Is nothing sacred?
In a front page article today the Australian Financial Review (subscription required) tells us that Kraft, the foreign-owned maker of vegemite, is closing one of its Melbourne factories in order to move the operation to China. The company has
warned of an “ongoing company-wide review” of the rest of its Australian operations, including the Port Melbourne factory that makes Vegemite and peanut butter.
We are further advised:
The manufacturing sector has lost 60,700 jobs in the past year as competition from China, the high dollar and tariff cuts have taken their toll. The 5.5 per cent fall in full- and part-time employment in the sector has struck hardest in the industrial heartland of Victoria, where 19,700 manufacturing jobs were lost in the year to August, according to the Australian Bureau of Statistics. Kraft, a unit of US-owned tobacco and food giant Altria, will sack 151 people and sell its Broadmeadows biscuit factory in Melbourne’s western suburbs after more than 40 years of producing brands including Captain’s Table, Premium and In-A-Bisket
Not to worry, all is well they assure us. Consumers will see no change. Phew! Thank heavens for that! But it seems unlikely that they will be shipping the ingredients from Australia.
Peter Roberts has done a comment piece on this development. He points out that manufacturing exports grew strongly by 18% in the decade up to 1995. But since 1997 they have struggled at 1.7% each year. I wonder what happened in 1996! In 2004-05 he tells there was “an ever-expanding and unsustainable $84.5 billion trade deficit in complex manufactures such as computers and cars.� He concludes:
It took a military threat from Japan to make us realise the importance of manufacturing to the wealth and security of the nation. How long will it be before the trade threat from China makes us realise we can’t be rich selling coal and buying computer chips?
The economist Peter Brain has said that the implied economic policy of the Australian government is one of “pastoralisation.� He says we should export some of our politicians and perhaps import some from Ireland, Taiwan or South Korea.
I’ve switched to Promite.
19,700 manufacturing jobs were lost in the year to August
Strikes me as a very big number is this (state) context. The issue is an important one with many dimensions, yet I predict that this thread will quickly fall into the shallow trenches of ‘competitive’ and ‘comparative’ advantage that revolve around the economics 101 debating artifice known as free-trade versus protectionism: a kind of ideological economic totalitarianism, comparable perhaps to Dubya’s for-us-or-against-us. Between the facts and the ideology falls the shadow of Australia’s future, as undebateable as ever (I hope not).
I can’t remember the name of the company (it’s a big brand) but a major factory on the Gold Coast has just offered redundancy packages to workers and is offshoring production.
What’s the bet this makes their share price go up? It seems to me that most people aren’t interested in stories like these/don’t identify with things like Australia’s future or community because they’re too busy being “mums and dads investors” with more aspirations than brains.
Heartily endorsed Promite, too, since I learnt of the evil conglomerate that is Altria.
That said, the making of vegemite is neither here nor there. Jobs come and they go. We need to institute excellent job transition welfare. As no worker should bear the brunt of global economic transition personally.
It does seem to me that we are the only country that comes close to actually practicing neoliberal dogma on free trade (NZ perhaps also.) To me it is important in the long run that we seem to be moving down the feeding chain in terms of complex industrial activity and value adding.
The consensus from Stepen Koukoulas and Shane Oliver last night was that the trade deficit is becoming more and more risky and that 2006 could well be the crunch year.
If things go crook we can comfort ourselves with the notion that resource-rich countries performing badly is not new. Jo Stiglitz called it the resource curse.
Sigh, not you again on this wbb. For such a tough, principled blogger, you’re still in the ark on this stuff, I tell ya. The boat’s landed; but I know the only way we’re ever gonna sort this is if we have a beer on it someday.
People must still be as enamoured by the whole “weightless” and “information” economy thing to take much notice… though something tells me that finance and IT are not going to soak up as many jobs as failing industry destroys… even without the coalition throttling tertiary education. A service economy does very little to help our trade balance; in fact, given the progressive externalization of our sources of manufactures and value added goods, it can actually make things worse. We are a 1st world import economy relying upon a third world export economy.
The Roberts and Brain arguments are not new. Similar arguments were made in the 1980s, exemplified by Garnaut’s Australia and the North East Asian Ascendancy, and drove the Hawke/Keating deregulation agenda. China’s role is the new addition to the debate in the 2000s.
Clearly the Howard/Costello government has been happy to let slide the promotion of manufactured exporting industry (the Asian Tiger model) which Hawke and Keating saw as important to Australia’s economic and social future. That term “pastoralization” is a good one, and appropriately pejorative, with its connotations of a lack of economic and social dynamism.
