The state of the economy at the street level

[PZ99]

https://www.abc.net.au/news/program...7-02/a-nation-making-coffee-not-cars/11272684

It seems some are starting to wake up.

A bit late, it has only taken ~40 years after the problems with the "low value service economy" idea became all too apparent to anyone who gave the idea some thought, but at least they've worked it out eventually.

Now how do we fix it?

We can't fix it. I voted against the removal of subsidising the auto industry.
But it happened and this is the result..

200,000 manufacturing jobs gone in 7 years. Our current political narrative to the manufacturing industry is if you want to build something, you do it with your own money and without Govt subsidies. With a population as small as Australia's in a high taxing low tariff environment, manufacturing will never be viable. Even those coffee machines are mostly made in China.

 

[qldfrog]

And it is not limited to manufacturing of big greasy mechanical parts, be it software or robots, medical devices we are out...
Too many disadvantages being here
Heartbreaking for an engineer

 

[SirRumpole]

https://www.abc.net.au/news/program...7-02/a-nation-making-coffee-not-cars/11272684

It seems some are starting to wake up.

A bit late, it has only taken ~40 years after the problems with the "low value service economy" idea became all too apparent to anyone who gave the idea some thought, but at least they've worked it out eventually.

Now how do we fix it?

Either bring back the car industry or move into another technical manufacturing area like electronics. But I doubt if the current government has any intention of doing anything so "risky".

 

[SirRumpole]

With a population as small as Australia's in a high taxing low tariff environment, manufacturing will never be viable.

Well , that's the problem isn't it ? The powers that be equate 'viable' with 'profitable'. They don't take account of the need to have a capacity to produce technology in case the world goes pear shaped and we other countries can't or decide not to sell stuff to us.

Every country that produces cars subsidises that industry because they realise the importance of a manufacturing base to their economies.

 

[Value Collector]

Well , that's the problem isn't it ? The powers that be equate 'viable' with 'profitable'. They don't take account of the need to have a capacity to produce technology in case the world goes pear shaped and we other countries can't or decide not to sell stuff to us.

Every country that produces cars subsidises that industry because they realise the importance of a manufacturing base to their economies.

The longterm trend has been and will continue to be towards greater globalization, and a greater “division of labour” among nations around the world.

In my opinion subsidizing a car industry would be silly.

I mean if Australia needs its own car industry because it fears other countries might stop selling us cars, maybe each state needs a car industry Incase Victoria stops selling to Queensland, and maybe each town needs is own industry Incase Brisbane stops selling to Townsville etc etc.

———-

If having an industry makes sense, it wouldn’t have died in the first place.

 

[SirRumpole]

I mean if Australia needs its own car industry because it fears other countries might stop selling us cars, maybe each state needs a car industry Incase Victoria stops selling to Queensland, and maybe each town needs is own industry Incase Brisbane stops selling to Townsville etc etc.

That's just a silly comment. States are not independent countries. We are a small market globally and usually get what's left over after the US and other markets get what they want. But is South Australia going to stop selling to NSW when the NSW market is 10 times SA's ?

 

[HelloU]

OT
trade restrictions between states under a variety of "rationales" is alive and kicking. Always back self interest in any battle. Try getting a water increase in Sth Oz from the murray-darling, or try to buy some Qld prawns if u r in WA.

at some point each of us has to decide if we want to drink water with our prawn lunch.

 

[sptrawler]

https://au.yahoo.com/finance/news/80000-a-year-jobs-no-australian-wants-200000884.html
Still struggling for workers?

 

[Value Collector]

That's just a silly comment. States are not independent countries. We are a small market globally and usually get what's left over after the US and other markets get what they want. But is South Australia going to stop selling to NSW when the NSW market is 10 times SA's ?

Countries are just lines on a map mate.

Companies sell to the highest bidder.

Haven’t you already complained in other threads that Queensland’s gas production is being shipped to China rather than sent down to nsw?

Ofcourse Queensland being a state rather than an independent nation doesn’t stop the companies that control production shipping the produce to who ever pays the most.

