Contribution To The Tariff Debate
Probably the most influential paper Gruen wrote during this period was never published. It set off the Australian 'tariff compensation' debate in the late 1960s. The arguments were taken up in the 1970s generating considerable professional interest and controversy. Gruen pointed to the way in which tariffs for manufactures imposed costs on export industries, particularly agricultural industries. As an early and strong advocate of lower levels of industry assistance, Gruen's point was not to advocate additional assistance for farmers so much as to challenge the idea that farmers might have low levels of assistance removed before manufactures had higher levels of assistance removed. He caviled at the "attitude . . . that anything any farm pressure group asked for was ipso facto unjustifiable". Gruen then commissioned Professor Peter Lloyd to write the survey of Australian economics of protection which would survey the tariff compensation debate. Lloyd had been one of Gruen's main opponents in the tariff compensation debate and his survey argued that the case for tariff compensation had been overstated – including in a Green Paper on Rural Policy in 1974 of which Gruen was a co-signatory. Gruen later agreed with Lloyd's analysis on the point.
Gruen also published a theoretical curiosity with Max Corden in 1970 "A tariff that worsens the terms of trade", though it was focused on a specific policy problem.
In response to growing unease at Monash University, Gruen attempted to engage with the more reasonable student radicals and set up complaints mechanisms. When those mechanisms sometimes found against his colleagues, his faculty became - unsurprisingly - less congenial to him and so, when he was offered a chair at the ANU in late 1971, he "accepted with alacrity".
Shortly afterward, following the election of the first Labor Government in twenty three years under the leadership of Gough Whitlam, Gruen was approached by the Head of the Department of the Prime Minister and Cabinet to become a special consultant to the Department to enable it to provide economic advice that was independent of the Federal Treasury. He accepted the position, though did so on a part-time basis to enable him to also fulfill duties at the ANU.
In 1973 with Australia experiencing sharply rising inflation and strong current account surpluses, Gruen proposed a 25 percent across the board tariff cut, which was adopted by the Whitlam government. Gruen regarded this as his greatest achievement and it is probably the policy he is best known for.
Read more about this topic: Fred Gruen
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