Hard News by Russell Brown

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Hard News: National Exuberance

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  • Steve Barnes,

    is the US that much better?

    Well, yes.

    How?

    Peria • Since Dec 2006 • 5521 posts Report Reply

  • Rich Lock,

    Well, for one thing, they're about to hold a democratic election.

    If we're going to debate FTA's and so forth, possibly all participants should explicitly annuciate the assumptions that underpin their starting positions before doing so.

    back in the mother countr… • Since Feb 2007 • 2728 posts Report Reply

  • Rich Lock,

    PS - not intending to get involved myself, but would hate to see any discusion degenerate into a bunch of people shouting past each other because they've assumed the other side has the same starting assumptions that they do.

    back in the mother countr… • Since Feb 2007 • 2728 posts Report Reply

  • Steve Barnes,

    Well, for one thing, they're about to hold a democratic election.

    I would like to think so but I have my doubts. That the last two elections have been democratic has been seriously questioned in some quaters and if their concept of democracy is illustrated by their behaviour in Iraq and Afganistan then....well. How is that a good thing?

    Peria • Since Dec 2006 • 5521 posts Report Reply

  • Kyle Matthews,

    I'm as likely to say "America is stupid" as the next person, but I think saying America is as bad as China on human rights is a stretch, particularly when it comes to elections.

    Since Nov 2006 • 6243 posts Report Reply

  • Matthew Poole,

    See, everyone just assumed I meant the US was as bad as China on human rights. Which I didn't. The US is far from perfect (capital punishment, abolition of habeus corpus, torture, political interference with the justice system...) but they're still a long way from China.
    What I meant, but phrased poorly due to being about to rush off to a lecture, was "If we put aside the human rights issues, what other possible grounds are there to object to an FTA with China but be desperate to get one with the US?"

    We got an FTA with China, and we didn't have to sell our souls to get it. A non-reciprocal working holiday visa scheme, with the non-reciprocity being due to China's lack of capability for doing such a thing at their end, another 1000 Chinese workers a year (how many tens-of-thousands of them migrate here annually to start with?), and the removal of the last vestiges of protectionism over clothing imported to here from there, and that's it. That's the sum of the negatives (and I don't see them as all that negative) that flow from the FTA. In return we get improved access to their markets for our agricultural goods, concessions on behind-the-border measures, and the kudos of being the first (western?) country to negotiate an FTA with China. We have so little protection already that we have little to concede.

    To sign one with the US, we'd have to agree to gut Pharmac, "reform" copyright (longer durations, for a start, and probably abolish the little fair use we've just been granted), and get not much more access to their markets. That's the template set by the AUS-FTA.

    Notice the difference? China didn't particularly take advantage of its size to negotiate positions strongly in its favour. They could have, and we probably would've accepted, but we didn't have to. The general consensus from commentators who know a hell of a lot more about international trade than I ever will is that it's actually a pretty fair deal, and really fair not just relatively fair. Whereas nobody (except probably the Yanks) thinks AUS-FTA is even relatively fair. It was a rogering, ably assisted by John "Sheriff-of-the-51st-state" Howard.

    Auckland • Since Mar 2007 • 4097 posts Report Reply

  • Islander,

    Matthew - more than any thing else posted here , this gives me pause,
    I am a working writer, with all contracts worded in western english terms. I've never had a (for instance) Chinese contract- I doubt me such is ever going to happen which means- I lose.

    Big O, Mahitahi, Te Wahi … • Since Feb 2007 • 5643 posts Report Reply

  • Craig Ranapia,

    How?

    Oh you're taking the piss, Steve, and I don't really have any to spare.

    What I meant, but phrased poorly due to being about to rush off to a lecture, was "If we put aside the human rights issues, what other possible grounds are there to object to an FTA with China but be desperate to get one with the US?"

    Well, let's do a compare and contrast on copyright and intellectual property; environmental and labour standards and so forth. Of course, there are plenty of people who think all FTAs are a combo of Faust and a full body cavity search conducted with a jack hammer.

