Wednesday 08 Apr 2020 | 23:31 | SYDNEY
Wednesday 08 Apr 2020 | 23:31 | SYDNEY

Reader riposte: Nationals and trade


Sam Roggeveen


13 February 2009 12:56

Peter Frank agrees with the sentiment of my post yesterday criticising the Nationals' language on Chinese imports:

It gets even worse, with Barnaby Joyce ranting this morning against the Rio Tinto-Chinalco deal. No-one would argue against a sober assessment of the national interest implications but it is decidedly not in the national interest to conduct such a debate in such a parochial manner. In the present global economic environment, the last thing we need is for our political leaders (or populist pretenders) to be actively encouraging the growth in protectionist sentiment.

But John Hannoush offers a slightly kinder interpretation of the Joyce and Truss remarks:

Joyce and Truss may well regard imports as 'bad things' under all circumstances but in this case they may have some Keynesian reasoning on their side. Isn't it the case that the 'multiplier effect' of a government boost to aggregate demand has to be modified downwards in the case of so-called 'import leakage'? I am sure the sophisticated models are much more complex and take account of the benefits to retail and so on, but it is a feature of Keynesian models. There's a nice power point presentation full of impressive equations and Greek letters here; the import leakage comes at slide 16. Maybe some of your real economist readers could clarify this.