The government should choose towns rather than industries to finance them
Rather than prop up failing industries, governments should focus more on supporting the entire town, if the government instead offers incentives like tax cuts to expand its position in the regional hub. This will help policy makers avoid returning to protectionism while also helping to address Australia’s growing inequality.
So far, policy makers have often tried to shore up industries that have failed. They also spent some money on retraining, offering small relocation subsidies and trying to make education for young people better suited to a globalised economy. Anyway, that’s not enough.
This has led to a bigger economic pie – of course. But it has also led to rising inequality. Those who have the skill set see wages rise. Some people without these skills have adapted or retrained. But, from the advent of globalization, many people never recovered. This has led to the political arrival of brexit, trump and le pen. Up to now.
A retreat from old-fashioned protectionism and industrial policy would be a disaster. Stopping a speeding freight train is economically equivalent to its trajectory. Yet the current approach does not work, and the anti-globalist forces it burns may be just as bad.
Protect my work
Twelve years ago, Thomas friedman’s global bestseller “the world is flat” was published. Friedman emphasized the inevitability of globalization while acknowledging the existence of winners and losers.
But he argued that the best way to against globalisation is make labor more adaptability, although redeploy, through health and retirement benefits the portability of more liquidity, pay more attention to science, technology, engineering and mathematics.
Published the book in the same year, Mr Friedman, he was in harvard college and the economist and the university President Larry Summers (Larry Summers) and philosopher Michael Sandel (Michael Sandel) professor together a new course. We were PhD students, and one day we dug up the final exam. The first question is:
“From an economic point of view, open immigration is as strong as free trade and capital flows.” Do you agree or disagree? Whether you agree or disagree, would you say that non-economic factors strengthen or weaken open immigration, free trade and capital flows?
It turns out that for 12 years, globalization has been around for a long time.
Today, in the trump era, we live in a world of wall, world inequality and protectionism. Forget to open immigration, free trade is very popular.
Last month, the President issued a trump called “buy American and employ americans” executive orders, Bill Shorten was quoted as saying: “we will buy in Australia, Australia, the Australian, hire australians”. The coalition – in the absence of shutting down foreign talent – is busy pretending to be Willie Sutton and taxing Banks because it is the source of money.
To be fair, economists are taking some responsibility for this anti-globalisation twist. For a long time, free trade has maximized the size of the economy and distributed it in a way that everyone could do better.
If only it were that simple. In fact, the job disappeared. Sometimes entire industries and towns.
There is a problem of resharding through the cash handouts. It requires a lot of money, not to solve the geographical problems of the dead town, and most importantly, it can’t provide people with a sense of dignity and sense of purpose.
It is also hard to retrain a 55-year-old steelworker to prepare for the economic transition. But there is a choice.
Focus on towns, not industries
We should provide incentives such as tax breaks to expand the position of companies in regional centres, rather than fostering failed industries. This could involve lower corporate tax rates, the removal of payroll taxes and immediate capital investment. It can sometimes involve loan guarantees.
The money should go to towns, because they are a coordinated way of the industry. If a larger enterprise is located in a town, then people will find it there.
Those salaries drove other local jobs, which led to more people. That, in turn, has pushed more local businesses, local dynamism, and more. Towns can be central to coordinating the virtuous cycle. Industry is important, but they are just industry.
On one level, policymakers can’t get rid of the “town problem”. It is not easy for rural and regional workers affected by globalisation to have many causes, but not every town can be saved. Figuring out which ones can be injected through new business activities is the key to providing hope for the victims of globalisation.
The practice is not without precedent. China has made the development of the new city a top priority in economic development planning, and many major cities have been completed, and the infrastructure has been completed before residents arrive. For example, the Chinese government recently announced that it would build three times the New York City – kumen new district, near Beijing.
Now, China is doing this because of population growth, urbanization pressures and environmental problems. However, it shows the advantages and feasibility of being a town centre. The government should focus on what’s needed to make a city successful, rather than let an industry survive for a while.
In addition, Australia faces an absurd tax credit that creates a housing affordability crisis, such as the negative burden of artificially boosting demand, as well as severe supply constraints. Barnaby Joyce’s warning of a departure from the capital city will be more noticeable because of the influx of new businesses and new capital into the region’s towns. The “pick town” policy can make housing more affordable.
The side effects of the globalisation of our current populist politics will not be solved by old-fashioned industrial policy. But focusing on the overall benefits of globalization will not work. We need to redistribute these benefits, focusing on areas that can achieve success and inject new economic life into them.