    North Shore, Auckland • Since Nov 2006 • 12370 posts Report Reply

  • Steve Barnes,

    Oh you're taking the piss, Steve,

    Not at all. China, America, better or worse?
    In terms of human rights I see little difference and that difference has become smaller over the past ten years. The number of people, on a per capita basis, locked up may even be greater in the US. The number of countries under some sort of "obligation" to the US far outnumbers those held in a similar position by China and I would say that the poor in America have very little to celebrate over their Chinese compatriots.
    America good, China bad is far too simplistic.

    Peria • Since Dec 2006 • 5521 posts Report Reply

  • FletcherB,

    Another point on why free trade with USA is preferable to with China....

    Local wages..... When any two countries go into a free trade association with one another..... that's going to hurt wages in the higher paid country and help lift them in the lower paid one.....

    I'd rather the US was outsourcing it's work to us rather than us outsourcing it to China....

    No judgements about human rights or other intangibles... just hard economics.

    West Auckland • Since Nov 2006 • 893 posts Report Reply

  • Matthew Poole,

    Well, let's do a compare and contrast on copyright and intellectual property; environmental and labour standards and so forth.

    Well, for starters you're making the very erroneous assumption that I think IP law, especially around copyright, as it currently stands in NZ is vaguely fair and useful. I don't. I think it's a total abomination, largely driven by US business interests. So why would I want us to align with a country that will force us to extend even further the already-ludicrous duration of copyright and limit what consumers can do with media they rightfully own? For me, IP is a complete non-starter. China's tidying their act up, slowly, and they have to do so and be seen to do so if they want entry to the WTO.

    Yes, I'll grant that China's got a long way to go on environmental standards. But comparing them to a country that, with 5% of the world's population, uses 25% of the resources and has only just been overtaken by the most-populous nation as the world's largest polluter, seems a bit disingenuous to me. How does it look to you, Craig?

    Labour standards? China's biggest failing. But guess what: they're not asking us to drop our standards to meet theirs. And they don't have people who hold down three jobs and are still unable to afford adequate healthcare. I wouldn't get so sneery about China, if I were you. They've got a lot of very bad aspects, to be sure, but the US is awfully ugly too. And unlike the US, China doesn't try and proclaim to the world that they're a model that should be held up for emulation by all. They certainly don't try and force others to do things their way as the price of trade access.

    I've got no objection to FTAs, as a concept. My objection is when a large country bullies a small country into doing things that are only beneficial for the business interests of the large country but distinctly bad for the citizens of the small. Such as Australia being forced to cease reference-priced purchasing of pharmaceuticals. Good for Big Pharma, very bad for Australian health consumers. But, hey, Big Pharma ain't Chinese so I guess that makes it OK, right?

    Auckland • Since Mar 2007 • 4097 posts Report Reply

  • FletcherB,

    BTW... my post above was simply what I see as one argument in the USA's favour.... not that it makes the entire decision done and dusted.

    Mathew Poole makes some good arguments as to why it's not so simple...

    West Auckland • Since Nov 2006 • 893 posts Report Reply

  • Matthew Poole,

    Another point on why free trade with USA is preferable to with China....

    Local wages..... When any two countries go into a free trade association with one another..... that's going to hurt wages in the higher paid country and help lift them in the lower paid one.....

    That point is valid only when you have protected local producers. We have barely anything that's locally-produced and still protected, and those protections were going to all be gone within the next five (I think it was five) years anyway.

    So who loses? People who were going to lose the protection with or without an FTA? Don't think so. NZ has about the most open markets in the world, bar none. We have nothing to lose from an FTA with China because whatever they gain on exports to us is only a brief acceleration of things that were happening anyway.

    Also, it's mostly only valid in labour-intensive industries. We cannot compete with China on availability of labour, and will never be able to do so. Even if they impose a minimum wage they've still got a population so large that adding all of NZ to it would be a rounding error in their census. We need to forget about trying to compete on low-cost, and start trying to compete on high-tech. High-tech pays better and is usually hard to emulate overseas. Value-add is the money-maker, as many luminaries (Lord Winston being on the most-recent) have stated.

