Tuesday, April 23, 2024

Professor Robert MacCulloch: Bizarre Claims

On Richard Prebble and Don Brash's Bizarre Claims about the link between Trade and Military Alliances

Last week, former ACT Party leader & Labour Minister, Richard Prebble, who reads this blog, wrote an opinion piece for Main Steam Media behemoth, the NZ Herald, with the blazing headline, "It is lunacy to join a military alliance aimed at our biggest trading partner". Don Brash, former National Party Leader & RBNZ Governor, together with Helen Clark, our former PM, have been writing articles with the same theme.

Brash has defended spying by China, saying "That's What Great Powers Do", and also argues that by joining the military alliance, AUKUS, "we antagonize the country which is, by a substantial margin, our largest trading partner". There is a long and ambiguous economics literature on the relationship between trade and conflict between nations - which mainly tries to address the question as to whether deeper trade ties lessen the chances of war.

My opinion is that Prebble and Brash are talking nonsense. Why? You could not be more part of a military alliance than Japan - which is aimed partly at China - with Japan even hosting a bunch of full blown US bases. The history of those two countries could not be more fraught, with the Japanese having, of course, invaded China in 1937. So who is Japan's largest trading partner nowadays? China. Japan's total imports and exports from China equaled $US 348 billion in 2021, with America far behind at $US 216 billion. Let's repeat the story. You could not be more part of a military alliance than South Korea which is aimed at North Korea/China, with South Korea also hosting a bunch of US bases. So who is South Korea's largest trading partner today? China. Its total imports & exports from China equal around $US 268 billion, with America far behind at $US 131 billion. Let's repeat the story again for the benefit of Prebble & Brash. The US military has a significant presence in the Philippines and that country is currently experiencing a fraught relation with China in its surrounding seas. Who is the Philippines largest trading partner? China.

Just because a country is your biggest trade partner, doesn't mean you have to be big buddies with it. Since when did the right-wing, which Prebble & Brash represent, believe you must be mates with those you do business with?


Professor Robert MacCulloch holds the Matthew S. Abel Chair of Macroeconomics at Auckland University. He has previously worked at the Reserve Bank, Oxford University, and the London School of Economics. He runs the blog Down to Earth Kiwi from where this article was sourced.


Anonymous said...

Well said, I also found those statements from Prebble, Brash and. Co very odd.
We are an independent country and have the right to do what we like when it comes to defence of the nation. NZ doesn’t run around telling China what it should do in regards to defence.
How about we all stop buying Chinese EV’s or crap from TEMU.
Chinese buy food from NZ, they can’t get enough quality food into China.
I can live without Chinese tat, they can’t live without food.

Robert Arthur said...

Maybe the others, being ominously closer, have less option.

Anonymous said...

I thought Aunty Helen was left wing, so it’s both sides here, taking sides with China.

Peter said...

While I have great admiration and respect for Dr Brash, on this occasion I personally believe his views are wayward and that Prof MacCulloch is correct - more especially when one considers the parlous state of our own homeland security measures.

We, ultimately, need the 'right' (aka, those that think and conduct themselves similarly) friends when the chips (aka money and trading partners) are down.

But then, I don't have a Phd or consider myself on the same intellectual plane as these erudite gents. But, unquestionably, both have considerably more smarts than the vast majority that are in our parliament - more especially both current and past PM's that any of us can relate to.

Anonymous said...

Right wing?


oneblokesview said...

The USA Demands obedience/acquiescence from its "partners".
Which above all else would make me NOT want to join their gun club.

Anonymous said...

Prof MacCulloch's own previous analysis about New Zealand's current economic predicament points to China holding us up from economic collapse. Are those other countries in the same perilous state?

Anonymous said...

It is said that " very clever people" can hold 2 totally contradictory ideas in their mind at the same time.

Perhaps an example of that?

Robert Arthur said...

Anonymous may care to note that much of the tinned food and the fish in supermarkets comes from China. The avergae chinese could survive well without NZ. but without their purchase of our milk powder and pine trees, the latter very avilable elsewhere, and sale of gift priced tat and quality products here our standard of living would be hugely reduced