January 23, 2004


SBS economics correspondent Peter Martin (previously mentioned here) reveals his stunning economic theory:

The bulk of exports from the US are only worth something if the rest of the world agrees to pay something.

Hey, it might sound crazy, but give it some thought. Peter might really be on to something. He continues:

The rest of the world could pay less, or less than the US wants. Against Australia's financial interest we agreed to extend the patent life on drugs a few years back. The US would like us, and the rest of the world, to extend the term on copyright.

We could refuse. And the more the US throws its weight around worldwide the more likely it is that that someone will.

Except that they wonít. From Londonís Financial Times:

Consumers around the world put aside any ill-feeling aboutUS foreign policy when they choose their fast food, soft drinks and sports shoes, a Harvard Business School study has found.

The survey of 1,800 consumers in 12 countries including Egypt, Turkey and Indonesia found that, despite expectations of a consumer backlash against US brands, most people still choose brands such as Coca-Cola and McDonald's.

Posted by Tim Blair at January 23, 2004 03:12 AM

Mr Martin has stumbled upon what is known as the Subjective Theory of Value. One of the key tenets of the noble Austrian school of economics.

Posted by: grant at January 23, 2004 at 04:25 AM

I was staying in Zona 9 in Guatemala City recently and the McDonald's next door to my hotel had an armed guard posted outside the entrance. And he wasn't there to keep out any Jose Bova disciples either. Of course, the fruit and soda vendors languishing in obscurity down the block couldn't have been all happy-happy-joy-joy to see their fellow campesinos skipping on by, hurriedly flocking like so many sheep to the Great Amerikkkan Fat Machine. Death to the running dog lackeys of American imperialist capitalism.

Posted by: Tongue Boy at January 23, 2004 at 05:00 AM

I'm glad Australia's at the forefront of drug creation.

With his attitude, you're going to need it.

Posted by: Sandy P. at January 23, 2004 at 05:37 AM

They will insist upon cutting off their noses to spite their faces. The day may yet come when they will hear, "Oh, you're French. For you, an aspirin for that tumor". (or various other nationalities, I just hate the French!). I, for one, am tired of financing these freeloaders.

They want to respond to perceived American bullying? Develop their own damn drugs, or create an environment where their scientists don't rush to the United States so they can protect their investment in their research.

Posted by: Karen at January 23, 2004 at 05:42 AM

Hey, any minute now, and he may realize that companies need to make a profit in order to make jobs.
There's hope for him yet.

Posted by: Geoff Matthews at January 23, 2004 at 06:11 AM


"Except that that they won't."


Posted by: Bovious at January 23, 2004 at 06:42 AM

Back in the eighties when John Dawkins was treasurer in the Hawke government, Dawkins gave an address to the Canberra press club after a budget speech. The ABC economic correspondent at the time was PETER MARTIN who asked the treasurer a question, the fact that PETER MARTIN was out by at least a factor of ten in his figures with the question became quite amusing when Dawkins response pointed this out. The tv picture of a red faced PETER MARTIN was priceless

Posted by: Michael Casey at January 23, 2004 at 07:29 AM

This guy's an economist? Somebody should tell him that trade is a two-way street and the last I heard, the U.S. has a trade deficit with virtually every country in the world. That is to say, the value of goods the US imports from those countries is higher than the value of goods it exports to those same countries. Also, comparable goods to most those imported (foodstuff, trinkets, automobiles and parts, lumber etc.) are either already produced in the U.S. or easily can be.

To re-phrase Peter Martins loopy theory:

"The bulk of your exports to the US are only worth something if the U.S. actually agrees to import them."

Posted by: Arty at January 23, 2004 at 08:52 AM

As I said last time.

Being economics correspondent at SBS is like being economics spokesman/spokesperson/spokesthingie for the Australian Democrats.

A contradiction in terms.

Posted by: The Mongrel at January 23, 2004 at 08:52 AM

the last I heard, the U.S. has a trade deficit with virtually every country in the world

That is in deed so.
But not with Australia.
Australia buys roughly twice as much from the US as it sells to the US.

Posted by: Peggy Sue at January 23, 2004 at 09:36 AM

When I lived in Brazil as a teenager, I was baffled by the Brazilian kids next door. They were a brother and sister, definitely in the "angry young man" stage of life--late teens, early twenties. To me their waking lives seemed evenly divided between two things: ranting about the horrible, overwhelming cultural oppression visited upon them by American commercialism; and spending every last centavo of their allowance at the mall, buying the latest and greatest in American jeans, sneakers, toothpaste, &c.

Posted by: Peter A. at January 23, 2004 at 11:10 AM

Would someone please advise this esteemed economics expert that the US extended its copyright laws to match the terms the EU put into practice 5 years before?

Posted by: Jeepster at January 23, 2004 at 11:21 AM

Despite the Anti-American animus that that motivates Peter Martins observation the point remains that the US economy's strongest comparitive advantages in terms of trade are heavily weighted towards products with a high component of intellectual property.

This is the product of US leadership in R&D as well as leadership in many industries that put a premium on creativity. What is true is that many of these products are susceptible to piracy, from drugs to software and movies and music most of the cost of production lies in producing the intangible intellectual property of these products rather than their physical form. Simply stealing that property is something that is occuring on an industrial scale. Peter Martin's point about countries choosing what they want to pay for these goods , and that this choice can be affected by political perceptions of the US can be turned around - there are governments who will use anti-Americanism to justify institutional theft in the name of "fair" trade. At last years APEC summit the Malaysian moonbat Mahathir was complaining about US and western exploitation of his country, what he neglected to mention is that his country is in fact a massive beneficiary of western and primarily American willingness to invest in , transfer technology to, and buy products from, with Malaysia enjoyng excellent market access to the US economy. America pays fair prices for Malaysian products, in return Malaysia simply steals almost it's entire consumption of US software and movies and Music, with under 20% of the market being legitimate. They then turn around and have the gall to sugest they are the ones being exploited.

The notion of fair trade is fast becoming a euphemism for the right of the resentful to steal from the resented - pathological anti-americanism is antural ally od such a shabby intellectual endevour.

Posted by: Johan Wehtje at January 23, 2004 at 11:36 AM

Funny, no response to my comment on his webpage...

Posted by: Wonderduck at January 23, 2004 at 01:39 PM

That is in deed so.
But not with Australia.
Australia buys roughly twice as much from the US as it sells to the US.

We do have a surplus 3-1 in our favour with Canada though.

Take that Canada!

Posted by: Quentin George at January 23, 2004 at 08:32 PM

"That is in deed so.
But not with Australia.
Australia buys roughly twice as much from the US as it sells to the US."

I hope you're just pointing out a statistic Peggy, and not actually suggesting that Peter Martin's idea has merit.

Posted by: Arty at January 24, 2004 at 12:49 AM