Australia's Economic Miracle

It's happening right now in the steel industry. The protection given to the industry was prefeced by the need for consolidation (the fragmaneted US steel industry is not internationally competitive because smaller companies don't have economies of scale to compete).

Loe and behold, consolidation has occured.

Pat Buchanan argues that high tariffs are necessary for national security. If all steel is produced abroad, how will we be able to produce armaments and supply our economy in the event of a world-war?

I fully agree with the logic of free trade and, in the words of one of this board's regulars, the "gods of creative destruction." But Buchanan's argument for national autonomy gives me pause.

I think the Japanese industries that had domestic protection but which were heavily export-oriented continued to improve efficiency in order to compete internationally. It is my understanding that there were substantial barriers for car imports for years. Not sure if there still are.

The national defense argument seems hollow. First, silicon is more important to the miltary these days than steel is. Secondly, we are NEVER, repeat NEVER, going to fight another all out war like we did in WW2. We are NEVER going to run into a situation where we can't buy our military needs either here or abroad. Wars just are not going to have the scale or scope for such a thing to happen. Smaller regional conflicts are the future.

You can't just superficially look at Japan and say that their mercantilist economy is one to emulate.

Japan really has two economies. One is export oriented, consisting of hyper-competitive companies like Sony and Toyota. The other is amazingly inneficient, and totally domestic oriented.

It is the domestic oriented companies that are protected by the tarriffs. Their inefficiency is a result of their protection. And over the last 13 years, it is these companies that are responsible for the Japanese economic stagnation.

I predict that in 10 years Honda, Toyota, and Sony will all be American companies. They will be headquartered here, their stocks will be listed here, and their upper management will be staffed by Americans. These companies manufacture here, design here, and sell here. And America is where the profits are.

> Secondly, we are NEVER, repeat NEVER, going to fight
> another all out war like we did in WW2.

The lesson of history is that one can never say never. Many thought that World War I was a war to end all wars; it was impossible to forsee mankind tearing itself apart on that scale ever again.

http://www.bartleby.com/65/ke/KelloggB.html

I don't agree with everything Buchanan says on the subject, but you can read it for youself:

http://www.amconmag.com/08_11_03/cover.html

> First, silicon is more important to the miltary these days than steel is.

At the rate we're going all silicon will be produced by Pacific Rim nations.

>>The lesson of history is that one can never say never. Many thought that World War I was a war to end all wars; it was impossible to forsee mankind tearing itself apart on that scale ever again.

>>At the rate we're going all silicon will be produced by Pacific Rim nations.

Did anybody actually read the Chairman's speech? If not, please do so. It seems that Australia has had its own Reagan Revolution, without a Reagan-like figure.

The reason countries like Japan and Mexico have faltered is because the people of Japan and Mexico have not made the tough choices, like Americans and Australians have done, to restructure their economy. The question we should be asking about China is whether the Chinese people will find their own Reagan or not. That will determine the future of China more than anything else.

Probably Australians need to "bring up" the new generation of the economists and analysts, but the government should carefully watch and control the number of the graduates in order not to train them in surplus and not to raise the number of uneployed.