 

[Klogg]

The longterm trend has been and will continue to be towards greater globalization, and a greater “division of labour” among nations around the world.

In my opinion subsidizing a car industry would be silly.

I mean if Australia needs its own car industry because it fears other countries might stop selling us cars, maybe each state needs a car industry Incase Victoria stops selling to Queensland, and maybe each town needs is own industry Incase Brisbane stops selling to Townsville etc etc.

———-

If having an industry makes sense, it wouldn’t have died in the first place.

Exactly. Subsidizing an industry just means we're not using the most efficient path to an outcome. By removing the subsidy, we immediately become more productive.

Productivity improvements look scary short term, but the longer term move to more productive industries can only be good. This is ultimately responsible for raising living standards across the globe.

 

[Smurf1976]

Companies sell to the highest bidder.

In general yes but there are exceptions.

Doesn't apply to those not transacting in cash or its equivalent. Party A funds the construction of party B's rather facilities and is repaid with product not $. Bonus = avoids tax so no chance they'll sell to anyone else unless they're willing to pay a seriously high price that would be totally uneconomic.

Also doesn't apply to any company if the national government decides you can't sell to or buy from whoever. Applies in any country but seems to be a bit of a thing in the USA recently.

Within Australia, well there's something somewhere in the constitution about not being able to restrict trade between states. The SA government once had the idea of ending gas supplies to NSW but it turned out to be unconstitutional was the advice. It wasn't a "nasty" intent, they were just trying to boost development in SA and proposed an end date well into the future, noting that NSW had in the past cut off coal supplies to SA on too many occasions to remember and that Vic also wouldn't supply NSW with gas at the time (although that was technically the decision of a private company not government) so assumed it was doable. Turned out not to be.

Fruit etc well quarantine is a perfectly reasonable and sensible idea. Biology and not spreading pests should always trump economics and artificial human constructs.

 

[Smurf1976]

Productivity improvements look scary short term, but the longer term move to more productive industries can only be good.

Trouble is that after ~40 years of going down this path, and that's roughly someone's entire working life, it's still not really working.

Look at the cafes, tourism and so on and the sort of employment they're offering. Not even $80K a year and in many cases not even permanent full time so it's in no way comparable to what has been lost with manufacturing.

 

[Value Collector]

Exactly. Subsidizing an industry just means we're not using the most efficient path to an outcome. By removing the subsidy, we immediately become more productive.

Productivity improvements look scary short term, but the longer term move to more productive industries can only be good. This is ultimately responsible for raising living standards across the globe.

The light on the hill that I want to strive for is a super efficient, global economy, where all stake holders respect that peace and trade are the ways to maximize our standard of living.

Talking about subsidizing, tariffs and stopping imports etc is a step back in my opinion.

———-

I actually think the world embracing Chinese imports has been wonderful, as it’s helped life millions out of poverty.

Buying cheap products from China has been more beneficial than the billions sent to Africa in aid.

Not that I think aid is bad, I just think trade is better.

 

[Value Collector]

Trouble is that after ~40 years of going down this path, and that's roughly someone's entire working life, it's still not really working.

Look at the cafes, tourism and so on and the sort of employment they're offering. Not even $80K a year and in many cases not even permanent full time so it's in no way comparable to what has been lost with manufacturing.

We are doing pretty well, if we had to lose a few industries to help pull China out of poverty, I think that’s great.

Especially because we still managed to increase our standard of living at the same time.

To me I don’t think giving some one a job in a cafe is worse than making them hunch over a sewing machine.

 

[sptrawler]

Exactly. Subsidizing an industry just means we're not using the most efficient path to an outcome. By removing the subsidy, we immediately become more productive.

Productivity improvements look scary short term, but the longer term move to more productive industries can only be good. This is ultimately responsible for raising living standards across the globe.

This is one thing people fail to realise, it is just as important to utilise our resources in the most efficient way, as it is to improve our emissions.
Wasting resources and wasting energy converting them inefficiently, is just as much an act of environmental vandalism, as burning fossil fuel to generate power.
It is just that no one is making an issue about. YET

 

[Value Collector]

In general yes but there are exceptions.

