Bert Kelly, “What the market will bear,” The Bulletin, Aug. 14, 1984, p. 124.
At the end of 1981, when the Fraser government was trying to screw up its courage to do something sensible about the car industry mess, a group of more than 30 members of federal parliament did their best to make the government take the inevitable decisions that the Labor government now has had to take. This group became known as “the dries,” to differentiate its members from “the wets” who talked bravely about tariff reductions — particularly when overseas — but did nothing about it.
One of the dries was Grant Chapman, the member for Kingston (South Australia) which electorate contains the Mitsubishi car plant. For Chapman to speak out as he did took courage and all the political pundits prophesied his imminent demise. He was defeated, too, but suffered a much smaller swing than did other Liberals who kicked with the wind as per instructions from on high.
Chapman had another virtue which endeared him to me: he was (and is) a member of the Society of Modest Members. This is a group of past and present members of state and federal parliaments who believe, as I do, in less government intervention in business and who also believe that MPs should do what is right rather than what is popular. I am proud to be their patron.
You can understand, then, that I was desolated when Chapman was defeated. He disappeared from my view for a year or more, so I was delighted when he bobbed up again recently — still a member of the Modest Members Society and still talking sense. He has written a chapter, “Labor And The Market,” in a book called The Crisis of Unemployment which is to appear soon, edited by Professor Cooray of Sydney.
I do not pretend that Chapman has uncovered any new earthshaking truths, but he has spelled out with unusual simplicity the plain facts of the labour market. His message can be summed up in this paragraph: “If a shopkeeper sets a price for an item above the market clearing price, some will be left on the shelf. Similarly, if the price for labour is consistently above the market clearing price, some will be left on the shelf; that is, unemployment will result. The more the price for labour is above the market clearing price, the higher will be the unemployment.”
Some high-stepping intellectuals will sneer at such a simple, self-evident statement. But they will not sneer at a statement by the high priest of labour relations in the Labor Party, Clyde Cameron. In his book Unions in Crisis, after describing briefly how hard he had to work and his determination that the youth of today not suffer as he did, he said: “We have not helped to young by demanding that they may not be employed unless paid excessive wages. We priced them out of the labour market and we deserve no thanks for that.”
I learned the hard way what happens when prices are set above market rates.
My dad had recently handed the farm over to me and we were struggling. Mavis had three kids at foot and greedy little beggars they were. I once drove 350 wethers 13km to the Riverton sheep sale with stern instructions from the banker that I had to get at least 35 shillings for them. But the bidding stopped at 27 and, though I got up on the rail with my youngest and hungriest spring and made a powerful speech about the injustice of it all, the audience just melted away and I had to drive to sheep back home.
When I went inside, Mavis said that the banker wanted me to ring him at once. I did so, of course, and told him the sad news. “You wanted too much for them, Bert,” he snapped. “You should have met the market.”
As it was the banker who had insisted that I must get 35 shillings, I thought his attitude was most unfair, but unfortunately I was not in a position to tell him so. So I just said meekly, “I am sorry, sir,” and went out and milked the cow.
It is significant that, though our economic performance has been gratifyingly good lately, our unemployment rate has fallen hardly at all.
In many businesses, it is just not profitable to employ people; it is not that no work is to be done, but we cannot afford to pay people to do it. This is the case on our farm. But in the US, where they have a much more flexible system which allows them to adjust wages to the demand for labour, the unemployment rate has been falling.
Justice Higgins started the rot here early this century when he said that it would be better for an industry to be closed down if it could not pay proper wages. When proper wages plus all the fringe benefits are higher than the market for labour, unemployment follows as night follows day.
Chapman’s may be a simple message, but that reinforces its validity.
- Bert Kelly on Journalism
- Move for a body of Modest Members
- Modest Members Association
- Bert Kelly's Maiden Parliamentary Speech
- Government Intervention
- 1976 Monday Conference transcript featuring Bert Kelly
- Petrol for Farmers
- Some Sacred Cows
- Experiences in Parliament
- Spending your Money
- Who needs literary licence?
- A touch of Fred's anarchy
- Supply and Demand
- Bert Kelly on Disaster Relief
- Bert Kelly Wants to Secede
- Under Labor, is working hard foolish?
- An Idiot's Guide to Interventionism
- Bert Kelly Destroys the Side Benefits Argument for Government
- Bert Kelly gets his head around big-headed bird-brained politics
- First Modest Member (Bert Kelly) AFR Column
- Second Modest Member (Bert Kelly) AFR Column
- Third Modest Member (Bert Kelly) AFR Column
- Fourth Modest Member (Bert Kelly) AFR Column
- Fifth Modest Member (Bert Kelly) AFR Column
- Sixth Modest Member (Bert Kelly) AFR Column
- Bert Kelly on the 2011 Budget and Australia's Pathetic Journalists and Politicians
- Bert Kelly, Bastard or Simple Sod?
