You have to hand it to The Age – it’s not at all parochial in its economic coverage.
Three times this week The Age’s commentators have looked at the Government’s automotive industry plan. Three columns would normally provide a diversity of views on an issue as important as the multi-billion dollar handout of taxpayer money to multinational firms.
Well, not quite.
Tim Colebatch looked at the plan on Tuesday. He considered the issue of whether the industry should be left to die and noted the flow-on effects of the industry and the fact that everyone else protects their car industries.
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The subsequent commentators weren’t quite as balanced, however. Yesterday Shaun Carney also argued that everyone else protects their car industries, that we waste a lot of money on stupid things like sport, and that, well, we just need a manufacturing industry and it can’t exist without government help.
Today Ken Davidson went the whole hog. He started promisingly, saying the plan “lacked direction” and that “government shouldn’t be in the business of picking winners, which in practice means the money will become a honey pot for rent seekers.” Then he proposed that the solution was for the Government to build a car plant itself.
None of this, of course, would relate to the car industry’s presence in The Age’s markets, or for that matter The Age’s interventionist ideological preferences.
The context for Davidson’s call for direct government intervention in the car industry was this illuminating observation:
The central lesson of the global crisis for Australia should already be apparent. Financial services based on increasingly complex financial products built on financial engineering cannot fill the gap left by the decline in manufacturing, nor can a revival in manufacturing be left to the market when nascent industries must compete on equal terms in global markets.
There’s a manufacturing-good/services-bad logic at work here, one I complained about to the annoyance of a number of readers who thought making stuff was much better than pulling beers or working as bank tellers. The idea that the manufacture of physical objects is a real job, versus the presumably faux-economic activity of providing services, apparently dies hard. Guy Rundle as always put it much more entertainingly in one of his dispatches from the political frontline in the US.
What the market faced in the US at the end of the 90s, was a crucial lack of things to invest in, for the free money sloshing around the markets. By 2001, the dotcom bubble had burst and you couldn’t shove $X billion into Ewidgets.com, and so there was a desperate need for another object that would keep the circus going. Mortgage backed securities was it — bricks and mortar, which looked like the most concrete investment was actually the most abstract, the notional capacity of people with no-deposit mortgages to repay.
Crazy, but what could you do? For the bitter fact is that without these pseudo-investments, the West is running on fumes. As China and the East roars ahead in classical 19th century high capitalist mode, the West runs on financial services, and rents — such as intellectual property, and debt and debt and debt.
For twenty five years, the US has been starving its public sector of investment — investment that would have created jobs and real growth and lowered overall costs — and allowed the rich to shuffle money into luxuries and useless services and waste, as the society decayed around them.
Of course not every service job is — was – a Lehman Brothers screen jockey. There’s about 1.1m Australian employed at the moment in the manufacturing sector and another million in construction. But to put that in context, there’s more than 1.5 million Australians employed in retail, another half a mill in hospitality. There’s 1.3m in business and property services, 800,000 in education and 1.1m in health. Oh, there’s 400,000 of them screen jockeys in the finance sector.
All service jobs. None of them making anything. Try telling them they don’t have a real job, or that their jobs are less important than the 60,000 people in the car industry, that they’re just an expression of the collapse of western capitalism.
Although I’ll leave readers to debate whether journalists and writers are service providers or manufacturers.
It’s odd — there’s no real reason why this fetish for manufacturing should reside on the Left. I can recall reactionaries in the 1980s railing against the “Hawke socialist government” which was apparently hell-bent on turning Australia into a holiday resort for Asian tourists. Serving a drink to a Japanese tourist — the Japanese were the bogeymen of that time, you’ll recall — was apparently not a real job to which a young Australian should aspire. But the concept that the only real job involves making stuff seems to have settled over on the Left, possibly because historically manufacturing has been highly unionised, while more recently-developed service industries have not been.
It’s a combination of job snobbery and nostalgia, and it’s closely allied — as The Age’s commentators show – to protectionism. And just because the rest of the world believes it doesn’t mean we should participate in the delusion. If we want to protect our industries because China and Brazil and Thailand do, then we can have a standard of living like them too. That’s where we were headed until the reforms of the 1980s opened us to the world and gave us a massive increase in our wealth.