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January 03rd 2016 print

Bert Kelly’s Ghost

Loathing Turnbull Isn’t Enough

Many conservatives find the latest Prime Minister's treachery, smug self-interest and egomaniacal waffle so hard to take that they are contemplating voting for one of the minor parties on the right. Fair enough, but that shouldn't mean rejecting the odious in favour of the economic illiterate

turnbull juliaIt seems likely that disgust at the Turnbull coup, as well as Turnbull’s various leftist, Islamophilic and crank-Green pronouncements, will mean an increase in small right-wing parties at the next election. They might get up a senator or two. Nothing wrong with that. I intend to vote Australian Liberty Alliance in the Senate myself. But — and it is a big “but” — many of these small groups, well-meaning and patriotic as they are, remain afflicted with McEwenesque economic irrationality.

I have before me a pamphlet which one of these groups has sent me. Its policies include:

  • “Stop imports of various products which we can easily make here from superior materials under Australian workplace laws. We look to reintroduce tariffs on imported goods.”
  • “Support Australian farmers and producers. Protecting Australian jobs.”

These policy points are printed one after the other. Yet they are mutually contradictory and, taken together, prove once more that a really bad idea never goes away. Quadrant Online readers will not need the fallacy pointed out, but I will outline it briefly for the benefit of irregular visitors: The whole point of tariffs is to put prices up for consumers. A tariff on shirts, for example, means shirts cost more. This does not bother the importer, who can pass on the cost to the customer, nor does it trouble the local producer, who it is meant to help. It means he can put up the price of his shirts as well. It does not even (much) directly hurt the worker, whose wages are adjusted — though, of course, it does hurt the pensioner and others on fixed incomes.

But when it comes to the farmer who buys and wears the shirt, while he has to pay more for it, he cannot pass the cost on by putting up the price of his wheat. He is exporting that wheat and has to sell it at competitive prices on the world market. If he puts the prices up, buyers will simply go elsewhere.

Thus tariffs, deceptively packaged as a tax on imports, are in fact a tax of exports. During the Great Depression, Western Australia was driven to vote for secession by the economically illiterate Scullin Labor Fovernment in Canberra putting up tariffs on fencing wire and other necessities for the export-producing industries – in effect hosing down a fire with petrol.

No country ever became rich by closing its borders to trade – doing to itself in peacetime what a blockading enemy would do in wartime. Countries which have striven for “self sufficiency” by closing their borders to trade have only achieved bankruptcy and starvation.

I am sure my readers are aware of this, but it cannot be repeated too often. If the little right-wing parties wish to achieve intellectual respectability they will take note.

The late Modest Member’s ectoplasmic emanations were recorded for posterity and the public good by the agile and innovation Hal G.P. Colebatch, who transcribed with one hand the above wisdom from the Great Beyond while operating his Ouija board with the other

Comments [29]

  1. Jack Richards says:

    Back in the good old days of tariffs on everything I remember buying a pair of Australian made Dunlop Volley tennis shoes. I paid $12.50 and that was 1973. I was earning about $70/week then. So in today’s dollars it was around $175. Not so long ago I saw the same shoes at K-Mart (but made in Vietnam) and they were $11 a pair! I also remember Midford, Paramount and Whitmont shirts that could cost the best part of a week’s pay – each. When I first visited the USA in 1976 I couldn’t believe how cheap clothing was. I could buy Levi jeans for $10-$15/pair as against $50-$100 here. Big Chevs, Fords and Chryslers with all the “optional extras” cost less than a basic Falcon or Kingswood.

    The trouble with a lot of right-wingers – Kim Vuga and Pauline for example – is that they have no understanding of economics or markets, economies of scale, the supply chain – any of it really. They think we can wall-off our industries and that they’ll thrive without competition; but those of us you lived through the 50s, 60s, and 70s no just how backward this country’s manufactures were and how vastly over-price. In 1970 I bought a brand new Holden Torana “S” with a 2250 engine and a 3-speed column change. That was the middle of 3 models. It came with … nothing. The “optional extras” were: cigarette lighter, radio, heater/demister, carpets, windscreen washer. Not only that, it leaked like a sieve when it rained and you never knew which way it would spin if you applied the brakes – that were all drums. The engine was actually an upgrade of the over-head valve 6-cylinder that was first used in Chevs in the 1920s and had been standard on all Holdens since the FX. It went OK so long as you didn’t have to apply the brakes in anything but dry weather. In comparison with Japanese, European and American cars, it was a pile of junk.