But the other side of the Hawke/Keating (and Evans) model - the idea of the “rise” of Asia, was always simplistic at best, and often plain wrong. It was founded on very shaky assumptions about Asian economies and societies.
On top of that, Promite tastes better. Much better.
Oh dear, I have two cans of vegemite in the fridge!
Exporting politicians is a great idea but I think the marketing guys are going to be working overtime on how to sell them! Maybe some examples would be:
Vanstone enema, you will never ever be constipated again,
Abbott and Costello, this duo should be easy with those names,
Downer, with his name and personality (or lack of) he could be used to market the latest psychiatric drugs.
The Abbot & Costello and Downer thing reminds me of something Kurt Vonnegut said in an interview about living in an era where the the country was run by Bush, Colin (pronounced colon) and and Dick. (George, Powell and Cheney). Cardinal Sin was alive then, too.
Manufacturing jobs gone!
so What.
The more you protect manufacturing jobs the more you destroy jobs in the Tertiary sector. That’s the one where you SELL and service the product and services!!
moreover you are also advocating a lower standard of living for the battlers you supposedly support.
Can I suggest you read economic material prepared for HSC students and you won’t write such rubbish again!
Homer, I’d expect HSC students to be taught a simple and probably simplistic version of the dominant (neoliberal) ideology to prepare them for Economics 101 as referred to by CS.
Is that what you are recommending?
Gotta go now. See y’all tonight.
We will learn in time to run our country’s economy, on the global stage, like any other business.
That is, mercantilism, not free trade mania.
Meanwhile we’ll go on allowing the most basic things we hold dear to be plundered.
Personally I think there should be a government backed compulsory acquisition, on reasonable commercial terms, of the IP in vegemite. If it starts coming from China via a company owned by seppos the situation will be ridiculous.
Arr, mercantilism. Armaniac, ye policy solutions are brilliant, ’tis a grand scheme, says I, Captain Felthat! My hearty crew will enjoy plundering the galleons full of doubloons and pieces of eight on their way to the far shores. Yo ho ho and a bottle of Australian-bottled Heineken!
…
What’s wrong with Chinese vegemite? Don’t buy it. It’s not as if the strain of yeast is patented. Personally I’m against over-restrictive ownership of such things as strains of yeast, plant genes and medicines. Bring on the generic version of Vegemite to go with generic AIDS retrovirals!
Protecting manufacturing has its place but as a solution to economic woes it’s a bit arse-forward. How about promoting skills, funding work-based education and training, and making trade apprenticeships viable for year 10 school leavers, rather than having an HSC designed to feed kids through university systems they don’t want to be in?
Naomi,
the more you protect manufacturing the higher the price of the good or service.
The higher the price the less that are sold and therefore need servicing.
Motor industry is a classic example of this.
If only the left understood economics!
You’re privileging one sub-branch of economics, Homer, but it’s traditional for Australian economics debates to fall into this shallow trench, as I predicted in my first comment, and I for one don’t have either the energy to point out the contradictions or the faith to believe they will be understood (some of them are in this essay). For once, I’m glad Fyodor isn’t here.
yes it is the one that has been pr oven correct,
Even Joan Robinson climbed into the left for supporting protection.
As almost every IAC annual report showed protection did not even gain jobs!
I remember one AMWU meeting one particular vocal person pointing this out to the Officials ( Remember Laurie Carmichael anyone).
I could write your anti-protectionism case better than you Homer, but it’s still not the full story - not that I expect this caution to have any effect on the broken record.
it may have passed you by but the article on which these comments are being made is protectionist
Homer, you have tumbled into the most hackneyed stance in economics. While it’s simple to win a free trade versus protection debate in terms of absolute theory, it’s an unrealistic debate in practice and primarily serves as ideology (see my above linked article). You need to get out more:
The more simple and absolute an economic doctrine is, the greater will be the confusion which it brings into attempts to apply economic doctrines in practice, if the dividing lines to which it refers cannot be found in real life. - Alfred Marshall
well done CS.
Completely avoided the pont.
By the way you may have noticed there was more globalisation just prior to WW1
Right back at you.
BTW, you may have noticed there was more globalisation before the 15th century (which is when tariffs were invented).
CS,
you are mistaking tariffs for protectionism.
The French dreamt up methods of protecting their industry well before tariffs
“Before that [i.e. C15th] there is no evidence of the slightest desire to favour national trade by protecting it from foreign competition” - Pirenne
Cs,
Can you explain how one can be both against protectionism ( which this article is about) and against globalisation?
