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The Forum > Article Comments > Breaking the Sheep’s Back: A review of the Australian wool industry and government intervention > Comments

Breaking the Sheep’s Back: A review of the Australian wool industry and government intervention : Comments

By Mark S. Lawson, published 22/8/2011

Charles Massey’s book reminds us of the dangers of shielding domestic producers from global markets.

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“there was no incentive for suppliers to innovate.”

There are three general forms of innovation.

1 Innovate to establish a new market.
2 Innovate to break into an existing market.
3 Innovate to maintain position in an existing market.

So the wool industry did not carry out No 3 and No 1 sufficiently. No need to condemn an Australian industry into the ground. It was competing in the export market, and had been for many years, and it was only a few years after settlement that wool was being exported from Australia back to England.

If there was more interest in developing something in Australia, there would be more developed in Australia.

The continued rubbishing of anything Australian, means that few will attempt to develop anything in Australia, except perhaps coal mines.
Posted by vanna, Monday, 22 August 2011 8:59:58 AM
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http://www.theaustralian.com.au/news/features/how-wool-was-pulled-over-investors-eyes/story-e6frg6z6-1226103788876

The Weekend Australian reviewed Massy's book some time ago( methinks
that Mark has spelled his name incorrectly).

I was impressed and will certainly buy a copy, when the Australian
book industry comes up to speed and sells the Ipad or Kindle version.

The thing is, it shows the disaster which can happen, when Govt
interferes massively in a market and the law of unintended
consequences that can follow.

We can see all this unfold again today, with such "you beaut"
economic schemes as being preached by the Greens, who want to
shut down the live trade. Sadly it will be farmers paying the
heavy price, not feelgood politicians and some of their supporters
who simply don't understand the consequences of their actions.
Perhaps they should read Massy's book
Posted by Yabby, Monday, 22 August 2011 11:11:05 AM
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Mark Lawson here.

Yabby - yeek! thanks for pointing out the misspelling.. I dunno where the extra e came from.. I've asked the site administrators to fix it up quick. How embarrassing.

Vanna - I think you've completely missed the point of the article. No one is rubbishing the industry as such. This disaster was entirely self-inflicted, but now that its long past it serves as a reminder of just how damaging market interevention can be. The industry would have been a lot better off if a few agripoliticians had never been born and the AWC had never existed.
Posted by Curmudgeon, Monday, 22 August 2011 11:50:02 AM
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Mark, you are much better on economics. I agree with this perspective on protectionism.

Some industries should be allowed to fail, protecting them only seems to hurt them in the long run.
Posted by Bugsy, Monday, 22 August 2011 12:23:09 PM
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Bugsy,
Why should the wool industry have been left to die, when the price of wool is currently at a 23 year high.

http://www.theaustralian.com.au/national-affairs/hope-rains-as-wool-prices-soar-to-23-year-high/story-fn59niix-1226073974949

I think there are too many who want all Australian industry killed off, but still want taxpayer funding when they demand it.

They haven’t thought too much about where that taxpayer money comes from.
Posted by vanna, Monday, 22 August 2011 2:29:33 PM
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Mark Lawson..(curmudgeon):

...You also neglected the mention of a key element to the story of the wool pricing intervention; political… It warrants the mention of the influence of the Australian Country Party's motivation in all this. The Country party had become the tattered symbol of the humiliating decline of wealthy landholders (wool producers) in Australia.

...Through all the good times enjoyed by wool producers over many years of Australian history, wool producers continued a relentless attack on rural workers wages enforcing grinding poverty and subservience. Little wonder it was that the Labor party attempted to ignore the plight of the industry; there was a tradition of animosity finally focused through the union movement, alive and well during those times.
Posted by diver dan, Monday, 22 August 2011 2:41:20 PM
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