    • Jack Richards says:

      “but those of us you lived through the 50s, 60s, and 70s no just how backward this country’s manufactures were and how vastly over-price”

      should read

      “but those of us who lived through the 50s, 60s, and 70s know just how backward this country’s manufactures were and how vastly over-priced.”

    • LBLoveday says:

      I used to buy Australian King Gee V-neck jumpers and they would last “forever”; the Made In China replacements are stretched out of shape at the wrist within days and, for me, unwearable within a few weeks. I know the Chinese version were much cheaper, but I’d happily pay 4x the price for the old quality, and save money long-term by doing so.
      I used to buy Australian Holeproof Explorer socks, and they would likewise last “forever”, but the Made In China replacements show wear within months. I was lucky to find some old stock in a Cairns shop last year at under twice the price of the Chinese line and bought the lot – should see my life out.

  2. Jody says:

    Yes, Jack, that fact seems to be conveniently airbrushed. But the comprehensive loss of a manufacturing base is an ongoing source of pain and we are buying overseas goods which are now inferior. I used to buy Australian made Sheridan sheets; now these same are made in China. they’re ill-fitting, expensive and short-lasting. So, it’s not all it’s cracked up to be – this globalization.

    • Jack Richards says:

      You may have noticed that much of the stuff that used to be made here by Pacific Brands and others – who paid Australian wages – did not decrease in price when the manufacturing moved to China or Thailand etc. The company executives and shareholders simply pocketed the difference. Who can forget how Sue Morphet wept, moaned and gnashed her teeth when she retrenched the last few hundred Australian machinists and factory hands – it was the hardest things she’d ever done. Then, after it was all over and they were gone and paid off, she got a bonus of about $4million that was a bigger sum than the combined wages of all those she’d sacked for more than year.

  3. Turtle of WA says:

    I noticed this at the last election. A ‘nationalist’ independent candidate, whom I won’t name, came to my door looking for signatures to get on the ballot for the WA senate re-run. Her policies were a combination of anti immigration nationalist stuff, and protectionism, which she said would ‘save Australian jobs’. When I politely explained the inconsistency of these policy positions she told me to “f— off”. I explained to her that it was my house. She then stormed off accusing me of voting green. Low.

    This person, I later found, was mentally unwell. She’d even been in Clive Palmers party and been kicked out. Last I heard, the police were after her.

    Nationalism and protectionism. It’s almost like national socialism. They just gives a bad name to loving your country.

    • Jack Richards says:

      Some of them are so ignorant it’s truly embarrassing. They have very simple solutions for very complex problems and they’re all wrong. That bleached dim-wit Kim Vuga has started the “Love Australia or Leave Party” and her “policies” are mostly just risible. She wants to have compulsory conscription for both males and females at 18 for two years. That’ll go over well as it did in 1916-1918 and from 1963 to 1972. I wonder how she think she’ll pay for it? That’s all detail I suppose that will work itself out.

  4. DRW says:

    How many Liberal voters will cast a ballot for the Golf Foxtrot option on a ballot paper with a Turnbull Traitor standing for re-election?

  5. Eeyore says:

    We can be competitive in the manufacturing sector if only we would get out of our own way, using OHS issues to pad out jobs is the old brewery strikes by stealth.

    Dopey regulation around our manufacturing sector abounds. Here is just one example.

    Engineering machine tools contain complex electronics and motion control systems, these electronics operate best when they are kept at a constant temperature, hence most machines come with air-conditioning to the electrical cabinet to keep moisture and temps where they belong.

    When Chlorofluorocarbon as refrigerant gasses were removed to protect the ozone layer a whole bureaucracy was created to control it’s inert replacement along with onerous licencing regulations. This was done under the AGW legislation assaulting manufacturing companies on a daily basis.