Read my article Homer. Here’s another link, and a quote:
All this is to say that the trade debate needs intelligence, not dogma. Blindly insisting that globalisation is only about ‘free trade’, and resting on the venerable theories of comparative and competitive advantage in order to paint ‘anti-globalisers’ as protectionists, hides far more than it reveals.
More, it is you who is insisting that this post is about the tired theoretical debate over free trade versus protection. I don’t agree.
of course the article is about protectionism.
you remind me of the AMWU who say they aren’t protectionist but merely want fair trade!
If you say so Homer. Whatevs.
Donald Horne lives
cs - I’m not sure what you are suggesting should have been done about Kraft either by gov.au or vic.gov.au in the long (er) term say 5 - 10 years ago or now or next week (or year).
Prop then up a bit more? I think vic.gov or gov.au has already shelled out up to possibly $50m to Kraft (and also to Kodak - presumably to fight digital photography).
Wouldn’t it be better as I think wbb was hinting, to spend that $50m on transitioning for workers when (the inevitable) change occurs?
I have not suggested, and nor am I now suggesting, that anything should or should not have been done about Kraft, Francis. I would only suggest, if I was to suggest anything, that industry policy - or, to be more precise, manufacturing industry policy - is a complex topic with many dimensions to it that warrant research and discussion.
As this thread exemplifies (and as I confidently predicted in the very first comment), in this country, alas, any and all attempts to raise or discuss the issues are immediately hijacked/bullied into the epic banalities of the abstract ‘free trade versus protection’ dichotomy, under the terms of which so-called ‘free trade’ automatically wins and discussion terminates (this actually being the ideological function of that debate).
This is Brian’s post, not mine, and I have not gone, and am not going, beyond that observation, for I know from experience that the way this works means to do so would be useless, but you can see my (above linked) essay for a taste, if you’re really interested. As Vee reminds me, the banality of this debate used to drive Donald Horne nuts. And as Gramsci once wrote: “Many people find it very convenient to think that they can have the whole of history and all political and philosophical wisdom in their pockets at little cost and no trouble, concentrated in a few short formula.”
I didn’t know you could get Vegemite in cans. Promite is a whole different taste, tangy and nice for a change–I suppose. I try not to buy food made in China.
I am a qualified horticulturalist and I will NEVER buy food that comes from China. That includes processed as well as fresh…
Homer, perchance you are in favour of unfair trade then?
I’d say amen to that.
I think we have to consider carefully what kinds of jobs we want to keep. I have big feet and find the most comfortable shoes for my 11K or so steps per day are KT26s made by Dunlop. In 1991 they used to cost $60 a pair and were made in Indonesia. Now they are made in China, of course, and cost about $35 inspite of inflation. For this I am duly grateful and wouldn’t want them made in Oz for $150 or whatever. A few sundry comments tonight and then I’ll look at cs’ paper and say some more.
Mark, the Gold Coast firm may have been Billabong although I’m not sure they were ever big on directly making the stuff. They are an example of how you make money in the modern world. According to Investorweb they are:
Profits for 2005 are $125m forecast to grow to $174m in 2007. That’s from 500 employees, remember. Their market capitalisation is close to $3 billion.
That’s fine for the rag trade and maybe that’s how we should approach it. But as wbb says we need to think about all the workers who are being displaced and many of them are not relocatable or particularly retrainable.
A ‘fair trade’ policy would also have a concern for how many lives are being wasted and how many rivers polluted (from colour dyes etc) in making the rags. The free trade approach is that no moral judgements should be made, we should accept the world as we find it.
wbb mentions “global economic transition.” My problem is that trade liberalisation is largely motivated by what suits the transnational corporations. They know that their policies and practices are unpopular, so the WTO regime seeks to constrain democratic action everywhere.
In terms of Wallerstein’s world economic system Australia’s implied economic policy of ‘pastoralisation’ (roughly mining, farming and tourism) is transitioning us away from the core while countries like South Korea and Taiwan started on the periphery and are transitioning towards the core. Ditto for Brazil and China. Not sure about India yet. None of these has achieved growth by following the standard neoliberal prescriptions.
Peter Brain (who doesn’t leave anything lying about free on the internet) would say we need to develop a pragmatic policy mix appropriate to our circumstances. True he consults for the AMWU (and the Victorian Government) but he would argue that if you let cutting edge manufacturing go your services will eventually be poorer as a result.
Unless you want to compete with India on call centres.
But no-one sane is saying that Botswana and Niger should manufacture all there own computer gear.
Food is a special case IMHO. I don’t personally care much about Vegemite but I recall our food manufacturing as about 20% of all manufacturing. If we let it go more farmers will go broke. It’s possible that critical mass will be lost in many regions.
