A Modest Farmer [Bert Kelly], “Politicians’ statements worthy only of contempt,” The Australian Financial Review, August 29, 1980, p. 13. Reprinted in Economics Made Easy (Adelaide: Brolga Books, 1982), pp. 223-25, as “After the Cabinet Decision (a).”
Do you remember the words of the naughty lady in the musical comedy Oklahoma who sang:
It ain’t so much a question of not knowing what to do:
I’ve known what’s right and wrong since I’ve been ten.
I know I mustn’t fall into the pit
But when I’m with a fella, I forgit!
Most people have known what was the right and wrong thing to do about the high tariffs protecting the textile, clothing and footwear (T.C.E.) industries. If we don’t, it is not because we have not been told often enough and by the good and great too. With ringing eloquence they have told us that we must lower trade barriers, particularly those that shelter the T.C.F. group. Let us listen to our masters’ voices.
First, let us hear from our Prime Minister who leads the Liberal Party which often proudly proclaims its belief in free enterprise and how people and industries should not always be leaning on the government. When Mr Fraser was in Lusaka, winning his international accolade, he demonstrated that he knew how we ought to handle this problem of trade barriers. I quote from his speech:
Defensive protectionist policies exacerbate the situation they are meant to deal with … We need policies which will free resources of capital and labour and allow them to reflect the operation of market forces including, most importantly, the competitive forces of international trade.
Having read that firm and statesmanlike utterance, we expected that he would be in favour of a reduction in the protection for the T.C.F. industries. But he was in the vanguard when the decision was made to keep the T.C.F. tariffs high.
Next, let us listen to Mr Anthony, the Leader of the Country Party which poses as friend of the farmers. Mr Anthony knows that farmers who are exporters have to carry their share (about 40%) of protecting the T.C.F. group and this is estimated to cost all the exporters about $750 million a year. That Mr Anthony knew the difference between right and wrong he clearly demonstrated in 1979 when he said:
If we are going to export more products which we can produce competitively, then we must also import more of the products we produce less competitively.
So those of us who foolishly believed what politicians told us thought that Mr Anthony would be in favour of reducing the burden of protecting the T.C.F. group. But he went to water with the rest.
Then we looked hopefully towards Mr Nixon who, as Minister for Primary Industry, could be expected to have a particular responsibility for the well being of farmers. He is also said to have a bit of guts. He too demonstrated that he knew right from wrong as this quotation from a speech of his shows:
We cannot afford to saddle our most efficient industries with the continuing burden of high cost uneconomic industries. The sooner we realise that, the sooner will we arrest inflation and declining rates of growth and employment.
When we heard that we thought we could depend on our Peter but he sold us down the drain with the others.
Some of looked hopefully towards Mr Tony Street, the Minister for Industrial Relations, who used to have a mind of his own. One of us unearthed a very sensible speech of his made in 1977 when he said:
Higher tariffs do not overcome the underlying problems of Australia’s poor competitive showing. In a very real sense they exacerbate the general problem because high tariffs tend to raise the price of the protected imports and of the local product afforded additional protection. Whatever the higher tariff may do for the individual industry concerned, it results in pushing up the general price level, and when wages are further adjusted for price rises, all industries find their costs rising.
When we read this, those of us who knew what a brave little beggar he used to be, thought we could depend on him to the bitter end. But he shot through on us also.
I think that I will be able to find some more similar quotations for next week’s essay. Mr Peacock has made some perfectly splendid statements and Mr Robinson too. But summing up so far I cannot help thinking that, as the value of money is destroyed by printing too much of it, so our belief in what our politicians tell us is destroyed by excessive incantation. We cannot be blamed for treating the statements of our statesmen with cynical contempt.
A Modest Farmer [Bert Kelly], “A many splendoured catalogue of meaningless statements,” The Australian Financial Review, September 5, 1980, p. 13. Reprinted in Economics Made Easy (Adelaide: Brolga Books, 1982), pp. 225-27, as “After the Cabinet Decision (b).”
Last week [above] I quoted speeches of the good and great which showed that they knew that trade barriers protecting the textile, clothing and footwear (T.C.F.) industries should be lowered as the I.A.C. recommended. But in spite of their loud and eloquent urgings, the government continued the present devastatingly high protection for these industries which is costing us exporters and consumers about $750 million a year. I ended by saying that next week I would examine statements made by Messrs Peacock and Robinson, two very powerful members of Cabinet, who have made some perfectly splendid speeches on the subject, only here again their practice does not square with their preaching. Then I was going to quote Mr Stone of Treasury, the Harries Report, and so on and on through all the impeccable authorities.
So, with Eccles’ help, I prepared a catalogue of splendid material and I read it with some excitement, and it made me feel really virtuous. But both Fred and Mavis advised me to tear it up. Fred’s argument was sour and simple:
There is no sense in proving that you cannot rely on what politicians say, Bert. That is news no longer. Everyone knows that the sods will say anything, particularly in election year. Why bore people by telling us what we already know only too well?
Mavis took a shrewder line:
It’s no good going on about these things, dear. Politicians sometimes have to do things that they know are wrong. You would have been in Parliament now if you had learnt that simple lesson instead of listening to that wretched Eccles. Probably the government thought they had to do what they knew was wrong in order to prevent more unemployment.
I know the government justified its action of leaving the trade barriers high by claiming that it was concerned about the 30,000 jobs that the I.A.C. estimated would be lost over a period of five years if its recommendations had been followed. But 20,000 of these jobs will disappear anyway because of the increased use of labour saving machinery which is an inevitable result of striving for increasing productivity.
But perhaps the government does not want this to happen and would prefer the industries to stick to hand looms instead. This is what the P.M. had in mind when he said:
Because of rising labour costs, employers are tending to use machines rather than people in the production process. If tariff protection for Australian industry were reduced, this trend would worsen. The government has worked to ensure that the push for lower tariffs would not continue.
The P.M. is a Luddite at heart and clearly sees the solution to our unemployment problem is not replacing men with machines. Yet at the same time the government encourages the installation of new labour saving machines by giving factories accelerated depreciation on new machines. You can’t blame us for getting confused!
However, let us return to the employment argument. Unless the P.M. has his way and succeeds in sitting on the productivity horse’s head, the ordinary economic pressures for increased productivity that work on all other industries, including farming, will also operate on the T.C.F. group, so 20,000 of the 30,000 people will have disappeared anyway after five years. But that would still leave 10,000 jobs that the I.A.C. estimate would be lost in five years if its recommendations had been adopted. Should we not be concerned at the loss of 2,000 jobs a year?
Well, we have been losing farmers at a much faster rate than that and no one seems to be worried. The average yearly loss of the farmer workforce has averaged 5,460 for the last 25 years. It seems proper for farmers to obey the economic laws, and small grocery stores also, but it appears there has to be a special place in heaven for the T.C.F. group. What have they got besides a strident voice, that we haven’t got?
Employment in the T.C.F. industries has been falling for years, in spite of their receiving an annual subsidy of about $750 million. More people are making their own clothes because clothes are so expensive, others are making do with less clothes for the same reason. Others are going overseas to buy clothes where they are so much cheaper. The government seems to have forgotten that the traditional way of dampening the demand for a product is to increase its price. It has certainly succeeded in doing this, if nothing else. Yet it continually maintains that its first aim is to reduce inflation. Holding the price of clothes artificially high seems a queer way of doing this.
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