    I'd rather the US was outsourcing it's work to us rather than us outsourcing it to China....

    Won't happen. We're a low-wage economy by western standards, but still many times more expensive than China or India. An FTA wouldn't change that. They export knowledge work to the cheapest source of competent labour, and that's primarily India. The things that they get done in China, we mostly can't do at all. We have very little heavy manufacturing, very little textile manufacturing, and so on. We have to offer the US unique, high-value services. Like Tait with their military radios, or Rakon with their GPS crystals. Things that can't be done cheaper by anyone who can throw more low-skilled labour at the problem.

    Auckland • Since Mar 2007 • 4097 posts Report Reply

  • Kumara Republic,

    Some wisdom from, believe it or not, the free trade lobby...

    Trade Liberalisation Network: Australia/US FTA - Confirms TLN's Worst Fears

    The southernmost capital … • Since Nov 2006 • 5446 posts Report Reply

  • Matthew Poole,

    AUS-FTA, as that link says, was utterly awful for Australia. The lead-in times are ridiculous (in excess of 20 years) for full implementation of some facets of the woeful reduction of import protections in the US. Howard bent over and spread wide, and the US took full advantage.
    That trade agreement is fair in name only. I've read absolutely nothing complimentary about AUS-FTA, other than that Australia did manage to conclude an FTA with the Yanks at all. The industrial goods thing is something that I'd missed, but I guess commentators aren't going to spend much time talking about a glimmer of light that's surrounded by yawning darkness. And people are falling all over themselves for us to sign something that would be, at best, the same, and quite probably worse given how little we can offer in return? Why?!

    Auckland • Since Mar 2007 • 4097 posts Report Reply

  • Rachel Prosser,

    I'd not realised Ormerod had released a new book. He'd developed some initial theoretical thinking about non-linear market dynamics in an earlier book, did he elaborate these further in this book?

    He did, I can't quote details because it was a few months back that I read it, and had borrowed it from the library.

    The idea of perfect markets, even if they did exist (presumably for commodities like energy), is over played in areas where it doesn't readily apply.

    Haven't time to reason this one out. Of the top of my head:

    The logic that markets are best rests on the mathematical calculation that, assuming a linear supply curve, and a linear demand curve, perfect competition maximises "utility" overall (usually measured in dollar terms) and has the least deadweight loss.

    It looks very pretty and compelling on a graph, but rests upon some assumptions, that don't always hold.

    For example, It assumes that everyone judges utility the same way (or they can be compared) and that demand and supply curves are continuous rather than stepped.

    The 5 preconditions for perfect markets (as memorised for an exam in my not-very-recent past:)
    - unlimited number of suppliers
    - unlimited number of buyers
    - perfect information
    - homogeneous product
    - and one other (anyone?)

    I'm not arguing that we're better to go for central planning for everything (more deadweight loss there!) But I agree that a market model isn't the answer for everything.

    In particular - I think in some areas people are, or should be motivated by a culture of public service, more than money. Economics doesn't always account well for the great human virtues: thinks like service, vocations, honour, integrity, loyalty, other than by calling them irrational (or rational only if they maximise something).

    Human beings can be wonderfully and nobly irrational sometimes. That said, I am a firm believer in the benefits of the scientific method, analysis, reasoning and logic.

    Christchurch • Since Mar 2008 • 228 posts Report Reply

  • Matthew Poole,

    The 5 preconditions for perfect markets (as memorised for an exam in my not-very-recent past:)
    - unlimited number of suppliers
    - unlimited number of buyers
    - perfect information
    - homogeneous product
    - and one other (anyone?)

    Taking a stab here, based on semi-recent (stage 1 micro was first semester '06, though I did only scrape a C-) economics, an equal cost of entry for all players in the market. The thing that's really killed proper competition against Telecom is the ridiculous cost of trying to replace their taxpayer-funded lines monopoly.

    Auckland • Since Mar 2007 • 4097 posts Report Reply

  • Steve Barnes,

    and one other (anyone?)

    homogeneous market?

    Peria • Since Dec 2006 • 5521 posts Report Reply

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