In the wider picture Tim Flannery reckons the planet faces a 20% bioproductivity hit through global warming by mid-century at the same time we expect a 50% population increase. I’m not sure it’s smart to sacrifice productive capacity anywhere.
Also food involves trust and I don’t trust the Chinese, or the Americans, or the Kiwis or… Maybe the Europeans, because they are pretty fussy themselves, now they’ve got mad cow disease under control.
I wasn’t amused when they said Chinese veg could be flooding the market soon. Some-one asked about quality and they were told, yes the e-coli count was higher but still acceptable. I think we should be allowed to pay more and eat our own germs if we want to.
Thanks for that confirmation, Pottsy.
I forgot to say I don’t trust AQIS and Biosecurity Australia have gone over to the dark side. They have to take trade into account and risk management, whereas the farmers all want a return to zero risk.
Did anyone see Peter Martin’s program (SBS I think) where they found Brazilian meat dumped near Bill Heffernan’s patch? The Brazilian’s have foot and mouth disease and have a control program that covers 99% of their herd. This leaves 1 million not covered and they have effectively open borders with several countries.
I too have some vegemite (a travel tube in my case) in the kitchen and have been feelign quite guilty about it for a while - not because they are American, or moving their manufacturing out of Australia, but because they are also a tobacco company and way too big for comfort.
I only have a problem with companies moving to countries with a poor record of protecting labour righs and/or the environment (and, often, pressuring the governments to continue this practice) - hence my current issue with China.
I couldn’t resent people getting jobs regardless of their nationality. And, if a business needs to be subsidised within the Australian economy it is probably too inefficient to deserve to remain in business (unless it contributes to our society or environment in ways that cannot be quantified economically - ie the arts, etc.).
That said, economic globalisation is as much about selective corporate protectionism as it is about trade liberalisation and that is the major problem - the incredible hyprocrisy.
mmm, should stop now - am tired and not sure if I am making any sense.
In terms of Wallerstein’s world economic system Australia’s implied economic policy of ‘pastoralisation’ (roughly mining, farming and tourism) is transitioning us away from the core while countries like South Korea and Taiwan started on the periphery and are transitioning towards the core.
There’s lots of historical specificity and historiography which makes this model an unconvincing generalization. Forgive a moment of self-aggrandizement, and see http://www.livejournal.com/users/bourdieu_boy/8874.html
That said, the broader issue of the merits of local or national manufacturing versus the globalization of labour has received some interesting comments here. I am surprised at the general acceptance of the “off-shoring” of labour, but perhaps that is a sign of how far the debate has come in twenty years. Where’s Dick Smith when you need him?
MH, Dick Smith was quoted in the article. He said he was surprised that Vegemite was not already made in China and predicted that it would be within five years.
BB, it is not only e coli levels that are of concern. Many countries that are providing our food are still using chemicals (pre and post harvest) which are banned in most developed countries for obvious reasons (arsenate of lead etc)
Aqis and Biosecurity OZ are a joke - look at the example of citrus canker in QLD. Approximately 5% (I am being generous on that figure) of food entering this country is checked for chemical residue, pest and disease. There are no regulatory bodies in developing countries to monitor chemical residues or bacteria levels effectively, and who is to say that substitution does not take place.
Why do the chinese boil lettuce before eating it?
Our food supply is one of the cleanest in the world, and yet two years ago John hoWARd and Mark Vaile announced a new trade deal with NZ. Some weeks later Biosecurity OZ announces it will conduct a review on the import of NZ apples.
And they have stated that there has been no political influence. Bullshit.
Pottsy, in the Peter Martin program I mentioned he interviewed the Biosecurity Australia officers and they were the public servants from hell. Arrogance oozed from them. Their idea of risk management was to schmooze the farmers who were noticeably unschmoozable.
Linda Weiss, Elizabeth Thorburn and John Mathews in their book How to kill a country have an excellent chapter on quarantine as well as pharmaceuticals, intellectual property and government procurement.
The latter is a sick joke because there are all sorts of non-trade barriers in getting access to the large American market, whereas we have given away government procurement as a potential element in industry policy here.
BB, Thanks for the link, this is on my “to get ASAP” list!
Elizabeth Thurbon outlines a little of her quarantine concerns here.
CS, thanks, even though, after reading this, my gravest fears are now well and truly founded..
Brian,
I favour free trade. No such thing as fair trade
After what I have just read, the current FTA with The USA is the equivalent of being hit by a bus when riding a bycycle. Would there be any person of standing in the government brave enough to call for signing a six month notice to quit the FTA?