    If one needs to replace the air-conditioning unit the importer is required to register as a importer of the gas (fee circa $6000) and run a control system correlating the volumes and handling of the units and the gasses they contain. (Onerous).

    The alternative is you may have your supplier OS certify that the unit contains no gasses.

    Just how did the people who wrote these rules imagined our OS suppliers would comply with these rules?

    Given the units have to be charged with gas before they can be tested running, does anyone imagine that they do not just let the gas out into the atmosphere? I know they do, I have seen them do it.

    So all of those costs, a bureaucracy to manage it, costs to the users for what?

    I get this every day of my working life, pointless stupid vacuous regulation driven by goals that of themselves may well be worthy, implementation of those goals is killing our manufacturers one refrigeration unit at a time.

    Investigate WELLS (water regulation for taps and the like) and ask yourself why there is only one Australian manufacturer of tap wear left. Ask why changing the colour of the tap or the handle you choose to fit means you have to pay WELLS a separate approval fee and that you have to reapply for approval each year?

    We don’t want manufacturing in the country, we have decided not to be involved because we allow this rubbish to proliferate.

    • Jack Richards says:

      There’s nothing more certain to make a cock-up of an industry or endeavour of any kind than public servants or politicians sticking their fingers in the pie. If committees of politicians and pen-pushers worked in industry then the USSR would still be around.

  6. en passant says:

    I left the once great, conservative Liberal Party last year and would not vote for them if they had the only candidate. Why vote Lite Green Stupid, when you can go the whole hog? I have not decided on which party I will vote for as each of the ones I have looked at all seem to have a fatal flaw built into their manifesto somewhere. I will be voting for independents and minor parties before closing my eyes for the four ‘majors’.
    In 1994, when the Cabinet Papers were released for 1964 it appears that the Menzies Government was in a slight panic as unemployment had hit a high of 2%. Yes, these were the days of tariffs and the high costs of tariff protection, yet unemployment went up. Of course, these days if we nominally bring unemployment below 6% there are triumphal parades in the streets and politicians demand bigger rorts to celebrate.
    In WW2 Australia manufactured everything from planes, to artillery to small arms, to optics, to … Unfortunately, Hal exposed the Waterfront Unions and their effect on the RAN and Army resupply in his great book on treachery and sabotage (available from Quadrant). These days our manufacturing industry has declined to the point where we are by definition a third world country providing primary produce and minerals. The rest of us are superfluous.
    As I studied economics at university I can assert with confidence that as a result I have no clue to any solution, but somewhere there has to be a balance where we retain capabilities in strategic areas, such as electronics, software, light manufacturing, weaponry, heavy engineering projects, infrastructure (dams, Roads, communications [but not the NBN]). We also need to retain low-tech industries (that can absorb the less intellectually endowed) even though all of those jobs can be done cheaper overseas. The Party that comes up with that balance will be the one I vote for.

    • Jack Richards says:

      That’s right. In 1964 we had very low unemployment but there were a number of reasons for it. Firstly we still rode on the sheep’s back and had guaranteed markets in Britain for wool, wheat, dairy and fruit etc. We also had a reasonable trade with Japan as well as with Europe and the Soviet Union who also wanted wool and wheat. Secondly, we had a well managed immigration system that allowed only European migrants and the numbers were kept at what the country could absorb – not run-away non-white immigration like we have today ensuring a perpetual unemployment level of at least 5% and designed to keep wages low and inflation at bay. Thirdly there were no computers and banks, insurance companies and governments employed an army of clerks straight out of school to operate ledger machines, punch-card machines and so on. Most banks had branches in every town where all the paper-work was done on site. The first accounting computer (with less memory than a mobile phone) was fired up in 1963 at Wales House in Sydney. Also, engineering shops and industrial workshops had lathes, mills, shapers etc that were operated by humans – and there actually were “fitters and turners” who made things. They, like the clerks, have all been replaced by CNC machinery. The banks retrenched all their middle-management and as-good-as abolished all the entry level jobs as have the Public Services and all big corporations.

