Quote:
Originally Posted by GasoLane
I read somewhere that China could scour wool for 28c a kilo, but here it cost $1.75.
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Except they can't, and it doesn't.
A few decades back, China effectively reinvented their entire economy, to make them more competitive and efficient. But we can't even fix the huge problems in our tax system.
Our problem is that for over 100 years we would periodically elect Labor governments who were obsessed with outdated socialist economic theories, and constantly increased the tax burden. Then we elect Liberal governments who say "thanks" and go and find new ways to spend the money.
We're now stuck with a tax system that is heavily punitive, and actually drives us to deliberately shrink our economy and become more inefficient.
And our constant political gridlock prevents us from fixing anything.
We all believe that "things" are too expensive in Australia, and for some reason both sides of government are happy for that lie to persist.
Yes, if you look at it from a "micro" point of view, it appears more expensive to have something done locally.
But not when taking a macro view.
Imagine if you will that you are bidding on a new contract (against a Chinese competitor) and the govt agrees that you can provide the service without paying taxes of any kind. Now also imagine that you could cut your wages bill because the new employees didn't have to pay taxes, then cut your supplies cost, then cut your wages bill further because your workers nolonger have to pay inflated living costs. Lastly take out all the costs driven by our inflated land prices. You would be highly competitive, you would have created jobs, and nobody would be worse off.
And if you think I'm talking nonsense, consider this. Having mined iron ore, and energy (say coal) it is apparently cheaper to ship them both to china, make the steel there (in a process that is NOT labour intensive) and then ship the steel back to Australia.
That is literally impossible, and yet it happens.
The first problem is that taxation.
The 2nd problem is that the Chinese government keeps selling their currency short, but the kicker is what they do with the other side.
We're actually getting hoodwinked.
Imagine this scenario:
The Reserve Bank of Australia starts selling off huge amounts of AUD on the foreign markets, this depresses the value and makes our exports more profitable.
This also cause the RBA to accumulate trillions of dollars in USD reserves.
This WOULD also make our imports very expensive, but the RBA then gives multiple Billions of those USD to BHP so they can buy foreign mines and take the produce cheaply,
The RBA also gives USD to companies like Qantas to buy their planes, and also gives massive interest free USD loans to private citizens so we can buy foreign real-estate.
Sounds Bizarre, illegal, unconstitutional, anti-free-trade, and just plain nuts? But thats EXACTLY what China does