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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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Yabby,

Something of interest.

Below are photos of some of Detroit’s manufacturing areas.

http://www.time.com/time/photogallery/0,29307,1864272_1810098,00.html

Below are photos of shopping malls in the US.

http://www.time.com/time/photogallery/0,29307,1852939,00.html

The shopping malls look attractive, but 1 in 6 in the US are on food stamps, and over 50% of adults cannot quickly raise $2,000 for an emergency.

In Australia, we give up on manufacturing and agriculture, placing all hope on coal mines and the service industry.

I think this has been done before in the US.
Posted by vanna, Wednesday, 24 August 2011 5:54:55 PM
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Vanna, I think your analysis of the US economy is a little simplistic.

Yes, manufacturing in Detroit reduced substantially, as union
stubbornness sent GM broke. Meantime BMW, Mercedes, Toyota, Honda
and others, have all opened plants in the South. There is still
plenty of manufacturing in the US. We buy their planes, medical
equipment and all the rest. Meantime whole new industries have
been created. Google, Amazon, Facebook and others generally
hardly existed 15 years ago, look at them now and their employees
don't work for peanuts either.

The housing industry is definately on its knees, but that can only
be blamed on Americans living it up and borrowing for far too long.
At some point they spend less and repay some of their debt, that
is exactly what they are doing.

US industry won't invest until they have a bit more certainty and whilst there
is a standoff about the future between Obama and the Republicans,
that uncertainty will remain.

Interestingly in the US, when Americans are offered the lower paid
jobs, like farm work, mostly done by Mexicans, they don't want the
work.

Meantime many US companies are cashing in bigtime around the world
but for tax reasons are keeping their money offshore. They are not
going to repatriate it home, without good reason. Perhaps Govt
should give them such a reason.

The US also needs to sort out its litigation mess. Like in Australia,
training lawyers seems more important then training engineers, so
much of Silicon Valley is driven by foreigners. The US spends
something like 15% of GDP on healthcare, because lawsuits drive
the cost through the roof. That is reflected in the cost of its
products and services. Hardly smart thinking in a global economy
Posted by Yabby, Wednesday, 24 August 2011 6:51:09 PM
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At 1900, over 70% of Americans lived in rural areas, but now only 17%.

They drifted to the cities as agriculture declined, and then manufacturing declined.

The US has lost over 20,000 jobs a month from manufacturing since 2001, and now over 100 cities in the US are on the verge of bankruptcy, because their councils can’t raise enough rates to pay for maintenance of city infrastructure.

Many of the employees in companies such as Google and Amazon are casual, and low income jobs account for 40% of jobs in the US, with many Americans now willing to work for anything.

Now globalisation is a wonderful thing, because everyone is better off, but quite a few of the above statistics are very similar to those in Australia.

Thankfully, Australia has coal.
Posted by vanna, Wednesday, 24 August 2011 7:28:18 PM
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Agree Yabby...

Life has its sad moments for everyone...witness the live cattle export debacle, as an indicator of the shift in political clout occurring in the rural sector. Once, the rural sector was the “Government of Australia” those days now long gone!
Posted by diver dan, Wednesday, 24 August 2011 7:28:44 PM
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Vanna, US agriculture did not decline, it changed, as it did in
Australia. So did manufacturing in both countries, something
which you seem to completely ignore.

Why? Continuing mechanisation and automation. Robots by the millions.

People used to use 100 hp tractors, now they are 500 hp. They towed
17 ft seeders, now they are 60 ft. They drove 8 tonne trucks, now
they are 65 t roadtrains.

People made things on lathes, one by one. Now they are CNC machines,
spitting out lathed items by the millions. Robots are
everywhere. Computerised lasers, cutting out sheetsteel in every
imaginable shape, are everywhere. Need I go on?

One of the joys of being semi retired in my late 50s, is doing the
things I want to do, when I want. That includes watching a bit of
Bloomberg TV and watching how modern production lines work on good
old commercial telly, like the Discovery and BBC Science channels.

The biggest problem for companies like Google, Microsoft and others,
is employee poaching. Zynga, Groupon, Linkedin and other upstarts
are stealing all the talent! The biggest problem for Wall St
investment banks remains employee poaching. For the best employees
are who makes them all the money for the companies. So they can virtually name their
price.

So what you have in economies like the US, Australia etc, is a
division based on skills. Both countries are importing skilled
labour, meantime the unskilled have a problem. Don't blame
globalisation, blame education and Govt policies.

BHP has just offered jobs to the 1000 workers let go by Bluescope.
It will be interesting to see how many will take up the offer. The
first reaction I have read is that people really don't want to move
anywhere, they want a job within a few minutes of where they happen
to live. How lucky they are to be able to think like that.
I still remember the days when Australians moved to where the work
was
Posted by Yabby, Wednesday, 24 August 2011 8:32:20 PM
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Yabby,
You can always go and live in the US, if you like Apple, Google, Amazon, Boomberg etc.

The US economy is rationalised and globalised, with many oppurtunities.

Nothing is any good in Australia, because we aren't as rationalised and globalised.
Posted by vanna, Wednesday, 24 August 2011 9:14:04 PM
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