I suspect nothing but weak supportive statements from Mark Vaile until it is too late.
Go Dick. He’ll be selling Dick Smith’s All-Aussie Yeast Extract before we know it.
Thanks for that link, cs. It’s a shorter version, with some updates, of their book. The book is not large and very readable. I’d still recommend it. They wanted it to influence the discussion prior to a decision being made, but in fact it came out a wee bit too late.
But I don’t think Howard or Latham made evidence-based decisions anyhow. But as Linda Weiss said:
But recently Mark Vaile has been talking about free trade as though it is an article of faith. Large parts of his constituency have different ideas, but many are convinced by the TINA spin and just regard it all as inevitable.
Indeed Kimbo is an ideological free-trader and I think as a public issue it’s probably dead for the present.
I think it’s time for me to turn in, but!
Brian, no question, this was a deal-driven deal. The challenge is to relate the sell-out and communicate it to the bigger case against the Evil One. Technical correctness is, oh well, better than the opposite, I guess. Meanwhile …
The US/OZ ‘free trade’ deal was not a free trade deal.
both sides considered they had ‘won’ from the deal which they defined in mercantilist fashion.
most free traders prefer unilateral agreements with no exemptions!
Homer, your first sentence is at least right. It was a preferential trade and investment deal where we sought simple market access and the US sought to penetrate and undermine our decisionmaking processes so that our key institutional arrangements would “harmonise” with the way they do things and the wishes of their multinationals. As the paper that cs linked to says, they succeeded in their complex goals, we failed in our simple ones.
I think as a public issue it’s probably dead for the present.
Brian, an interesting book that I gave a thorough reading over the break is Greg Bailey’s Mythologies of Change and Certainty in Late-20th Century Australia. It’s not new (2000), and nor is it easy (although well-written), but it’s one of the few books to study (as distinct from complain about or critique) the dominance of neo-classical economics in public culture in Australia in the 1980s and 90s. Bailey studies the phenomenon in the terms of classical mythology; mythology, not in the sense of being empirically untrue but as a dominant cultural narrative (which all societies going through massive change need).
He holds that a myth’s social reception is different from that expected of other expressions of culture (novels, films, poetry, advertising, research summaries etc) because of the aura of unquestionability in which they appear to be clothed. Myth is held to be occupied with those areas of culture deemed to be beyond question and assumed with such absolute factuality as not to need anything but simple justification in a narrative form. His chapters on the market and competition are good starting points for anyone pondering how the credibility gap between official policy and actual experience has been filled.
In case you’re wondering, he rarely uses the Gramsci concept of hegemony (and Gramsci doesn’t appear at all), but rather draws on Claude Levi-Strauss and Algirdas Greimas. As far as I know, all of Bailey’s other work has been on Sanskrit narrative literature, and last I heard he was over at George Washington University teaching, appropriately enough as Homer implicitly suggests, religion.
csw, that’s interesting - and depressing. How do you demolish myths especially in these turbulent times? Can we only be rescued by a wise and charismatic leader who has access to real power as well as the world’s mainstream media? Blair was well-positioned but blew it. The anti-systemic movements (sometimes called ‘civil society’ or ‘global justice’ movements) seemed to amount to something from the Seattle WTO meeting in 1999 through to the G8 in Genoa in 2001 and for a while the leaders couldn’t find a safe place to have a meeting. There was a magnificent march at the European Social Forum in November 2002, but already the focus was moving to peace in the face of the looming US invasion of Iraq. After the success (and failure) of the peace marches of 15 Feb 2003 the wind seems to have gone out of the sails. The WTO meetings at Cancun (2003) and Hong Kong (2005) and the G8 at Gleneagles last July, for example, produced respectable protest efforts (please tell us more about Hong Kong, Cristy!) I don’t think the people inside are shit-scared anymore.
You say that we need mythology “as a dominant cultural narrative (which all societies going through massive change need).”
This implies, of course, that we are going through massive change, something more than the global economic transition referred to by wbb. Wallerstein of course thinks that the world economic system which has prevailed and developed for about five centuries, but has operated as a stable system, is now becoming seriously unstable. Robert Brenner, who you cite in your article, believes the US economy is heading Towards the precipice. I think he makes an excellent case and is now not on his lonesome. Wallerstein, as I understand him, sees a currency crisis in the US as a critical turning point. It hasn’t happened yet, but it could be that it is sliding over the cliff as we speak. Gerry van Wyngen in his latest BRW column says 2006 could be critical and the big worry is the faltering of the housing boom in the US. If it goes, consumer spending will stall (70% of GDP) imports from China, Japan and the EU will stall and the bottom falls out of our resources market. China itself has increasing stock levels and excess production capacity.