      We did make our own weaponry and so forth during WW2. There was an engineering miracle called the CAC Boomerang that went from drawing board to flying prototype in 12 weeks. It was made because we had no front-line fighters at all. My father flew with 4 Squadron RAAF in the SWP and was flew both Australian made “fighters” i.e. the Boomerang and the Wirriway. Their combined score was ONE zero downed in New Guinea – but it wasn’t shot down. The Wirriway pilot saw it below him and dived onto it – because he knew he had no chance if it saw him – and the Jap dived straight into the drink! The Boomerang and Wirriway proved to be of use in photo-reconnaissance, target marking for artillery and ground attack. As a fighter they were worthless. We made Beaufighters and light bombers from British designs and they were handy aircraft.

      But here’s the problem comparing today with the halcyon days of Bob Menzies and 1964.Britain joined the Common Market and told us and the Kiwis to eff off and do for ourselves – plus they withdrew militarily east of Suez in 1970. Europe had fully recovered from the war by 1970 and didn’t need our food or fibre any more and the Common Market completely excluded our products. Luckily we found new markets for wheat and wool in the Soviet Union and the middle-east – so long as the yanks didn’t cut us out with dumping. Had it not been for coal, iron, wheat and wool exports to Japan we’d have been sunk. We exported virtually nothing that was manufactured other than cars and they only went to NZ and South Africa. The TCF industry exported nothing and overcharged for everything. WE had an electronic industry that made radios and TVs (AWA, Admiral, Pye etc)that were far more expensive than we could have imported them for – which we do now. There was a National factory at Penrith where they simply assembled Japanese TVs from about 50/50 split of locally made components and Japanese ones and then sold the TV for about 4 times what it would have cost if fully imported. In NZ they did a deal where Japanese TVs were dismantled in Japan, the parts sent to NZ and reassembled – all to provide “work” for Kiwis who then paid 6 times what the device was actually worth.

      Protectionism and self-sufficiency has appeal to people who don’t understand the complexity of the modern world. The USA tried it and it led directly to the Great Depression in the 1930s. They stopped importing from Europe and suddenly found themselves with mountains of produce they couldn’t sell.

      What jobs we’ve exported to China, Bangladesh, India, Vietnam etc like the making of underpants and t-shirts and thongs and shoes – TCF basically – is low-end 19th Century manufacturing. The manufacturing that still exists in Australia – and there is much of it – is precision high-end stuff.

      • Eeyore says:

        To your last paragraph, I regret to report that it is not the case of precision high end engineering based manufacture being in Australia. That has gone OS some time ago.

        Precision mould making collapsed in Australia with GM’s decision to move those processes to India, Taiwan and Thailand. Sydney mould makers are dropping like flies. Those that are left in SA and VIC are hanging on by the skin of their teeth, many moved to mining support only to see that go up in a puff of smoke.

        Fighter plane component manufacture is in its dying days, there is hope for some relief via Subcorp. Rent seeking from manufacturers is no less annoying than from any other sector.

        New Tech companies (grant farms) are manufacturing OS with few exceptions.

        Mining tech companies are on their knees with the drop in extractive industries.

        There are some patches of green out there, but they are very few and far between. The pattern has been to build up business then move the manufacturing off shore, deep hole drilling for gas and oil is the perfect example.

        We have chosen with our policies to get out of engineering based manufacturing, we will be a cottage industry R&D support or restricted to time sensitive maintenance support in short order if we are not already at that point by and large.

        I see it come and go, composites are the new thing the headlines in industry magazines quote, government announces excellence centre in composites…….no investment in composites follow the government cash and it all disappears again into history.

        3D printers will change manufacturing the industry magazine claims, forgetting entirely that additive processes cannot replace production except in R&D and even then only for a small % of the time…..open a 3D printing centre for excellence some politician decides and all will be well with manufacturing.

        Reality kicks in and the people who are sticking their hands into their pockets to buy the equipment are smart enough to see the holes.

        We are seriously having ourselves on if we expect to be other than a boutique- R&D- breakdown support country because we have chosen to be otherwise, we have chosen to run extractive industries, food and tourism and services.

  7. Roy Edmunds says:

    One problem is that Australia does not have its own money and is unable to create its own credit.

    Free trade has meant that China has not only an advantage in low wages but in many other costings.

