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The Forum > Article Comments > Detroit lessons for South Australia > Comments

Detroit lessons for South Australia : Comments

By Malcolm King, published 14/8/2013

South Australia's politicians need to face the fact that globalisation has decimated its economic base.

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Hello Cheryl:
You say "This is globalisation at work as manufacturing markets in Asia undercut local producers on price."

If you look ahead at the time when the mining boom has spluttered to a halt , this is what could happen to the whole of Australia not just Adelaide.
Globalisation is what is going to kill our economy one day and the only way to protect against it is to bring back tariffs.
Yes Australia can "go it alone".
The only items that we have to import because it would not be worth making ourselves would be aircraft.
Let us close the borders completely.
The farming sector would scream blue bloody murder but it would not be ruining what little good agricultural land we have to export for digital dollars.
They could survive quite well by producing food for our own population.
Mind you I would not like to hazard a guess how long it would be , before we were invaded for our way of life.
Posted by Robert LePage, Wednesday, 14 August 2013 9:10:31 AM
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One of the lessons we have learned from recent decades, and one that Robert Le Page would do well to heed, is that we cannot shut out the rest of the world, economically or in any other sense. To out up tariff barriers is costly and self-defeating, at least in the Aus economy.

But chucking away protection has it penalties, including the slow collapse of most of our car manufacturing industry. This is a shame but basically it costs to keep it.. Those employed in the car industry would be more productive if employed in industries that don't have to be propped up by taxpayer dollars..
Posted by Curmudgeon, Wednesday, 14 August 2013 10:40:34 AM
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When you have farmers ripping out fruit trees and crops because they have no markets for them after being undercut by cheaper imports, how is putting up a tariff "costly and self defeating"?
When you consider that a lot of the "cheap" imported food causes huge unemployment here, I cannot see how we gain.
When you have manufacturing companies closing in droves because they cannot compete with cheap imports how do we gain?
When you consider that Australia did not descend into a depression in the GFC and is only now feeling the effects of a slowing world economy, why would we be tied to the chaos of the rest of the world?
The only lessons that we have learned in the recent decades are that the rest of the world is a mess and the lesson that we should learn is that we can never compete with most of the world in labour costs and it is foolish to try.
Posted by Robert LePage, Wednesday, 14 August 2013 11:04:21 AM
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Robert Le Page

These arguments are all old hat and barely worth refuting now. They may still have a certain appeal to those aren't aware of the debate, but that's their problem..

If farmers rip out fruit trees to free up productive land for produce that people might want to buy, so what? Would you put up tariffs just so they could continue to produce fruit the market doesn't want?

You say, "When you have manufacturing companies closing in droves because they cannot compete with cheap imports how do we gain?"

Yes we do gain. That's the lesson we have so painfully learnt over many decades. The resources consumed by those companies are then used more productively elsewhere in the economy, and the taxpayer does not have to prop them up. Everyone wins, even the retrenched workers (eventually), as they will get jobs in areas with prospects.

We got through the GFC because of our mining sector and because China kept on demanding resources. We were better prepared because we had mostly dumped protectionism (there is still some left, but nothing like what it was)
Posted by Curmudgeon, Wednesday, 14 August 2013 1:27:22 PM
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Malcolm there never ever was a really good reason for South Australia's existence. Without pinching a huge amount of water from the eastern states, the population & the wine would dry out, shrivel up & die.

Closing the place down would really be a good thing for the rest of Oz, & would do wonders for the deficit very quickly. Close Tasmania at the same time, & the rest would be on easy street. Hell we might even be able to pay off that deficit.

The fact that some folk back in history were silly enough to settle there is no reason why we should be so silly as to keep funding it's existence so their decedents can stay there.

To try to make some use of it, we could excise it from the migration zone, & give it to the illegal immigrants, it would serve them right.

This is not the fault of the car industry, but of course they were silly enough to be enticed to build that factory there, so must share some blame.

Continued.
Posted by Hasbeen, Wednesday, 14 August 2013 2:08:05 PM
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Continued

The reason for our car industry's problems is so similar to Detroit, & is now showing up in our mining industry.

The problem is down to unions & bosses. In the good times unions make ridiculous demands for pay & conditions. In those same time the bosses, laughing all the way to the bank, will give them anything, to keep the cars rolling out, & the money in.

Soon we have a grossly overpaid workforce, with conditions even a king could not have aspired to last centaury. Great, everyone is happy, until comes the crunch. The companies are going broke, & the workers won't take a pay cut. They can't actually, they have expanded their cost of living, & need every cent to pay the bills.

Now in America, the land of the free, along come overseas car makers. They open new factories, but they are too smart to give ridiculous wages & conditions. They pay a fair rate, build cars much cheaper, [& sometimes better], & make good profits.

The old companies have to go bankrupt to get rid of the ridiculous retirement conditions they gave away, & the poor old retired unionists is now in big trouble, because he has banked on what he was promised, lived to it, & the companies can't honor it, as they are priced out of the market

Everyone loses except the foreign car makers.

This can't happen here, any new manufacturer would have to pay those ridiculous wages & conditions, [unions rule here], so no new manufacturers to take over from the old. We end up even worse with no industry, old or new, & no jobs.

We go broke trying to compete with new manufacturers, in Asia, with low wages & sensible conditions. So watch out world, here comes Oz the soon to be poor white trash of Asia. If you can't see it, you're blind.
Posted by Hasbeen, Wednesday, 14 August 2013 2:10:59 PM
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