Economists for the price mechanism

I had a call from a local business organization asking if I would talk at a breakfast about the carbon tax to be held in a few eeks. The date was fine, so I said yes, then came the kicker – they wanted an economist on each side of the issue. The organizer said they had plenty of economists willing to speak for the tax, but they couldn’t find any willing to speak against it. I gamely offerd to present the case for an emissions trading scheme as opposed to a tax (even though, at the moment, I lean to a tax). But they wanted an actual opponent of any kind of carbon price, who was also an economist. This has proved to be impossible, which is pretty impressive testimony to the quality of the Queensland economics profession, and to the underappreciated fact that economists are among the strongest supporters of good environmental policy.



27 thoughts on “Economists for the price mechanism

  1. Alice,
    thank you for your kind words. But its not just Australian or American workers who suffer from the present globalism garbage. Although they do, and lets clear up a few issues first.
    1 Globalism does not bring jobs in the developed world . It reduces them. See the only empirical research I know of, the Upjohn Institute which reports that globalisation has led to a reduction in jobs in the USA and the jobs that have been created are lower paid ones than those lost. Michael W. Klein, Scott Schuh and Robert K. Triest, “Job Creation, Job Destruction and International Competition” (Upjohn Institute) (Someone might show me how to get those cute blue link things one day) I’m willing to change my view if there is some research that shows I’m wrong but to date there hasn’t been any Iv’e seen.

    2 Globalisation and free trade does not lead to increased wealth in the 3rd world; quite the reverse it leads to exploitation. The funny thing is this has been known for at least a century, but well concealed by the globalisation people. The best example (And one of the oldest) I know is cocoa. The Cadbury family bought its cocoa from the Portugese colonies of Sao Tome because it was cheaper than that grown in the Gold Coast (now Ghana). The reason it was cheaper was because the Portugese allowed slavery- so it was proven in court in Cadbury v Standard Newspapers. see Chocolate on Trial: Slavery, Politics, and the Ethics of Business, by Lowell J. Satre ISBN 0-8214-1626-X A more uptodate version is in ANU research here “Race To the Bottom Globalisation and China’s labour standards”
    3 Globalisation and free trade does not -of itself – reduce prices. Again an old example is the best. The classic case of free trade is the repeal of the British Corn Laws. I learnt it in High School history and economics and again at Univ. But in fact in the average price of wheat in England in the 10 years after the repeal of the corn laws was higher than the 10 years prior to the repeal. (‘Asquith’ by Roy Jenkins 1864 Chilmark Pressp 134 for a fuller treatment of the ‘rediscovery’ of this by Joseph Chamberlain and the English Tariff Reform see

    Now having cleared away the dead wood as it were, let me continue
    firstly the products imported are -at least in FCT industries (once the most protected here) poorer quality than our own. Greshams Law – bad cheaper products force out the better dearer one..but are we better off?
    secondly a comparision of Australia and Argentina for the first 70 years of last century shows how two of the richest countries in the world at 1900 fared. Argentina followed free trade, using competitive advantage to promote its agricultural products. It failed. It descended into the juntas and the Peronistas. Australia followed tariffs, we remained a rich country and more importantly perhaps a democracy.
    thirdly an historical survey in America and Germany. Before tariffs both were agricultural lands (Germany wasn’t even a nation, but a collection of principalities and so on) America became rich thanks to tariffs. See Pat Buchanon on the subject Tariffs also made the American worker rich: they shared the wealth And they did so here. The same argument can be traced (though not as concisely or focused in AJP Taylors “Bismark”

    I’m in my 50s, I want my sons to have the standard of living I’ve enjoyed. Tariffs not free trade will give them that.

  2. And another example of ‘free trade’ leading to worker’s oppression in the developing world is the continuing fearful human rights abuse- there are stronger words but I’ll not use them in a polite forum, is the company that makes Apple products, 2 more deaths there this week Now it may be that they are better off than they were in the paddy fields, but they would be far better off with proper ILO conditions, unions and proper wages. Yes we would have to pay more, perhaps double the price we pay now for such electronic toys (if the price were doubled and the whole of that increase went to the worker they might have a decent wage.)

    A tariff (reduced as Foxcom workers’ pay and conditions improved) would help us stop exploitation in the developing world.

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