BIG MARKET: Bike ball bearings piled up in Melbourne under protectionism.
BIG MARKET: Bike ball bearings piled up in Melbourne under protectionism.

Protecting domestic industries is a mistake

WHEN I was a student I learnt what ridiculous lengths governments can go to in protecting "home" industries from competition.

During the Bruce-Page conservative government in the 1920s, Australia was a closed shop to imports of agricultural and manufactured goods which would or could compete with those produced here.

To illustrate the extent of this sort of protectionist policy (as it is called) there was apparently a bicycle ball-bearing factory in Melbourne which everyday produced more ball-bearings than would be needed to replace fully those in every bike in Australia at the time.

They were produced and then piled up in the yard out the back.

In the US and Europe, farmers are to this day paid by government to dump produce to keep prices artificially inflated and they are protected from having to face competition from overseas by huge tariff barriers.

In Japan, where rice growing land owners hang onto traditional fiefdoms, imports of rice from countries whose production methods are far superior and the product far cheaper, are banned, as are certain kinds of meat imports.

And you'll be hard up trying to find a US or Aussie built car there - unless of course it's built in a Japanese-owned factory.

Even in Australia our farmers are continually rallying against allowing in oranges from Brazil, butter, milk, lamb and apples from NZ, wheat from Canada and so on.

But there has been a global shift over the last few decades to free trade, the ending of protectionism. It's been hard going, particularly in countries which are net exporters.

The key to a strong global economy is freeing up distribution and exchange.

And much of the aggro and unrest in the world can be sourced to economic disadvantage, which can in turn be sourced to the "haves" restricting access to cheap imports for their own financial gain.