Via Herald Sun:
DICK Smith has criticised the Australian Open’s decision to sell bottled water from China, as a local brewery offered to supply water to the tournament in 2019.
The Australian business entrepreneur described the move to sell water from overseas at an international tournament which is hosted in Melbourne as “bizarre”.
He said that China’s definite strength was selling electronics, not water.
“It’s complete madness,” he told News Corp Australia.
“It’s a rule for us to buy electronics in China because they’re good at making them, but we have the cleanest water in the world and should be providing it to Australians and overseas.
“China is a developing country with a lot of air pollution.
“Countries should do what they are good at. I imagine they’ve done a deal with sponsorship, but I’m not sure, and it’s up to them in the end.
Much of what Dick Smith says makes sense but he’s barking up the wrong tree here. If the AO can buy Chinese water of sufficient quality more cheaply than local then it should. As should everyone else.
The question is, why is it cheaper? It’s absurd that it costs less to import such a voluminous and heavy resource that has zero scarcity premium than to produce it locally.
Dick Smith should focus on that question and the equation is not complex:
- a small open economy that imports capital to waste on house prices while;
- running massive immigration inflows to support the same, and
- lives high-on-the-hog on capital gains that creates structural current account deficits…
Is always going to generate very high business input costs in both capital and labour, not to mention run a chronically higher currency than its productive economy can handle. At least for so long that the world will lend it the money to do so.
If you then campaign to use more expensive local water ignoring the potential cost savings then all you’re doing is hollowing yourself out all the more.
The issue is not free trade, which works well to produce the most goods most cheaply. The problem is how you compete (or fail to) within it.
