1 - there is a real distinction between production of capital goods, essential consumer production, and the production of luxuries that is common to both classical economics and marxian economics

2 - in the consideration of the health of any national economy, it’s worth looking at what the composition of the economy is in regard to these sectors. If your economy is increasingly made up of easily transferable services - financial services, IP rents - then you have a problem.

3 - neo-classical economics suggested that economic calculations could be made on the basis of money value only, with indifference as to whether $X billion of your GDP was made up with steel mills or pet care products. Do that and you let your economy be hollowed out without noticing it

4 - the western world has suddenly noticed that the composition of your economy does matter. If you’ve steered a whole bunch of people into luxury production, while exports replace imports, then you are in deep shit.

5. Thats the situation the US is in (Australia less so, due to primary extraction). That’s why Kevin Rudd - wisely in my view - drew a line in the sand, and said that we’re going to keep making cars, and whatever follows from them using R and D. The only western economies that have weathered this crisis well are those - such as, yes, Sweden - who have retained a high-end manufacturing base through a. national industry policy, and thus continue to have an export base on which luxury service jobs can depend.

6. What really worries me Bernard, is that I don’t see any critical thinking in your response. All I see is a rather hackneyed mobilisation of old economic ideas, which were briefly fashionable in the 80s and 90s. Rudd’s auto plan may not be the answer - but the idea there’s no problem with the approach you’re suggesting seems naive and behind the game

Economic rationalists would sacrifice our car-manufacturing industry to appease their crass and craven deity, Loki. Thanks to their mischief, we have a private sector of fake jobs and mock industry: people who produce imaginary goods and who invest in nothing but their own promotion.

Had we the courage and vision to resist their poisonous doctrines years ago, our economy would still be powered by the coopers and wainwrights and roof-thatchers who might have made our country the envy of the world. Can a PR expert or a CFD trader turn urine into dye? I don’t think so. (Or, maybe, but not without a grant for retraining.)

In Bernard’s scenarion, it may be OK to dismantle Australian manufacturing of cars - and replace the sector with say, services related to the management of compulsory superannuation. Both products have, no doubt, extensive markets in the Middle East.

If Australia makes nothing exportable except debt, it’s hard to see how we will not in the long run become a mendicant population, about as lucky in global commerce as our seemingly luckless indigenous population is locally. People whose acknowledged skills lie in anecdotal history, music, land and livestock management are likely to be forever inadequate when trading for Toyota Landcruisers or information technologies.

The nub of the issue is whether we can ever again export anything much except primary products. Exceptional world-class exporters like Cochlear and CSL have arisen because of past public-sector intervention in the market.

These days it’s ABSOLUTELY CRAZY that 44% of our share market capitalisation is made up of BANKS and INSURERS and FINANCIERS!

1. The car industry, in spite of decades of subsidies, tariffs etc etc etc remains a basket case. And we just go on throwing money year after year at international corporations who simply cannot be trusted to keep Australia’s interests in proportion to the money we taxpayers throw in.
2. $600 billion committed to the CSIRO over 10 years is far more likely to provide useful outcomes in the long-term interests of Australia, than is this hand-out to the internationals.

What we will watch with huge interest is the “deal” that requires the recipients of this largesse to “match” the hand-out. How? When? Where? What??

No problem with Government propping up Australian industry, but I only hope the advice taken by Rudd and Carr did not come from Treasury.

But one line I can’t let pass. “we’re going to keep making cars and whatever follows from them using R and D”. I hate to break it to you but we’ve doing that for decades with no discernible result except to keep industries with their hands out for more money and deprive employers in other industries and other manufacturing sub-sectors of skilled and semi-skilled labour. Cars aren’t high tech, and aren’t the basis for anything other than long-term industrial mendicancy.

Your attitude is, as I said, job snobbery. The idea of people making money buying and selling securities on a PC, or earning income from a patent, offends you. It frankly offends me too, but not so much that I begrudge them the right to do it, or want to force them to go work in a factory.

Oh, and arguing that they do it in Sweden and therefore we should do it is no more sound than saying that Thailand has massive tariffs so we should too.