Australia MIGHT go into a recession (2 Viewers)

[SylviaB]

 

[lunaaaa4403]

I think this might be the biggest compliment Ive received on BoS. Question, you have pointed out that countries protect their auto industries, what were your thoughts on Abbott's decision to no longer support our auto industry (thus leading to its closure)

someone give eggnog a real compliment

 

[HazzRat]

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So instead of manufacturing iPhones in China, they're now going to be manufactured in India. Is that all this was about?

 

[HazzRat]

1. The unemployment rate only includes people looking for work. When people drop out of labor market, they cease to be 'unemployed'. This has been particularly for men, where the current rate is lower now than at any point since WW2.

There are entire states where government benefits are the main source of income for the population. This is grossly sub-optimal in a variety of ways.

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Notice how this "4% unemployment rate!!!!" never stopped entire regions of the country being economically decimated?


2. "Good for the economy" is essentially a meaningless phrase. Things can be "good for the economy" while making most people worse off.

Manufacturing jobs are good for low-skilled people. And most low-skilled people (who aren't e.g. recent high school graduates) will likely always remain low-skilled.

Jobs are not fungible. Sending manufacturing industries offshore while tech and pharmaceutical industries grow may make 'muh GDP go up', but it doesn't all even out. Nobody who lost their job in the rust belt went on to become a computer scientist or biomedical engineer, nor could they.

And if you look at the jobs that replaced manufacturing jobs, its crap like minimum wage walmart workers, fast food workers, insecure service jobs, working some shop in a failing mall, just crap. With long-term manufacturing jobs, you had security, you had community, your union functioned as a social club and support network. These are the jobs that built towns and communities across the US, and it when they were lost that these communities were devastated.

With the right protectionist policies, American corporations would need American workers, and that's how things improve for them. Low-skill american workers have no leverage because they have nothing to offer when corporations can hire people from the whole rest of the world.

It doesn't mean all of them can come back or that Trump's plan will work, but if you can't acknowledge why this is even an issue then I think you're frankly just ignorant.

And if America's best minds had a secure domestic manufacturing industry to work in, they would be doing much more valuable work making manufacturing as advanced and efficient as possible, instead of designing ad delivery algorithms to sell people cheap chinese garbage, which is what they do now.

3. How can you have lived through covid and think that having a mindset of "We should become MORE dependent on China in the future!" is anything short of complete insanity?

The people most critical of protectionism per se are the ones who predicted over the past 50 years that trade with China would cause them to liberalise and become allies of the west. This is a catastrophically wrong prediction that, in a sane world, should have permanently discredited these people. But instead, now we have to listen to these clowns prattle on about how tariffs are evil and how we have to stay on the same road that will lead to China becoming a global hegemon that can tell everyone else what to do. The average young Australian thinks Russia is an existential threat (despite having nothing whatsoever to do with Australia) but then somehow think China is nothing to worry about. ABSOLUTELY MIND FUCKED RETARDS.

And how can you act even hysterically over Russia and then think that we need everything, including technology and materials necessary for western militaries, to be more and more beholden to Russia's largest and most powerful ally?

The people demanding that Europe build up their military capacity because America "betrayed them" apparently think you get missiles by buying them and are mocking the very idea that you need a heavy industrial base.

This is my rebuttal, not written by me: https://web.archive.org/web/2025032...charleston.edu/Readings/Trade/iowacarcrop.pdf

A thing of beauty is a joy forever, and nothing is more beautiful than a succinct and flawless argument. A few lines of reasoning can change the way we see the world. I found one of the most beautiful arguments I know while I was browsing through a textbook written by my friend David Friedman. While the argument might not be original, David's version is so clear, so concise, so incontrovertible, and so delightfully surprising, that I have been unable to resist sharing it with students, relatives, and cocktail party acquaintances at every opportunity. The argument concerns international trade, but its appeal is less in its subject matter than in its irresistible force. David's observation is that there are two technologies for producing automobiles in America. One is to manufacture them in Detroit, and the other is to grow them in Iowa. Everybody knows about the first technology; let me tell you about the second. First you plant seeds, which are the raw material from which automobiles are constructed. You wait a few months until wheat appears. Then you harvest the wheat, load it onto ships, and sail the ships eastward into the Pacific Ocean. After a few months, the ships reappear with Toyotas on them. International trade is nothing but a form of technology. The fact that there is a place called Japan, with people and factories, is quite irrelevant to Americans' well-being. To analyze trade policies, we might as well assume that Japan is a giant machine with mysterious inner workings that convert wheat into cars. Any policy designed to favor the first American technology over the second is a policy designed to favor American auto producers in Detroit over American auto producers in Iowa. A tax or a ban on "imported" automobiles is a tax or a ban on lowa-groum automobiles. If you protect Detroit carmakers from competition, then you must damage Iowa farmers, because Iowa farmers are the competition. The task of producing a given fleet of cars can be allocated between Detroit and Iowa in a variety of ways. A competitive price system selects that allocation that minimizes the total production cost.* It would be unnecessarily expensive to manufacture all cars in Detroit, unnecessarily expensive to grow all cars in Iowa, and unnecessarily expensive to use the two production processes in anything other than the natural ratio that emerges as a result of competition. That means that protection for Detroit does more than just transfer income from farmers to autoworkers. It also raises the total cost of providing Americans with a given number of automobiles. The efficiency loss comes with no offsetting gain; it impoverishes the nation as a whole. There is much talk about improving the efficiency of American car manufacturing. When you have two ways to make a car, the road to efficiency is to use both in optimal proportions. The last thing you should want to do is to artificially hobble one of your production technologies. It is sheer superstition to think that an Iowa-grown Camry is any less "American" than a Detroit-built Taurus. Policies rooted in superstition do not frequently bear efficient fruit. In 1817, David Ricardo—the first economist to think with the precision, though not the language, of pure mathematics—laid the foundation for all future thought about international trade. In the intervening 150 years his theory has been much elaborated but its foundations remain as firmly established as anything in economics. Trade theory predicts first that if you protect American producers in one industry from foreign competition, then you must damage American producers in other industries. It predicts second that if you protect American producers in one industry from foreign competition, there must be a net loss in economic efficiency. Ordinarily, textbooks establish these propositions through graphs, equations, and intricate reasoning. The little story that I learned from David Friedman makes the same propositions blindingly obvious with a single compelling metaphor. That is economics at its best. *This assertion is true, but not obvious. Individual producers care about their individual profits, not about economywide costs. It is something of a miracle that individual selfish decisions must lead to a collectively efficient outcome. In my chapter on Why Prices Are Good, I have indicated how economists know that this miracle occurs. In the present chapter I will pursue its consequences.

 

[enoilgam]

Interestingly, China has tried to use this to form an alliance of trading partners to combat the tariffs, including Australia. However, Australia has politely rebuffed them in favour of forming closer ties to the EU. It just goes to show how much damage the "Wolf Warrior" diplomacy of the 2010s has done to China's credibility. Had China built better relations across the world I think it would have been far better positioned to leverage those relations against the US. The US would be wise to heed that lesson - their alliance system is the envy of the world and throwing that away might not bode well when they need it down the line.