    Australia is gradually approaching the same situation as the United States where the debt will be impossible to repay. Australia is currently borrowing over 100 million each and every day to pay the interest…

    The problem is that all money is now Fiat. And money works best as an agreement among peoples of a common socio-economic group. Expectations may be totally different and the money may therefore be assumed to match those personal values in terms of worth. Meaning the money has no intrinsic value but the people attribute a certain worth to it.

    There in lies the problem with so called free trade. There is nothing free about it.

    The fiction of one peoples money cannot be transferred to another if they share little in the terms which cannot be measured in money yet directly set the worth thereof.

    Trade is necessary. So is the money necessary to pay for imports. But when a country imports more in so called value from country A than it exports to country A one has to question the relative worth of the fiction because money has no value…only relative worth in our imagination.

    To sell off a country because it is not imagined to be worth much is a sad indictment on a failed monetary system which persists because we have no understanding of the thing we all believe in but know nothing about…money.

  8. Keith Kennelly says:

    I’m a successfully manufacturing and looking to export.

    I don’t get stumped by problems.

    I’m also an entrepreneur. It’s my job to make sure I get over, around or demolish the hurdles, roadblocks, potholes and other obstacles in my way.

    Academia can’t teach that and all those qualified in academic institutions can never possibly understand anything other that what their academic training imbues in them.

    That’s why their Australia is struggling to find a way.
    That’s not my Australia.

    And here’s a tip: nobody ever asks how I’m doing what I’m doing.

    My son is an electrical engineer. He recently undertook a course on entrepreneurship.

    After completion he came to me with a list of question.
    I answered diligently.
    His conclusion: Dad you are an entrepreneur.
    His question: How did you do it.
    My question: How much did your course cost.
    His answer: It cost you about $1500.

    I laughed because I know that is exactly what professional education does. It teaches everything except how to achieve.

    • en passant says:

      Keith and Jack,
      The key was in my last paragraph: I believe we need to retain strategic capabilities and not just be a resource colony for the world. If we simply produce primary products, food & ores, then Oz probably only needs a population of 4-5M, while the rest of us drink coffee. I look at the Japanese Miracle, the Singaporean Civilisation, the Swiss, Norway, the manufacturing growth and aggressive muscle of China, the vibrancy of Vietnam, the industry of India, the recovery of Russia after its collapse, Taiwan, Brazil, even Mexico and wonder if the changes taking place in Oz are the right ones. We no longer worry about what is good for Australia, we wonder if the world will like us for the sacrifices we make.
      The world is a schoolyard and we seem bent on trying to impress the bullies and sports jocks instead of standing up for ourselves. We are giving away the unfair advantage of cheap energy that we were gifted so we can ‘be just like them’. We have not vetted the people we have brought in to infect our culture as we seek the approval of totalitarians instead of standing up for ourselves so we can ‘be just like them’. Who has criticised Saudi Arabia, Iran, Turkey, Pakistan, Indonesia, Malaysia or 37 other muslim nations for not taking in the muslim detritus of the M.E? Yet Sarah wrings our hands for us for Oz not doing enough … Remember at the next election to vote for a sovereign Australia that promotes our national interests first.

  9. Eeyore says:

    Good on you Keith and more power to your arm.

  10. Keith Kennelly says:

    En, Jack, Jody et el, it is great to be able to identify and understand what is occurring and great you understand things need to change.

    But … always a bloody big but! We also need to assess what we want to change to, what is possible, and what are the alternatives available and THEN act on the conclusion we arrive at. Don’t leave it to others … especially the politicians, bureaucrats or the ideologues.

    Cheers to you all.

    But have hope! The market and entrepreneurs will survive any thing the academically educated elites use to try to shape us, including Malcolm. We survived Rudd and Gillard..

  11. Jody says:

    My son, a winemaker in his own business, is really doing it tough. Taking GST, doing the paperwork for the taxpayer free of charge, issues with the weather, a wife he cannot get rid of and who seems to have unlimited rights…. He was here two hours ago and said, “It’s much more intelligent for me to close my doors and go on the dole”. I looked askance and said, “clearly, if that’s all you can hope to achieve for all your efforts (and the courts don’t want to know about him as a custodian of his children) then that seems to be the only option”.

