“Mercantilism sweeping through canberra it seems.”
No its got nothing to do with that. Its about facing reality, and being concerned for the nation over the long haul. To have a ‘NAURU STRATEGY” is to have no rational strategy at all.
Firstly, over the long haul, a nation must save, just as a family must. A smart nation will always try to export more than it imports, during peacetime. Now if everyone tries to do this, without tariffs, well then its impossible. But what this situation would constitute is INTERNATIONAL POLICY SUCCESS, and the cost of manufactured producer goods would fall right down, enhancing everyone’s living standards.
So supposing Australia alone tries to run trade surpluses net of its raw materials exports without even one tariff? Well if others aren’t trying to do this, we will succeed in this goal. But if others are trying hard to run trade surpluses by a variety of measures, as well, and we are trying to do so, with genuine force, but without tariffs ……. then what would be the big deal sometimes running trade DEFICITS, under those circumstances?
Again. There is a word for this scenario, and that word is SUCCESS.
Now in any competitive market margins are pretty small. Margins may have been high for lets say MICROSOFT, when they had all these internationally enforced patents. But this is not a forever thing, nor the normal way of things.
Competitive business runs with small margins. So given that how insane is it to just except year in year out, that we can have and survive on, a purchasing parity price level PERHAPS 25% OUT OF WHACK with our international trading partners??????
Clearly this expectation is straight irrationality that the economics profession doesn’t want to face up to.
There is nothing in the theory of comparative advantage to say this ought to be considered a normal thing, and that everything is alright.
Whereas tariffs are a pretty terrible idea, even with final products, they amount to something approaching straight irrationality when it comes to producer goods, since tariffs on producer goods would directly undermine the final products of our exporters.
But noting this before most of you were born, does not give me the right to go mentally blank at that point, and decide that putting up with a purchasing power parity disadvantage for our manufacturers is fine, okay, and according to Hoyles.
There is a right and wrong answer to all of this, but as usual it goes beyond the arguments that take place in public where it is the way of things that the two contending sides, each have grabbed a wrong leg of the tripod.
And another thing. They don’t want our haircuts. They don’t care for us outsourcing each others laundry. There is little in tertiary industry that is worth trying to hawk overseas, without a strong manufacturing base to enable these various services industries. Essentially it is manufacturing capacity that is the sustainable way for us to save as a nation; to do better than merely living within our means.