Furthermore, he obviously cannot see that China s tariff policy involves a wealth transfer from Chinese consumers to Australian consumers. In reality, it is the mass of Chinese who are being penalised by these tariffs, not the bulk of Australians. Dr Thor s protectionist injunction against free trade at any cost is utterly ridiculous. Free trade never takes place at any cost . Trade only occurs up to that point where the cost of trading exceeds the benefits.
Free trade is voluntary trade.
Dr Thor s views are just a variation of the great mercantalist myth that imports are bad and exports are good. Therefore, governments must always act to deter the former and promote the latter. The classical economists exploded this fallacious thinking by pointing out that exports are a cost and imports are benefit. Put another way, exports are simply the price of imports. It follows from this chain of reasoning that export income is only of any real use to the extent that it is used to buy imports.