Doesn't apply to those not transacting in cash or its equivalent. Party A funds the construction of party B's rather facilities and is repaid with product not $. Bonus = avoids tax so no chance they'll sell to anyone else unless they're willing to pay a seriously high price that would be totally uneconomic.

Also doesn't apply to any company if the national government decides you can't sell to or buy from whoever. Applies in any country but seems to be a bit of a thing in the USA recently.

Within Australia, well there's something somewhere in the constitution about not being able to restrict trade between states. The SA government once had the idea of ending gas supplies to NSW but it turned out to be unconstitutional was the advice. It wasn't a "nasty" intent, they were just trying to boost development in SA and proposed an end date well into the future, noting that NSW had in the past cut off coal supplies to SA on too many occasions to remember and that Vic also wouldn't supply NSW with gas at the time (although that was technically the decision of a private company not government) so assumed it was doable. Turned out not to be.

Fruit etc well quarantine is a perfectly reasonable and sensible idea. Biology and not spreading pests should always trump economics and artificial human constructs.

I want to live in a world where we look at other countries the same as we currently look at other states.

 

[Value Collector]

Call me old fashioned, but I think Adam smith had the right idea.

 

[Smurf1976]

Especially because we still managed to increase our standard of living at the same time.

For many we did.

But if someone is in a casual job on $25 an hour then, among other problems, banks won't give them a mortgage and even if they did, it wouldn't be enough to buy even a modest house.

The big problem we've got, both socially and economically, is that the gap between the top and the bottom is far too wide and those at the bottom are far worse off in relative terms than they were in the past.

Anyone working in a factory could at least buy a house with their wages. That we've got many who can't today means we're going backwards not forwards. As more find themselves toward the bottom, it's no wonder they're not spending and nor are the rest who fear ending up in that situation.

 

[Value Collector]

For many we did.

But if someone is in a casual job on $25 an hour then, among other problems, banks won't give them a mortgage and even if they did, it wouldn't be enough to buy even a modest house.

The big problem we've got, both socially and economically, is that the gap between the top and the bottom is far too wide and those at the bottom are far worse off in relative terms than they were in the past.

Anyone working in a factory could at least buy a house with their wages. That we've got many who can't today means we're going backwards not forwards.

The problem is not the gap between the top and the bottom!!!

The problem is that a low income Aussie believes they are on the bottom, when they are actually in the top 10%.

If the world is in the process of lifting millions of people out of stark poverty, and some Aussie complains he lost his job and has to go on the dole, and by VB instead of Heineken I don’t feel that sorry for him.

At the end of the day, he will have a home, he will be fed, his kids will be educated, vaccinated and clothed, life is not that bad.

All we are witnessing is a smoothing out process, most of us are greatly increasing our life styles compared to our parents some are stalling, but the majority of the globally population if seeing big increases.

 

[sptrawler]

For many we did.

But if someone is in a casual job on $25 an hour then, among other problems, banks won't give them a mortgage and even if they did, it wouldn't be enough to buy even a modest house.

The big problem we've got, both socially and economically, is that the gap between the top and the bottom is far too wide and those at the bottom are far worse off in relative terms than they were in the past.

Anyone working in a factory could at least buy a house with their wages. That we've got many who can't today means we're going backwards not forwards. As more find themselves toward the bottom, it's no wonder they're not spending and nor are the rest who fear ending up in that situation.

The whole premise in Australia, is that wealth is totally dependent on owning a house and currently is measured by the ability to own a house in either Sydney or Melbourne.
If you removed housing from the equation, most people have never been better off.
Maybe the Government, should look more closely at building social housing, in a joint ownership model.
Firstly it would be a fiscal stimulus, it would remove the supply demand problem associated with privately funded social housing and probably would put an end to the boom and bust cycle.
Just a thought, but I'm sure a lot of European Countries, with high living standards don't have the home ownership drive Australians have in the psyche.