OPEC could precipitate a run on the dollar by switching to Euros.
I’m perhaps feeding my disposition to be gloomy, but with democracy on the retreat there doesn’t seem much that I can do except tap this keyboard compulsively and engage in sundry conversations when the opportunity arises.
I don’t think there is room to argue against the observation of massive change (reaching all the way down to kindergarten committees adopting a ‘marketplace’ view of the world). The idea that it is a ‘transition’ is well within the terms of the mythology’s organising functions, converting the process into a teleological one, implying temporary adjustments that come with progress and advancement … to which is usually joined a cargo-cult, as in the famous $20 billion in benefits from competition policy John Quiggin long demolished, but which couldn’t actually be killed because of its mythological properties; or, more broadly, as in the idea that losses in Australia are benefiting poorer workers elsewhere.
In the meantime, real limits appear to be looming. If you go to the endnotes in my article, you’ll see links to a growing crisis of confidence among world economists in the venerable theory of trade based growth. The per capita world annual GDP growth (mean per decade) for the 1960s was approx 3.5 per cent, for the 1970s approx 2 per cent, for the 1980s approx 1.3 per cent, for the 1990s 1 per cent, and for the 2000s less still, so far. (Communist) China alone more than accounts for the measure reduction in worldwide poverty since 1990, implying large losses elsewhere. I recently heard a lecture by John Buchanan wherein he referred to research suggesting economic growth is now dependent on increasing inequality (I’m chasing the references). Yes, it’s difficult not to be gloomy, when NSW Labor is even selling off the Snowy Mountains Scheme.
Is nothing sacred? Nope. Blinky Bill - the cartoon version has been sold to germany - admittedly they all ready had 50% shares. The company that made Blinky Bill has been sold that is.
MH you commented on Wallerstein. He didn’t comment specifically on Taiwan. I was referring to his broad conceptualisation of our politico-economic world in the braod sweep of history in an attempt to give shape and meaning to the broadest possible context.
These all-embracing theories are to some degree problematic and can’t be expected to last forever but some rudimentary understanding of his theories would have led one to expect at the recent WTO meeting that Brazil and India would act in a way that was self-interested but in concert with the major powers (US, EU). So from being genuinely poor and marginalised at Doha in 2001, for example, the expectation now was that they would deliver the poor countries’ vote. This they did.
I enjoyed your paper but I’m all tuckered out now and will perchance rise again for maybe
one last attempt tomorrow.
My motivation in this post, apart from letting people know what was happening and getting their reaction, was to highlight where the Howard government’s industry policy, or lack of it, was getting us. In addition to the Kraft factory closure the article also advised of severe losses in the automobile industry.
Wind-shield-wiper maker Trico had cut 160 jobs to move to China, Autoliv (making seatbelts and airbags) is to cut more than half its 900-strong workforce, and Silcraft has closed with a loss of 460 jobs.
On Monday we had a report of Industry Minister Ian Macfarlane jaw-boning the heads of Ford and GMH about loyalty and sourcing automotive components locally. So given that he wants these jobs to stay his response is rather a pathetic, I think. After-all if you go around cutting tariffs and signing free trade deals such losses would surely be an expected policy outcome.
Yesterday Peter Roberts has a follow-up article on the topic. It has a fair bit in it.
One salient point made was by a spokesman for Bluescope Steel, who have invested $810 million here in the last three years. He says that:
It seems that:
Part of the problem, it seems to me, is that the dominant narrative is that Australian manufacturing is stuffed, and has been since the 1970s. In such circumstances why would anyone train as an engineer or take up an apprenticeship? Yet from 1989 to 1997 manufactured exports rose from about 26% of imports to over 38%. Unfortunately now they are back to just over 28% and trending strongly down.
Going beyond trade/protectionism it seems to me that the efficacy of neoliberal economic reforms in general is becoming part of the dominant narrative. I’m no expert on industry policy but I’ve always believed (along with Peter Brain) that every nation has to look at its own situation and assemble an appropriate pragmatic policy mix. Your paper, Chris, says:
MHs paper on Taiwan says that:
This seems like common sense to me. So why do we have to put up with all that other rubbish?
Brian, just to limit the chances of going around the loop again, I also argued that that position is also Australia’s, when you really look into it (albeit, I agree the present policy is almost invisible); it’s only that the public policy argument (as distinct from the reality) is always framed in terms of chosing openess or autarchy.
cs, I think we are just about done here and I certainly don’t want to go around the loop again.
