The global property bubble is fuelling protectionist policies
The latest wave of globalisation is driving politicians to impose local solutions that could damage global trade, says Merryn Somerset Webb.
New South Wales has introduced new taxes on foreign property buyers
A few weeks ago we published a piece on the global property bubble its causes and its consequences.
This week has brought news of another one of its symptoms: two Australian states have announced that they are toin an attempt to deal with fast-rising house prices (there has been a wave of Chinese money hitting the market over the last few years).
New South Wales is to have a new stamp duty of 4% for foreign buyers and Queensland is to have one of 3%. New South Wales is also planning to charge a 0.75% land value tax on real estate investors.
The news comes hot on the heels of a government decision earlier in the year to block the sale of S Kidman & Co, a company that holds nearly 1% of Australia's land mass (25 million acres and 2.5% of its agricultural land), to a consortium of Chinese buyerson the basis that the sale would not be in the national interest.
The problem here is obvious the latest wave of globalisation has made money movement international. But politics is still (quite rightly) pretty local. That means that politicians feel obliged to come up with local solutions to block the perceived problems of globalisation and that those solutions are often (rightly or wrongly) protectionist.
This, clearly, isn't just about houses: the World Trade Organisation put out a report only yesterday noting that between mid-October last year and mid-May this year, G20 economies had introduced protectionist trade measures at the rate of five a week (affecting 5% of global imports).
This isn't yet a return to the 1930s (the last time a wave of globalisation was rejected by electorates and half of global trade was wiped out as a result). But it is worth keeping an eye on: given the mood around the world it could mark the beginning of something similar.