“Buy Australian?”

by Elaine Schwartz    •    Apr 25, 2011    •    712 Views

In Australia, concerned about the impact of twin disasters in Queensland this summer, Australia is saying, “Buy Australian.”  But they just faced an unexpected problem.

The T-shirts they are using to publicize the campaign were made in Bangladesh and the U.S. Buying Australian made T-shirts would have cost up to $10.00 each. The Bangladesh T-shirts were $5.12.

Is that bad?

It depends on who you are. Shirts North, a T-shirt seller in Cairns, was unhappy. Consumers and taxpayers, though, should have been pleased.

Nobel prize winning economist Milton Friedman (1912-2006) would have reminded Australians that buyers were saving money on cheaper imports while sellers would create new jobs in exporting industries. Commenting on publicity received by the local businesses harmed by floods, he would have called them “visible.” By contrast, consumers are “invisible.” Anonymous and invisible, the millions who benefit typically have no newsworthy evidence.

The Economic Lesson

David Ricardo (two hundred years ago) stated the classic defense of free trade when he expressed the principle of comparative advantage. Trade, trade, trade, he said because each nation then can do what it does best (where it has the comparative advantage) and the whole world benefits through greater efficiency.

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