Can Western nations remain fair and affluent?

But again, domestic resistance at the Western societal level plays an important role in tempering fears about foreign investment, again providing an example to other nations.

While Western nations are unlikely to return to extensive industry protectionism, as this would contradict Western claims to global leadership, they are adopting some measures to uphold US concerns. The US Commerce Department (April 2010) imposed import duties of up to 99 per cent on a type of seamless pipe, resulting in Tianjin Pipe (the world’s largest maker of steel pipe) investing in a US facility as it could not afford to export to the US if tariffs were over 20 per cent.

China’s Jeff Chee, who owns Top-Eastern with worldwide sales of more than $120 million and 4,000 employees, notes that investment is made in the US despite prices being much higher than in China as lots of US customers have government contracts that have ‘made in USA’ requirements.

And concern about Chinese management at one Haier plant in Camden, South Carolina, also resulted in the removal of Chinese managers who had little in common with domestic cultural norms, including the need to offer health insurance.

Western governments have a difficult task to uphold social and environmental considerations, as well as remain competitive in economic terms and attractive to investment, but ongoing and smart alterations at the national level can change the game.

It could even be that streamlining welfare, along with other policies that temper any reliance upon high levels of immigration and foreign investment, may actually create extra opportunities for lower-income earners in terms of lower house prices by altering the supply and demand equation.

It is simply a furphy for policy elites to rely on more of the same to save Australia, including large numbers of immigrants, students, or even tourists.

Western societies will have to think that much harder if they want to remain affluent, equitable or even influential.

We may have to weigh up whether we force our own workers to move where work is, or rely on temporary skilled labour. We may need to look harder at how to increase per capita wealth rather than gross levels of GDP. We may need to build more public housing, even at a substantial cost. We may need further taxation reform that helps first home buyers, yet penalises others in accordance to how many homes they own. All policy options should be open to public debate.

While Western nations are unlikely to return to extensive protectionism, as this would undermine its global leadership, it would be naïve for Western governments to give full expression to liberal economic ideas, especially at a time when many rising developing nations are hardly open and transparent. For instance, the International Finance Corporation’s 2007-2008 report noted that in terms of the ease of doing business, China and India ranked 83^rd and 120^th of 181 countries. Similarly, in terms of corruption ranked by Transparency International (2010), on a scale of 1 to 10 (higher figure least corrupt), many still rated poorly: Brazil 3.7, China 3.5, India 3.3, and Vietnam 2.7.

There will also be some tension between various nations that have to be resolved. This includes resolving currency values and debt levels. Concern is expressed at China’s reluctance to float its currency, yet the German Finance Minister Wolfgang Schäuble also described US policy as “clueless” given a belief that enough money had been pumped into the market, and the US itself was itself artificially depressing “the dollar exchange rate by printing money”.

To conclude, the evidence suggests that Western nations will face tougher times ahead. In this era where a greater proportion of global GDP is being generated by developing nations, Western societies may indeed have to modify the balance between open trade and government intervention.