A Modest Member of Parliament [Bert Kelly], “The price for protection has to be paid,” The Australian Financial Review, September 24, 1976, p. 6. Reprinted in Economics Made Easy (Adelaide: Brolga Books, 1982), pp. 51-53, as “Tariffs and Employment (1).” [“Tariffs and Employment (2)” is here.]

On 15 April 1975 one of our more inane Members of Parliament asked the then Treasurer, Dr Jim Cairns, that if printing a little bit of money helped to lessen unemployment, why didn’t he print more of the stuff and get rid of the problem altogether?

Dr Cairns startled us all by replying that was exactly what he had in mind. The utter awfulness of that answer seemed to mark the beginning of the decline of all economic responsibility until, too late, Bill Hayden tried to bring the economic ship round before it hit the rocks of ruin.

The behaviour of some of our more primitive people today reminds me of the answer by Jim Cairns.

Ask these people: “If a little increase in tariff protection would bring about a small fall in unemployment, why not have an even higher tariff and get rid of unemployment altogether?” and they would probably reply, like Dr Cairns, that that was a splendid idea and was exactly what they had in mind.

Dr Cairns was talking economic nonsense and they would be too.

Everybody with any economic understanding knows that, though employment may be increased in a particular industry by increasing the tariff, yet the gain in employment would be at the expense of employment in other industries.

Perhaps employment would be lost in industries using the protected product which has been made dearer; perhaps it would also be lost in the export industries which have to pay the price of protection in the end. Their employment opportunities would be limited by having their production costs increased by the increased tariffs.

Anyone with any economic training knows this and Eccles has even been able to belt it into the brain of a Modest Member. But when economic illiterates talk about tariffs creating employment, too few people publicly clobber them for talking nonsense, and the reason is easy to understand. It’s a simple matter for a Member of Parliament to thunder eloquently and angrily if an industry in his electorate is not getting enough tariff protection; he will be able to point an angry finger at the Minister and with a sob in his voice will talk about the poor unemployed people being flung onto the scrap heap and so on.

If he is a smart sod, he will arrange for his local television station to come down to the factory gate on a cold morning and show the closed factory gate with a woman in an apron with three barefooted children at foot. She will wipe her eyes and ask with a faltering voice: “How can a government do such a cruel thing?” And then she will burst into tears.

You can imagine what an impact that kind of programme will have on the public!

But the employment which would be lost in the user or export industries cannot be pinpointed, there would be no television pictures of them because they are spread thinly throughout the country. Perhaps the damage will occur in the form of employment foregone — employment that would have happened if the cost increase had not occurred. But you can’t take photos of people who are not yet employed.

Or perhaps the unemployment effects will be caused by retaliatory action taken by other countries that have been damaged by having their goods kept out of our country by the tariff.

For instance, the Philippines have recently taken retaliatory action against our exports to the Philippines because of the restrictions we have placed against Philippine textile exports to Australia. But we exported about four times as much to them as they did to us, and much of our exports were dairy products. No one seems to worry about the adverse effects on the dairy industry.

It is hard to photograph this kind of damage; it isn’t as though they were shooting the unemployed cow-cockies like they were shooting the cows! Evidently you have to shoot somebody or something to attract attention.

Eccles is always eager to edge me into the tariff firing line, but it isn’t a pleasant place to be, particularly in parliament these days.

It is all very well to propound pure economic logic, but it is hard to match a Member of Parliament beating his breast with the unemployment wind behind him.

It is true that Eccles and indeed everyone with any economic understanding, knows that I am in the right, but there are not enough of these about for comfort.