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Using trade protection to promote local culture

The Federal Government might now back down on the Productivity Commission proposal to allow parallel imports of Australian produced books.  Relying on price discrimination on the basis of less elastic local demands these books are sold at a premium to the prices charged overseas for the same books. Allowing the books to be imported would therefore force local suppliers to cut prices by 35%.

In the main the possible change of heart reflects a campaign by local book printers and publishers.

There are gains to local consumers from the price cut but the argument is that lower incomes to local authors and to local publishing houses would lead to a reduction in the supply of locally-sourced reading material.   Books by overseas authors, it is claimed, would come to further dominate the local market.

The view propounded is consistent with arguments for forcing local content in TV programming.

My preference is to allow free competition in such markets and to move towards free trade immediately but I acknowledge that there is a case for some nationalistic bias. It is desirable to promote Australian content in books and in media, such as movies and TV shows, as an alternative to car chases, serial killer movies and what seems to be a bottomless pit in contemporary US culture.    There is also direct value in promoting the Australian national viewpoint – not only in cultural and entertainment areas but also in the way we teach.  We need to self-reflect as a society and to learn about ourselves.

But the ban on parallel imports is not an effective way of achieving this.  The best way to advance Australian-sourced literature is through subsidies administered by organizations such as the Australia Council for the Arts .  This provides transparent grants to local authors and such grant givers can be held to public account.  That is not to say such grant-giving will always get it right but on balance it should promote work of quality and not a bunch of talentless free-loaders.

Banning parallel book imports increases returns to local printers and publishers by charging a high price to local consumers for locally-produced books.  This price effect reduces local consumption of such material.   

To the extent too that such publishers have monopoly power and the market for local book writing is competitive such high prices need not translate into increased incomes for authors.

Promoting Australian culture is also not only a matter of trade economics but also involves educational philosophies and more general issues of national self-confidence.  I’ll post about such issues on another occasion when I have time to disentangle this case from an uncritical jingoism.

6 comments to Using trade protection to promote local culture

  • […] View post:  Harry Clarke » Using trade protection to promote local culture […]

  • conrad

    “It is desirable to promote Australian content in books and in media, such as movies and TV shows,”
    You must be joking for movies. It seems that 99% of Australian movies follow the same old boring formula: white-trash man does good or cultural cringe light comedy. Very occasionally we get some Aboriginal film. No doubt the grant system is rigged to give money to the same old group of boring directors. Perhaps if they made films people liked to watch, we wouldn’t have to subsidize them.
    Of course, the whole idea of restricting what you read or watch in the world of ebay and BitTorrent just shows you how far behind the government is in its understanding. I personally can’t think of the last book I bought from a normal store — I just type the name into ebay, buy the book (generally second hand but in perfect condition – usually from overseas), and presto, it’s delivered to my doorstep in a few days at 20% of the Australian sticker price without tax. If its a book that isn’t on ebay, then I just get it from one of the OS online distributors. Again, problem of tax solved. This is the new parallel importing, which is unstoppable.

  • hc

    I am reasonably impressed by Aussie movies – they include some of the best I have seen over the past couple of decades. I thought Australia the movie was poor but some of the lighter movies (e.g. Strictly Ballroom, The Castle) I thought were entertaining. And movies such as Gallipoli I thought were excellent drama. I think we should have a local movie culture and not one that is primarily derived from Hollywood.

    My point is that grants that are exposed to public debate (a debate that would include your negative views) is a better way of going than trade-based restrictions.

  • Uncle Milton

    The PC did the cause no favours by its use of clumsy language like “cultural externalities” to describe the national benefits from supporting local writers. It made them look like philistine economists who have no appreciation of cultural values. Unfortunately, this might actually be true.

    The government will go to water on this. The tell-tale sign is that the most economically literate member of Cabinet, Lindsay Tanner, is waivering. Of course he knows perfectly well that import resgrictions on books are a pernicious nonsense, but he has an inner city electorate with a thin margin against the Greens to defend.

    Mind you, I haven’t seen the Opposition say that the restrictions should be lifted either.

    I’m all in favour of Australian writers. I’ve just finished Tsiolkas’ The Slap and thought it was terrific. Kate Grenville is one of my favourite authors. But it I also like to read to books written by people from other countries. Yes. I can buy them on Amazon at less than the local price but the freight is expensive. Local writers should be supported by the tax payers not book buyers.

  • conrad

    “I am reasonably impressed by Aussie movies – they include some of the best I have seen over the past couple of decades”
    Look, I’m happy to have a local film industry too. But whether subsidizing them does any good you can judge for yourself here:

    Try having a look at the big ticket items between, say, 2001-2007, and see whether you even know any of them (for some reason, more come up if you use smaller dates, e.g. 2006-7). If you feel enthusiastic, have a look at some of the ratings on the review sites.

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