In reviewing the thread I’d like to highlight this from your comment a while back:
The research Buchanan referred to would be fascinating and I await your report with interest.
The slowing of growth story is also of note because it seems to give the lie to the efficacy of magic formula for growth in freemarket economics. I’ve got a few papers by notable economists that critique the World Bank Dollar and Kray research that has become a mantra about World Bank/IMF/WTO policies lifting hundreds of millions out of poverty.
The shorter version is that if you take out China and India, which are exceptional, and some other countries that didn’t follow the magic prescription the story falls apart. In fact if you look at the overall growth patterns they should not be congratulating themselves, rather they should be scratching their heads as to why their policies don’t work.
It’s maybe worth another post if I can summon the time and energy.
I think it would definitely be worth another post Brian, provided it’s possible to discuss the issues without being swamped by (the unrealistic) doctrinal argument, which is what tends to keep me away from such subjects.
… and besides, Blinky Bill was crap, and should probably have been sold to North Korea. And they don’t sell Vegemite in cans.
Yeah, so we lost vegemite production to China. Big deal. Nothing unique about how about how and what that product is made from. Most of the value adding there comes from the brand IP.
On the other hand we’re now making the key flight control surfaces (rudders, flaps, etc) for all Boeing and Airbus’ new aircraft - whipping the arses of the US and the EU at cost effectively mass producing state of the art carbon fibre/resin aerofoils - a multibillion dollar market unlike salty bread spreads. And the jobs in this area pay much better than working on the Kraft production line.
I’m glad you came along, Nabs, because you know about stories like that and we all need to hear about them. There is a good news story in the Fin Review today (still Thursday here) which said that the latest Austrade-DHL export baromenter found that 70% of manufacturing firms surveyed expect their export orders to increase next year. This compares with 64% for services, 56% for tourism exporters, 53% for miners and 51% for farmers.
The Kraft story was front page, but this one was on p9.
Amongst the other information given they said that elaborately transformed manufactured good were now almost double the simply transformed goods.
We have a number of firms that lead the world including Cochlear (hearing aids) and Resmed (sleep disorder equipment). Sadly, though, it doesn’t add up. Access Economics in their BRW spot this week have long term graphs with forecasts for trade balance, net income and current account as a percentage of GDP. The bottom line is that the current account looks like bumping along at about -6% for the next few years, so Howard’s luck might continue but we seem to be on a bit of a knife edge.
If the Americans crash out we’re in trouble. Ken Rogoff also in the AFR says they could and their current account problem does have to be resolved. On balance, however, he thinks they’ll scamble through, though he doesn’t say how.
Yes, quite right. I don’t think anyone’s seriously concerned about Kraft per se, apart from a tug at the national sentimentality attached to vegemite. Still, national icons are handy pegs to hang a manufacturing industry argument on.
Some of the other issues we haven’t touched on so far, which are outside the orthodox model, but are relevant when you take time and space into account, are the social spillovers. These allegedly include things such as a possible loss of ‘clustering’ benefits, and a certain form of alienation - what David Syme once called a country becoming “utter strangers to all skill and dexterity in the arts and manufactures of highly civilised nations as are the Bedouins of Barbary, or the Tartars of Central Asia” (with apologies to Bedouins and Tartars). Moreover, in skill and capital intensive manufacturing, there is often waste in scrapping, and then start-up hurdles if conditions once more become conducive.
It is, in sum, a complex argument. I’m a free-trader by instinct, which means it’s my starting assumption, yet it’s only sensible to then take the content and context into account in evaluating the patterns and directions and designing policy. No-one sane wants autarky, but protectionism has a bad rap these days. Somehow the social memory has been cleansed of the fact that both US and German industry grew up behind tariff walls. Ireland has at least partly achieved its exceptional recent industrial growth by tax breaks and European subsidies. And isn’t China effectively protecting itself with bung environmental standards that it will eventually have to start paying for? So I say, it’s complex.
” And isn’t China effectively protecting itself with bung environmental standards that it will eventually have to start paying for? So I say, it’s complex.”
I’ll say. China’s lackadasical approach to managing the consequences of the biggest urbanistaion effort the world has ever seen is now seriously pissing off their fast growing middle class. Like a whole Chinese city’s water supply just got seriously poisoned recently. So now they’re urgently importing Western expertise in town planning, urban design and water, energy, environmental, traffic and TDL management.
