This would necessarily mean the expansion of
outputs in export industries. They were the primary goods producing industries which
were suffered from the cost of protection. These industries were supposed to have
been experiencing diminishing returns. Any further attempt to expand their output
would have resulted in increasing cost. Furthermore, Australia was producing a
substantial proportion of the world supply of primary goods such as wool and wheat.
Any further increase in the Australian supply of these commodities would have
undoubtedly depressed the world prices of those commodities. Protectionists thus
argued that the free trade policy would shift the terms of trade to the disadvantage of
Australia. Thus the expansion of the manufacturing industry under protection was
seen as a viable option which would avoid this unfavourable outcome (Anderson,
1938).
The other side of the argument was that tariff had the effect of shifting distribution of
income in favour of labour, supporting a larger population. Under free trade, the
concentration would be on the production of primary goods which would produce
national income primarily absorbed in land rent. The extension of production into
1930s Australia. The results provide a more formal assessment of the impact of tariffs
during that period and throw some light on the debate on the efficacy of protection
during the 1930s...
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Re: Australian economy

Postby HBS Guy » 14 Nov 2017, 13:10

Did your study include a nation hollowed out by manufacturers moving to China?
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Re: Australian economy

Postby Squire » 14 Nov 2017, 13:55

HBS Guy wrote:Did your study include a nation hollowed out by manufacturers moving to China?


Manufacturing as a percentage of GDP has been declining for 40+ years. The current world average is around 15%. Australia is around 7%.

Tariffs won't help manufacturing recover. It requires government strategic planning.

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