    He drove off in a very worrying mood and I was left concerned but thinking how so much of what MALE entrepreneurs do is hindered at very stage, every day, by red tape and unfettered domestic rights for the women they want out of their lives. Yes, I’m angry – not least because he will very likely have to hand over to his estranged wife most of what he’s worked for (360 days a year) so that she can sit on her bed, leaving the house a garbage dump, and writing about her ‘ideal’ family on “Facebook”.

  12. Keith Kennelly says:

    Jody

    Xero Accounting. A cloud based system. $50 MONTHLY.
    Does all my bookkeeping, reconciles my bank accounts daily, prepares my activity statement and lodges my get statement. Also provides all management reports from p&l to executive summaries.

    That’ll alleviate much of his paperwork, dead time and accounting bills.

    I raised my children, from a very early age, alone as custodial parent.

    If your son wants some advice in that area. Tell him to just give his kids fun. It was the advice I received at a difficult time.
    My kids are now in their thirties. They are both responsible adults, successfully doing the things they most wanted and maintain adult and happy relationships.

    Things were never easy, I simply battled on and dealt with the adversity. Eventually I was rewarded far more than I’d ever imagined. I became the strongest person I know.

    Your son is on a similar path.

    It might be intelligent to take the easy path but that’s not smart.

    I rose and faced the greatest challenges whenever I heard positive encouragement.

    Cheers Jody.

  13. Keith Kennelly says:

    P’s this Christmas was the first Christmas holiday I’ve had in 45 years.

  14. Jody says:

    Thanks so much for your advice on this. I’ll pass on the information about Xero Accounting!! He’s a one-man band and tremendously hard-working; I couldn’t be prouder of him, actually. Long, long hours and hard yakka making his own wine and selling it. But the wife is the unending drain in all this and their badly neglected children (her end). He does provide the fun, love, magnificent meals and intellectual encouragement. Same here at home with the grands. But I want to know why the Courts don’t want to know and won’t listen to my son’s huge concerns about his childrens’ welfare!!! Or most men, for that matter. What a sexist world we inhabit.

    We know all about foregoing holidays as we owned a huge intensive agricultural business until 2002. It stole my husband’s youth!! Government never made it easy; in fact, I developed the idea that we progressed IN SPITE of government and its endless red tape. On top of that punitive environmental laws (which, I hasten to add, do not pertain to the RAAF contamination of the lower Hunter) nearly sent us out of the business. Only that I stood up to and stared down the local council and neighbours we wouldn’t have had a business to sell. So, absolutely NO thanks at all to government for our endeavours – and the full time employment of another son and part-time for local people. None whatsoever. In fact, my brief was to my accountant, “do whatever you can to make our taxation bill as light as you can – my husband isn’t working 24/7 for the Australian taxpayer”. There it is!!

  15. Lawrie Ayres says:

    I see constant contradictions in government policies. We are told we can be the food bowl of Asia then they take the irrigation water and let it evaporate in a man made lake. We wish to build a man made lake on a river where the water runs to waste and are told some frog will die. We are told to preserve the bush for biodiversity just so it can burn to a crisp. We are told to have marine parks and sustainable fishing so we buy our fish from unsustainable and ecologically destructive Asian fish farms. We are told to preserve old trees so we buy wood from clear felled Asian forests. We are told to use bio diesel from palm oil plantations that are now a monoculture where they were once diversified and home to orang-utans which are now endangered so we are asked to sponsor their young. We are told to be innovative and more efficient but the government mandates wind power. The country is run by idiots who expect us to re-elect them so they can commit more idiocy.

  16. Jody says:

    The recurring theme in your comments is “we are told”. I’m over being told.

  17. Keith Kennelly says:

    It’s the age old problem if the academically educated. They thing they know best and think the rest if us need to be told.

    I wish we’d get back to our egalitarianism where we know everybody holds some of the truth and that nobody holds all of the truth. Them we all be listened to … With respect instead of being told to shut up, talked over and ignored.

    • Jody says:

      That’s what happens when you over-educate lesser beings. Remember “Animal Farm”.

      My son tells me there’s an issue with Xero Accounting having its funding cut from its backers and that it may not still be around by 1/7/16. Do you know anything of this?