Monday, February 10, 2014

Trans-Tasman sad

The weekend news told me that Kiwi fire fighters are helping put out bush fires in Australia.

It also tells me that Australians hate Kiwis so much that they've pressured their two main supermarkets to stop stocking New Zealand produce. This isn't some voting thing where nationalism is cheap at the ballot box and so people vote for Buy (insert home country name here) mandates. Supermarkets in Oz expect to profit because their customers are just that nationalistic.

C'mon, Bruce, give your head a shake. Autarky is stupid.

Update: vengeance is always tempting. But, it's generally misdirected.
First off, the Australian banks are hardly to blame for whatever the Australian supermarkets are up to.

Second, the Australian supermarkets are doing it because they think that their customers really want it. So taking it out on the New Zealand franchises of Australian supermarkets might make those supermarkets run a broader profit and loss calculation, but it will likely just punish the local franchisees while not addressing the underlying problem: nationalism's popularity in Australia.

Third, autarky hurts everybody, but is most painful for the country imposing it on itself. Doing it to ourselves in revenge makes as much sense as bashing ourselves in the head with a hammer to get back at our neighbour for doing the same thing.

It mightn't be nuts* for the New Zealand government to suggest merging its government-run, stupidly nationalistic, generally pointless, blame-the-Greens-for-it "Buy Kiwi Made" campaign with the Australian private-sector equivalent for a Buy ANZAC logo, perhaps timed for the Gallipoli centennial next year. Even better would be abandoning all of these kinds of autarkic sentiments.

* Note the "might" here. Basically we get pretty quickly into the whole trade-diversion literature. It can be better, from an efficiency perspective, to have nationalistic Aussies put the same "not Australian" discount on all foreign goods and then to maintain the proper mix of imports within the smaller set of imported things than to have NZ within the "Counts as Australia" circle and so to distort trade. I still lean in favour of "diminish nationalism by making more countries count as "us" for nationalistic purposes", and reckon that arguments against having the merged ID would also be arguments in favour of abandoning the Australian-NZ free trade area, but arguments going the other way are tenable.

4 comments:

  1. In reply to dotcom, Joan Robinson, of all people, put it nicely when she said "if your trading partner throws rocks into his harbor, that is no reason to throw rocks into your own".

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  2. KDC has a lot more commercial credibility than you Eric, and it shows. You repeatedly miss the point that KDC is making. He is not blaming the banks, that is your own framing of the issue, not his. Second, where is the evidence that Ozzie customers want a NZ food ban? Third, KDC is not talking autarky, again that is your misrepresentation/ exaggeration. I think KDC is spot on with rattling the sabers. Its about posturing, bluster and bluff, which you seem oblivious of. Unless you have made millions that you are keeping to your self,please think more deeply in the twitterverse..

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  3. He suggested punishing the banks. I went through the reasons we might not want to. First, they're not to blame. Second, any punishment on local franchises of Australian parents, whether banks or not, is likely to do more harm to us than it is to the Australians - that's the "don't hit yourself in the head" part.

    Where is the evidence that Oz customers want to get rid of NZ food? That the Oz supermarkets are dumping NZ lines in favour of Oz ones as part of a buy Oz-made campaign is itself evidence of that Oz customers want it.

    Posturing, bluster, and bluff, when you really can't do anything and both sides know it, just makes one look ridiculous.

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  4. The "buy Australia" campaign is being driven entirely by the two main supermarket chains, not consumers - it's an advertising gimmick to combat the threat from recent foreign entrants like Aldi. It long pre-dates the current stoush, or indeed any actual commitment by the supermarkets to buy Australian - a couple of years back it was the Australian suppliers complaining that they were being shut out in favour of cheap imports.
    I propose there's a much more straightforward story behind this supposed "ban": supermarkets are sensitive to cost (especially for the inputs to their house brands), and the NZ-Aus exchange rate has gone from very low to very high in a short space of time.

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