Bert Kelly, The Bulletin, May 15, 1984, p. 118.
Before Eccles and I go out to examine in detail some of the sadder rural industries in our land, there is one more general heading which we should have in mind.
It is, “I was right anyway.” It originated when a chap was being rushed to the hospital in an ambulance after an accident, saying through his muffling bandages to his nurse, “Well, I was in the right anyway!” But he was still going to the hospital.
I think of that heading every time I hear some brave defender of some rural industry proclaiming in ringing tones that surely his producers are entitled at least to get their costs of production. He then usually hammers his point by saying that many secondary industries get tariff assistance so that they can get their costs of production, so surely his people are entitled to the same treatment.
But I have to warn him that, if he and his group are guaranteed the costs of production, then it will probably be bad for them in the end.
Why is this?
First, there is the difficulty of arriving at what is the cost of producing anything. My costs will certainly be different to Fred’s and our will be different yet again to most of the others in our district and different again to farmers in other districts and different yet again to farmers in other states. The plain truth is that there is clearly no single cost of production for any crop grown in widely separate areas.
The second danger is that this way of fixing prices always distorts the market signals.
It encourages farmers to keep on producing something for which the demand is falling or vice versa. It almost always works in opposition to the law of supply and demand which always wins in the end.
Thirdly, the cost of production philosophy is frequently used as the excuse for a muddled up social welfare system. Poignant pleas are made that some producers are in real trouble and are living below the poverty line and so on. To cure this, some people say that if all farmers were guaranteed the costs of production, then everyone would at least get enough to live on.
The trouble is that, under this system, most of the money would go to farmers who did not need it. I have a very competent farmer friend who has a big English farm. We always compare our farming figures and his are always better than mine. Not only is he a better farmer but he also gets very generous treatment from his government which seems frantic to keep the small EEC farmers happy. When I asked him rather quizzically for how long he could continue to get such generous treatment from his government, he replied, “Bert, as long as there are enough poor struggling farmers around me, I shall be all right!”
If prices are raised by the cost of production formula to protect the position of the small farmer, most of the money will end up in the pockets of big farmers.
If governments feel that they should help poor farmers for welfare reasons, it would be better to pay the money to farmers in proportion to their need, not their production.
The sad truth is that you can put off the day of reckoning for years by hiding the unpleasant facts of economic life behind cost of production schemes, but the law of supply and demand always wins in the end; and the longer the end is delayed, the more painful will be the inevitable shake-out.
I said after the January Agricultural Outlook Conference that now very few producer groups advocated the cost of production method of fixing prices compared with 14 years before, when the conferences began. But it lurks there all the same. For instance, I heard a sugar grower make a stirring appeal for sugar producers to have their home consumption price fixed in this way. Then he said that, if it was good enough for manufacturers of cars to have the cost of producing their cars subsidised by the government, then it was surely good enough for sugar growers too. I was glad to notice that almost all the sugar growers present had the grace to grow red behind the ears at the thought of the mess we had made of the car industry being taken as a model for anything except disaster. After all, the sugar industry stands on its own feet nearly all the time, while the car industry stands on ours.
If only prices were fixed by what is just and fair, the cost of production system would be excellent. But prices are, in the end, fixed by the law of supply and demand and nothing can stop this law working.
That is why the chap was going to hospital, even though he was in the right.
- 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
- Boring economics worth a smile
- The Libido for the Miserable
- Agricultural Development and Tariffs
- Fred's too poor to have principles
- The Playford charade is out of date
- Bert Kelly: the odd man out who's now in
- Dries must resist giving up struggle as going gets tough
- Sir Roderick Carnegie's foreword to Bert Kelly's Economics Made Easy
- The Vale of Popularity and the Protection Procession
- Politics 101: Pay Lip Service to Capitalism and Shoot the Messenger
- Bert Kelly makes politicians eat their own words on tariffs, then says, "We cannot be blamed for treating the statements of our statesmen with cynical contempt"
- Bert Kelly on Free Enterprise