- Liberal Backbencher Hits Govt. Over Import Restrictions
- Bert Kelly feels a dam coming on at each election
- Bert Kelly Enters Parliament
- Why take in one another's washing?
- Bert Kelly breaks the law, disrespects government and enjoys it
- Gillard's galley-powered waterskiing
- Can price control really work?
- Should we put up with socialism?
- We're quick to get sick of socialism
- Time the protection racket ended
- Can't pull the wool over Farmer Fred
- People not Politics
- Bert Kelly admits he should have had less faith in politicians
- Labor: a girl who couldn't say no
- Why leading businessmen carry black briefcases
- Ludwig von Mises on page 3 of AFR
- Mavis wants the Modest Member to dedicate his book to her
- Time to Butcher "Aussie Beef"
- Bert Kelly reviews The War Diaries of Weary Dunlop
- Bert Kelly reviews We Were There
- Tariffs get the fork-tongue treatment
- Bert Kelly reduces government to its absurdities
- Politician sacrifices his ... honesty
- It's all a matter of principle
- Bert Kelly Destroys the Infant Industry Argument
- Bert Kelly Untangles Tariff Torment
- Bert Kelly resorts to prayer
- Eccles keeps our nose hard down on the tariff grindstone
- "Don't you believe in protecting us against imports from cheap labour countries?"
- Even if lucky, we needn't be stupid
- Great "freedom of choice" mystery
- Small government's growth problem
- Tariffs Introduced
- More About Tariffs
- Sacred cow kicker into print
- Modest Member must not give up
- Traditional Wheat Farming is Our Birthright and Heritage and Must be Protected!
- Bert Kelly brilliantly defends "theoretical academics"
- The Society of Modest Members
- John Hyde's illogical, soft, complicated, unfocussed and unsuccessful attempt to communicate why he defends markets
- Modesty ablaze
- Case for ministers staying home
- The unusual self-evident simplicity of the Modest Members Society
- Animal lib the new scourge of the bush
- The Association for the Prevention of Cruelty to Krill
- Repeal economic laws, force people to buy new cars and enforce tariffs against overseas tennis players
- Thoughts on how to kill dinosaurs
- Let's try the chill winds
- Taking the Right's road
- Bert Kelly: "I did not try often or hard enough"
- Bert Kelly "lacked ... guts and wisdom"
- A look at life without tariffs
- The Gospel according to Bert
- Tiny note on Bert Kelly's column in The Bulletin in 1985
- Why costs can't be guaranteed
- Hitting out with a halo
- Paying farmers not to grow crops will save on subsidies, revenge tariffs, etc
- "The Modest Farmer joins us" | "How The Modest Farmer came to be"
- Bert Kelly Destroys the Freeloading Justifies Government Argument
- Government Intervention
- Bigger Cake = Bigger Slices
- Bert Kelly on the Political Process
- Charabanc: Part 1
- Charabanc: Part 2
- Charabanc: Part 3
- Relationships with the Liberal Party
- Tariffs = High Prices + World War
- Bert Kelly's Family History
- Bert Kelly's Pre-Parliament Life
- Why Bert Kelly was not even more publicly outspoken
- WEATHER IS USUALLY UNUSUAL
- How to stand aside when it's time to be counted
- How the Modest Member went back to being a Modest Farmer
- My pearls of wisdom were dull beyond belief
- Bert Kelly on Political Football
- Ross Gittins Wins Bert Kelly Award
- Interesting 1964 Bert Kelly speech: he says he is not a free trader and that he supports protection!
- This is the wall the Right built
- Has Santa socked it to car makers?
- Is the Budget a cargo cult?
- Will we end up subsidising one another?
- Do we want our money to fly?
- Can a bear be sure of a feed?
- How to impress your MP -
- The time for being nice to our MPs has gone ...
- Don't feel sorry for him -
hang on to his ear
- Trade wars can easily end up on a battlefield
- Tariffs Create Unemployment
- Bert Kelly recommends Ayn Rand
- Bert Kelly's Satirical Prophecy: Minister for Meteorology (tick) and High Protectionist Policies to Result in War Yet Again (?)
- Bert Kelly in 1972 on Foreign Ownership of Australian Farmland and Warren Truss, Barnaby Joyce and Bill Heffernan in 2012
- Parliament a place for pragmatists
- Of Sugar Wells and Think-Tanks
- Bert Kelly: "I must take some of the blame"
- A Modest Farmer looks at the Problems of Structural Change
- Government Fails Spectacularly
- Know your proper place if you want the quiet life
- Bert Kelly on political speech writers
- Perish the thawed!
- Modest Farmer sees his ideas take hold
- Max Newton: Maverick in Exile
- Why no-one nails the Big Green Lie
- A case for ministerial inertia
- Why politicians don't like the truth
- Ominous dark clouds are gathering
- Better to be popular than right
- Crying in the wilderness
- Ivory tower needs thumping
- Bert Kelly asks, "How can you believe in free enterprise and government intervention at the same time?"
- Rural Problems
- Unholy state of taxation