Chasing the Norm

Australian academic and blogger on politics, international relations, and culture

The Free Trade Left

I’ve already raised the issue of ending the ban on parallel imports of books. The Productivity Commission has now released it’s final report and its findings are clear:

the Commission has
• concluded that the PIRs place upward pressure on book prices and that, at times,
the price effect is likely to be substantial. The magnitude of the effect will vary over
time and across book genres.
• Most of the benefits of PIR protection accrue to publishers and authors, with demand
for local printing also increased.
• Most of the costs are met by consumers, who fund these benefits in a nontransparent
manner through higher book prices.
• PIRs are a poor means of promoting culturally significant Australian works.
– They do not differentiate between books of high and low cultural value.
– The bulk of the assistance leaks offshore, and some flows to the printing industry.

Alan Fells, former head of ACCC and now at the Australian New Zealand School of Government has suggested that means a cost of up to $200m for consumers.

But what is most interesting (though if you know your history not surprising) is that most of the push for this end to protectionism has come from the left. It was Chris Bowen, in the Rudd government who initiated the Productivity Commission’s survey. It has been most publicly championed by Bob Carr, former ALP premier of NSW. And has received support from a variety of quite left wing types such as the ACT’s own rising star Andrew Barr (as I noticed this morning via his facebook – who says blogs don’t break news:P). Whilst the libertarians at Catallaxy have of course been forthright in wanting a change, I could only find this lukewarm press release from the Liberals Competition policy shadow minister Luke Hartsuyker, with not a single mention by Malcolm Turnbull.

This may seem counter-intuitive if you think the right is pro-free trade and the left against it. Yet whilst the two party structure of Labor and anti-labor sometimes creates that mould, the history is quite different. The single largest reduction in tariff’s in this country occurred in 1973 under the Whitlam Government. After some drift under the conservative Fraser, Hawke and Keating picked up the mantle and effectively ended the way Australians had run their economy by reducing almost all tariff’s. This was encouraged by Howard (having supped from the classical liberal economics of Reagan and Thatcher), but his own government whilst rhetorically adamant, ended up doing very little on the free trade front. It liberalised small areas such as CD’s (in the way now proposed for books) and seeing the flaws of multilateral deals pushed into bilateral deals with mild success. The two big areas still under the umbrella in agriculture and cars remained protected, or got effective protection through constant handouts. In fact if you examine Australian political history, it has been the moderates and liberals within both the ALP and Liberal Party who have lead the move towards free trade in this country (Howard being the obvious exception). The more conservative forces, much like the union-left have largely been against such moves. Take for instance this piece by Tony Abbott writing in 1995:

‘His [Keating’s] Asian crusade is simply the second phase of a long battle – hitherto fought around Australia’s economic structures – to extripate the legacy of Menzies. The first phase meant changing Australia’s economic structures and breaking down the old business establishment. The second centres on smashing the Crown which he thinks is the ultimate icon of conservative Australia. Asia played little part in his drive to ‘reform’ economic institutions – after all, most Asian governments pursue pragmatic interventionist economic policies similar to those of pre-Keating Australia’ (p220)
Abbott, Tony in Sheridan, Greg (1995) Living with Dragons: Australia confronts its Asian destiny Sydney: Allen & Unwin

Abbott went along with, even championed Howard’s economic ideals, but never was at the forefront of the debate, and with his mentor out of the game, it will be interesting to see which way he turns in his forthcoming book. Whilst the forces of free trade have largely won out (both due to argument and circumstance), don’t be surprised if there is a slight shifting back amongst the right should the conservative forces lead by Abbott take charge. As i’ve predicted many times before, I see the two party system shifting to a more liberals vs conservative basis instead of the weird cross-overs we saw under the Reagan/Howard coalitions, but either party could take either role, depending on their internal struggles. Long story short the “common sense” idea in the media and the general public that the right is pro-free trade and the left against it is not sustainable in current policy nor historically accurate. As the new left begins to develop it’s form, I have little doubt that a strong stand for free trade will be at the heart and soul of its economic system. Only such a system can encourage universal rather than national sentiments, international organisation, healthy free competition and the free flow of ideas and people.

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