In the media, political point scoring arena and general community you can always hear people discussing the supposed advantages of buying local, supporting the local industry and supporting local jobs. It seems like it has become our patriotic duty to buy everything and anything locally made and despise and turn our noses up on those who support foreign made products.
Now, despite the subtle racist/nationalist pride that come from a “locally made is better than foreign made” concept or the emphatic war cry “they took my job!” there are long term economic advantages to trading with our International partners.
One of the first topics discussed in Economics is the advantages of specialisation. If I can make a good or service faster and cheaper than you and you can make an alternate good or service than I, we are both better off specialising and trading with each other. I spend less time, energy, resources, as do you, and we both have more. This rule applies not only to trading with people in our local communities but also on a global scale.
Arguments for buying local is also intended to ensure “our jobs” stop being exported overseas or will stop children being forced into sweat shops. I have a couple of issues with these. Firstly, they are not our jobs. They are jobs which are available in our country due to market conditions allowing them to be generated. When the market is no longer suited to these jobs they are transferred to regions which are more suited. If someone is willing, and able, to do the exact same job for less then why should they be punished and prevented from having a job created in their country?
The argument that sweat shops take advantage of children is a difficult one. No doubt this happens, but what of the child who works and earns an income to support their family. It’s not the best situation that we can hope for, but a child that needs to work and earn an income would be much better completing low skilled, low risk work then many other jobs that are in the black market. Because we live in better circumstances does not mean that a child should not be allowed to assist his family. Again, of course with the libertarian principle of non aggression it should be of the child’s choice and not of coercion.
To get some data into this I thought it was only best to compare two economies that are in the same geographic region, fairly similar race, religion and culture but with one open to trade and one severely restrictive to trade. North Korea and, you guessed it, South Korea.
The two countries have two different political systems, ideologies and their opinions to trade with South Korea heavily involved in International Trade and North Korea relatively closed off to International Trade.
North Korean GDP is estimated to be approximately $US28 billion as of 2009 with a growth rate of around 0.8% and GDP per capita of $1,800. Nothing really to excite the public about through your propaganda news networks.
South Korea on the other hand has a GDP of $US1.64 trillion as at 2012 with a growth rate of 2.00% and GDP per capita of $32,300. Significantly higher then its northern neighbour.
Now to be completely fair there are other free market forces which have significantly raised the South Koreans to a level above their neighbour in addition to international trade however the effects of international trade cannot be underestimated. Think about this, if it was not significant then why do the “leaders” of the world use trade barriers and restrictions to punish and force so called rogue states to get back in line? Stopping, cutting back and reducing trade has a significant impact on the economy.
If you’re not convinced then lets look at one item that would not be here, or in your pocket without trade. Apple iPhones are manufactured in China, using technology researched and developed in America and parts from over the world.
I do have a question for those in our country, or world who are always championing the advantages and benefits of “Buy Australia”, If it is so productive to the economy then why don’t we just “Buy NSW” or go further and “Buy Sydney”? Well, the reason why we don’t just Buy NSW or Buy Sydney that this is the least economical way that within a short period of time it would dissolve into chaos with shortages of all types occurring and in the long run… We would begin trade, again…
When we trade and exchange goods and services with each other everyone is mutually benefitted. Australians, or any nation engaged in trade, can buy goods at lower prices or higher quality than what can be produced at home. In turn, this increases productivity in the economy as our money can go further. The goods that are produced locally can be sold overseas thus increasing the potential customer base. Better yet, it is a small and important step to alleviating poverty.
This blog was made in Australia so please like and share it with everyone to support one job in this country or help me export this around the world by coincidently hitting the like or share button.