And guess which large Western country in the region with a quality of life envied worldwide is now rapidly taking the lead in this $A50 billion a year market? We may bitch and whine about infrastructure and planning fuckups here but it’s still one area where the developing world wants whatever we’re doing that makes us a better place to live than where they are. Plus local fuckups aside, we’re actually pretty bloody good at this kind of thing. The annual EIU Most Liveable Cities survey isn’t regularly dominated by Australian cities just because we have nice weather.
And there’s gonna be very intriguing development about flogging our urbanistion skills to China announced once the Commonwealth Games have been passed through the cloacae politica.
Shorter Nabakov: China can manufacture our vegemite while we design their cities. Seems like a fair trade to me.
Cs and Nabs, you’re both right, of course, and rasie interesting points. Just a couple of comments.
On clustering, Nabs, if you’re there, I was wondering how you rated automotive manufacturing in Aust. It is often cited as a good example of clustering. I was talking to someone from GMH a couple of years ago. He said that while their company strategy was to reduce the carmakers in Oz to one by knocking out the competition, they actually needed other companies to be here too.
Also the automotive industry is often cited as the heart of Australian manufacturing because of the skillls and facilities it creates that are used in other smaller and often higher value ventures.
cs, I’ve been wondering whether the researech Buchanan was talking about was based on the American experience. There have been a couple of rants at Dissident Voice recently that seem to be based on a report by the Center for Economic and Policy Research, “which analyzed a quarter-century of robust U.S. economic growth (1979–2004) by analyzing data from last March’s Current Population Survey.”(Sandronsky) He says that
That is
Holly Sklar points out that between 1968 and 2004 “domestic corporate profits rose 85 percent while the minimum wage fell 41 percent and the average hourly wage fell 4 percent, adjusted for inflation.”
It makes the European experience seem not so bad. As Tony Judt said in his European lecture at the recent Cheltenham Literature Festival it may well be a choice between the detestable and the preferable.
MH you commented on Wallerstein. He didn’t comment specifically on Taiwan. I was referring to his broad conceptualisation of our politico-economic world in the braod sweep of history in an attempt to give shape and meaning to the broadest possible context.
Indeed, but the depolyment of specific cases can sometimes undermine these attempts to produce macro models. I would also take issue with the broader epistemological assumptions of Wallerstein, especially the tensions between his politics and his objectification of global systems. There are issues here about what it means to “explain” or “know” history.
Shorter Nabakov: China can manufacture our vegemite while we design their cities. Seems like a fair trade to me.
Memo to Australian designers: Less corporate monumentalism, please!
MH, I was working all day yesterday in the heat and again today. Last night we had guests.
I was hoping not to have to go further into Wallerstein, as every time I raise him some-one seems to fundamentally disagree with his approach. Yet a few things can be said that are relevant to our subject. I’ll have a go tonight if I can stay awake.
I would also take issue with the broader epistemological assumptions of Wallerstein, especially the tensions between his politics and his objectification of global systems. There are issues here about what it means to “explain� or “know� history.
I’d be interested in hearing a little more from MH about his historiographical objections, mainly because Wallerstein belongs to the tradition of the Annales school. Are the objections to the Annales school in general, or specific only to Wallers?
It’s really hot and humid here at the moment and I’m just too tired to do all the work.
By the last phrase I mean that MH’s objection is just too glib to work with. Wallerstein’s position is not easily captured in a phrase or even a paragraph or two.
I maintain that he’s probably forgotten more about epistemology than most people ever know. It is one of his abiding concerns.
As to objectification, I think that charge fails too. He’s an engaged intellectual, knows that he is changing all the time, knows that knowledge, indeed reality (at least the kind he is studying) is socially constructed, that he has to be careful not to over-privilege his own view, that the evidence as well as the value and perceptual filter through which we see it is changing all the time and that there is a difference between reality and statements about reality. Also the only point in understanding contemporary reality, according to Wallerstein, is to open the possibility of changing it.
He insists, though, that the unit of analysis needs to be more than nations or societies, it needs to be the ‘world system’ or more generally, an ‘historical social system.’
cs, as you know I’m not a scholar and hence am not qualified to comment on his placement within the Annales school. I suspect he is not easily contained.
There is a claim, of course, that he is part of, indeed a leading instigator of the world systems movement. William G Martin tells us that world systems scholarship was born out of the ‘world revolution’ of 1968 and the antisystemic movements of the time. Furthermore its promise and survival depends on maintaining its relationship with antisystemic movements.
I’m not sure the last bit holds up. Certainly the events of 1968 were seminal and I go back to the bit about understanding the world in order to change it.
There are a number of learned articles about him in a Festschrift for Immanuel Wallerstein but the most accessible account of his position and intellectual journey come from the man himself. Here are the last two paras: