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Marc My Words - 10 December 2004

MArc My Words 10 December

“When not in Rome (Santiago)………….”

The recent Asia-Pacific Economic Co-operation (APEC) summit in November in Santiago Chile was interesting for a number of reasons. To start with it is ironic that our Prime Minister seeks to advance the cause of free trade while she does her best to inhibit it in our own country.

The two opposing views on international free trade devolved into an ideological slanging match; the Greens in NZ predictably and hysterically launched their tiresome tirade against Helen Clark for championing free trade with China, accusing her of selling out on human (yawn) rights. Santiago itself evokes a warm memory for me.

It was the venue for a speech I made at the IPEC Conference in 2003, lambasting the Pom and the Aussie contingents for their mad dash to prove their canine-like obedience to George Dubbya, and to protect (?) the citizens of Iraq from the reign of terror of (former best buddy) Saddam Hussein. Bush went on to replace Hussein’s bullets with America’s own and fuelled a mirage of weapons of mass destruction in Iraq. If there is one thing that I do thank Helen Clark for - and I don’t do that very often

- it is that she kept us well away from the madness in Iraq. We’re not the ones bringing body bags home, having to explain why we went there!) But that’s by the bye…on with the show. There is a sense of hypocrisy in the idea that an argument for free trade should be advanced abroad with a push to rid ourselves of obstacles such as trade barriers, subsidies and tariffs; while at home we disconnect work from its rewards through our unwillingness to provide tax incentives, with wage manipulations, minimum wage and Union interventions, and compliance impositions, all which work to distort the natural workings of the market.

To introduce a positive note; it is noteworthy that the Government is forward looking and seeking the bigger picture for growth in productivity, employment and prospects for long-term prosperity. Ms Clark must be commended, and all the more so because it must be very hard to concentrate on what’s good for the country while the inane and backward looking Greens are yapping at your heels.

The Greens’ objections to free trade revolve around a flotilla of misguided notions, half-truths and flawed thinking. Their main basis for complaint consists of a combination of worry about overworked underpaid foreigners, and saving our own jobs and industries. I’m not sure which matters most to them but either way they are seriously mistaken. What they really advocate is a restraint on the efficiency of production, on lowering our living standards and a halt to our prosperity. Here’s how:

It is advantageous and more efficient to purchase what we want either for personal use or to add value to a product at the cheapest possible price for the best possible product. To do otherwise is a waste of resources. Sometimes that means that as a family or a nation we should buy from elsewhere and not at ‘home’. Special protections such as tariffs may benefit some in the short run but are at the expense of those opportunities that would bring benefits had the tariffs not been in place.

What these protections actually do is to support inefficient producers by forcing other industries to subsidise them. This is because the capital savings that would have been available to other producers are tied up in artificially protected industries. Labour would be much more productively used both here and abroad if it was forced to find those endeavours in which it could be most efficient. Tariffs therefore reduce labour productivity and drag money away from where labour, land and capital can be put most efficiently.

For the consumer it means being able to purchase at the best price, thus raising consumption power. The alternative antediluvian approach advocated by our Green friends, would be to impose a tariff regime and slash our real wages by reducing our efficiency…our production…and ultimately our wealth and prosperity.

And we do our trading partners no good either. Their exports to us give them the capital to buy from us. Import quotas, exchange controls, tariffs and other means of restricting or preventing international trade benefits no-one, only the special interest groups covered by protection at the expense of all others.

It has been estimated by the World Bank that freeing up trade would add $US500 billion into the global economy and lift 140 million people out of poverty by 2015. That is what the anti globalisation Greens are really against. They seem to be fervent in their opposition to wealth creation on the one hand, yet on the other hand do all they can to cream it off those who create wealth.

They are the people running around wanting to raise taxes…redistribute…build bridges where there are no rivers and who, when they see the light at the end of a tunnel, ask for more tunnel. The real question is: why are they like this? I haven’t heard anything from them to justify their beliefs other than that image from Santiago of a halfnaked protestor giving the finger with an accompanying quote which said, ”No to APEC…no to capitalism.”

Says it all really.


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