A Modest Member of Parliament [Bert Kelly], “You can lead a horse to water, but …,” The Australian Financial Review, September 17, 1976, p. 3. Reprinted in Economics Made Easy (Adelaide: Brolga Books, 1982), pp. 108-10, as “Shipbuilding (2).”

One of the arguments that has been put forward to justify the taxpayer paying an annual subsidy of $13,000 for every man employed in shipbuilding runs somewhat like this:

The industry certainly costs the taxpayer a lot but we should not ignore the side benefits that follow creating shipbuilding employment in this way.

Shipbuilders are likely to have a family of five, so benefits of the employment are spread through the economy.

And then there is the employment gained in the components industry. And the Commonwealth gains in income tax collected from all of these groups.

So we must not be too narrow-minded and think only of the $13,000 subsidy per person employed. There are other side benefits and these outweigh, by far, the piddling little amount of money involved, about $50m.

I have drawn a parallel between shipbuilding and the wheat industry to see if I can demonstrate the fallacy of this argument. I have constructed what Eccles would call a model of the wheat industry designed so that we employ the maximum number of people.

My plan is splendid in its stark simplicity — I simply pass a law which states that any farmer who grows wheat using horses instead of tractors gets a subsidy of $13,000 a year.

You can see that there would be an immediate stimulus to employment because all farmers would have to employ more people if they wanted the subsidy. And the extra farm hands would need houses, so employment would be gained there. And the horses would need harness, creating more employment there.

And all these extra people would pay income tax, so the government would gain on every count.

And there would be an immediate improvement in the economic health of the small country towns which would start to blossom again because of the extra number of people working in the bush.

And more country schools would open up and we would be able to demand better roads and so on.

Indeed, the more I thought about my plan, the more desirable did it seem. I mentioned it to Fred’s brother, Bill, because he owns one of the few draught horse stallions left in the land.

He thought it was a statesman’s solution and he promised me massive support from the other draught horse breeders.

I could see that the willing co-operation of the stallion would have a very important part to play in the plan, so I asked Bill to give the matter deeper thought:

Don’t forget that you can lead a horse to water but … well, you know what I mean, Bill. It would be a great pity if my whole splendid idea was to fail just because we couldn’t get your horse to co-operate.

See if you can find out what he thinks about the idea and I’ll see you next week.

When I saw Bill a week later he told me that he had put the question fully and frankly to the horse and had given him two days to think about his reply because he (the horse) is rather slow witted.

In due course Bill says that the horse thought my idea was basically sound and that he would do his duty, but added the rider (you would expect a horse to do that) to the effect that he hoped that “in this day and age” (he was a very well bred horse) there would be none of the old fashioned nonsense of a horse having to plod around from farm to farm on his feet. Bill swears he said:

See if your man will arrange to have me carried around in an air conditioned float pulled by a tractor. Then I’ll get my own back with that lot.

For the benefit of my city readers I must explain that, when we farmed with horses, most farms did not keep a stallion but our mares were got in foal by a stallion led “on a round” from farm to farm by a groom.

It was this walking which was evidently worrying Bill’s horse. He (the horse) seemed to think that he would have enough to do without that.

Bill strongly supported him on this, and I must admit that the request seemed reasonable, particularly as the horse was not exactly youthful, though I cannot tell his age because I have forgotten how to read a horse’s mouth.

Now I am the first to admit that the success of my scheme rests rather too heavily on the performance of Bill’s horse, because clearly we couldn’t create much employment unless we had a lot of horses.

But even apart from this criticism of my plan, Fred says the whole idea is stupid anyway.

Perhaps it is, but no more stupid than paying $13,000 per man just to keep him in shipbuilding employment.

At least my plan would have considerable side benefits for Bill’s horse.