The Free Trade Ideology is Misplaced

Hi, I just set this piece up to start a discussion on onlineopinion.com.au


The Free Trade Ideology is Misplaced
Gilbert Holmes August 2010

The idea of free trade is based on David Ricardo's 'Theory of comparative advantage'. The basic idea is that: even if one party has an absolute advantage in the production of everything, both parties will be better off if they specialize and trade with one another.

Wikipedia gives some simple examples http://en.wikipedia.org/wiki/Comparative_advantage

Unfortunately, while it makes a lovely mathematical model, our lives do not actually fit well into the pattern. Pursuing comparative advantage to it's logical end would be like pursuing freedom all the way to anarchy or stable governance all the way to totalitarianism.

Unfortunately, the neo-liberal agenda continues to exert vast influence over the institutions of our global society, and the 'free trade' bandwagon rolls on. Free trade is often spoken about in the media for example with the assumption that it is a good thing.

Instead of 'free trade', what we are actually looking for is balance.

On the one hand, we want to enable trade across boundaries. This will enable us to purchase what we don't have and will help ensure that local producers are maintaining their efficiency.

On the other hand, however, we want to encourage people to buy locally produced goods and services ahead of those that are imported. This will encourage diversity, interdependence and self-reliance within local economies.

Looking for this balance, I have been working on the concept of a 'locality tax'. This tax would be increasingly applied on the purchase of all goods and services depending on how far away from the purchasers home the good/service was sourced.

I suggest that the tax be applied down to the neighbourhood scale. As an example then, if a person wished to source an item produced in another country, they would have to pay the tax first to their own neighbourhood, then again to their village, their city, their state, and their nation.

Encouraging local self-reliance down to the neighbourhood scale through a mechanism such as this is not only sensible in economic terms. It will also I suggest, be an important step in our becoming an ecologically sustainable global society.