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The Forum > Article Comments > Economic philosophy fails Australian agriculture > Comments

Economic philosophy fails Australian agriculture : Comments

By Ben Rees, published 25/11/2013

Classical economics' Says Law incorrectly conflates productivity and profitability, creating problems for Australian farmers.

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The “governmental” reasons for a non-level-playing field are all the various subsidies and handouts and price-rigging and cost-shifting that only a government can indulge in by virtue of its legal monopoly of the use of force.

The irony is that you guys are arguing for intervention by an actual monopoly based on force, to pre-empt mere possibility of monopolies based on consent.

Any attempt to “deliver profits” to Australian farmers by means of policy amounts only to making everyone else worse off by a straight-out forced wealth distributions, and none of you has attempted to deny this.

So it’s not clear what policy action you guys are calling for. Correct me if I’m wrong, but “We! Want! Handouts! We! Want! Handouts!” seems to be all your argument about pragmatics amounts to.

Well I think we can all agree that it’s pragmatic to the beneficiary of the stolen loot! The question is whether agricultural policy should be doing that! Of course, if it should, then why not above-market privileges and handouts for the rest of the population too – paid for out of magic pudding presumably?

But this is not pragmatic: it’s a policy of destruction of wealth. If carried to its logical conclusion it would literally spell the end of human society, which is why full communism caused the death of millions and complete social collapse whenever it was attempted.

You are in a double bind about the level playing field. On the one hand you declare that it’s an absurd concept that can never occur in reality. On the other, your critique is nothing but that government should be attempting to level the playing field - by coercive interventions.

Sorry to be so blunt in telling you this, but the reason you can’t answer my 4 questions, which disprove your argument, is because the theory you are using is illogical and self-contradictory.

Both neo-classical and Keynesian theories are demonstrably wrong for the reasons I have shown. Austrian-school theory isn’t, and I respectfully recommend it to your readership:

“Human Action” by Mises
http://mises.org/Books/humanaction.pdf

“Man, Economy and State” by Rothbard:
http://mises.org/Books/mespm.PDF
Posted by Jardine K. Jardine, Thursday, 28 November 2013 8:21:23 AM
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Jardine K Jardine
I have at no time asked for tariffs or handouts. I have just asked for the lifting of some of the imposts such as unscientifically based environmental law without compensation and protection from an uncompetitive environment where too few players means that they can get away with offering prices below the cost of production.
As for anti-trust laws-I do not think that a few large players should be able to get together and set prices or carve up territory or arrange tenders with impunity.
Belonging to a cartel which managed to raise prices for lysene by 70% in a short period resulted in record fines for ADM (the proposed buyer of AWB) in both Europe and the US and some executives imprisoned.
Posted by campaigner, Thursday, 28 November 2013 8:54:42 AM
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You just dont seem to get it .
You claim labour is market reason? clearly this is government.
the free market will never exist while countries impose different standards.
I think you talk about natural advantages certain countries have should be able to be exploited, however the reality is this doesnt happen, the reality it governments are manipulating the market all the time , the reality is that the free market you talk about does not exist, never has and more than likely never will.
The reality I face as an producer and exporter is that every market I compete in , including domestic , i face competition that have either lower standards (labour/environmental) or have government support and protection.
This is the reality, so to compete we either drop all social costs (tax) so i dont fund someones drunken night fling to night at the opera to retirement fund or hospital visits and have no food safety regulation and we will compete with the rest of the developing countries. or we need to pay our producers for the regulations imposed that give us the higher standard of living that most western world enjoy like the USA or the EU cap. China is ours and almost every countries largest trading partner, try and convince them to stop protecting thier domestic industries even with thier cheap unprotected labour force.
You can sling or the quotes and theories around all you like but this is the trading reality.
If anyone thinks that they can influence or convince all the world to follow the same line then you better stick to sipping tea in the garden with the fairies and smurfs.
Best result in this is to ensure domestic industries are not at a disadvantage in the markets to give thier competitive advantage a chance and to maintain a standard of living that we can all enjoy.
the current "free trade " australia has, means producers/ manufacturers face Global incomes with highly regulated costs in a market that has unregulated standards and subsidised goods.
Posted by bartb, Thursday, 28 November 2013 12:45:32 PM
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This gives local industry a disadvantage that all the competitive advantage will never overcome. I double the ave. Brazilian farmers yield, while using less than 1/3 the chemicals but processors at times say that even if I gave them the fruit for free it’s still cheaper to import! and that’s after they have to use the extra energy to concentrate and ship it. Is this your free trade at work benefitting the efficient.
All the excuses then pop up and I’ve heard them all from fools like warren truss who then said we need to be more mechanised... Except that still doesn’t work because the grape industry in Australia is also the most mechanised and the market is failing as they still can’t compete... the answer is do nothing but find a wage job and hold onto it until the local business shuts also and then what?? Move to the cities to do what?? India and china can do all the white collar jobs from their desktop much cheaper than here, manufactures are dropping like flies, Can we all pour coffee for Who?? or the promised green jobs??.... the tourists who don’t come anymore because our dollar is too high from manipulated currencies.
The Only thing the Author was wrong about was that Economic philosophy is failing us all , for Ag and manufacturing it’s the end game, for tourism and education industry its down the slippery slope and for the rest its coming, just a matter of time
Posted by bartb, Thursday, 28 November 2013 12:47:10 PM
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The Austrian school also believe in Say's Law of Markets. So supply creates demand and there is no problem in producing as much as you want . It will be bought. If they understood the nub of Ben's discussion, it would be clear that his article applies equally to neoclassical, classical and Austrian. So long as Say's law underpins their theory of supply and demand, the article is just as relevant

Engel's Law looking from the demand side says Say's Law is nonsense. As farmers, just think about your own experiences and make up your mind who has the right understanding of agriculture Say or Engel

From the belief in Say's Law of Markets follows the false understanding of productivity and profitability. enough of the ranting's which are self opinionated meaningless slogans and clichés . Typically anything uncomfortable is dismissed as illogical.

Thanx Jardine for the intro into the Austrian schools thoughts, we need though to deal with real answers to real problems...Engle's law is reality...Says is a recipe for collapsing industries...we need not experiment any further with the lives of our people.
Posted by Nev, Thursday, 28 November 2013 3:41:26 PM
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Notice how no-one has ventured to answer any of the 4 questions I asked? That’s because they prove you wrong and you can’t answer them without self-contradiction.

Nev
“The Austrian school also believe in Say's Law of Markets.”

Can you refer us to original Austrian-school authority for that proposition?

Bartb and Nev
What specific policy are you proposing?

Campaigner
I agree about the so-called environmental laws. Science does not supply value judgments, whereas law requires them, so the scientism of such laws is always fake. If they were really about the environment, and not about mere power, then their proponents would voluntarily pay the costs of the landholders whose equity they confiscate, and there would be no political issue.

However obviously government reducing or destroying farm profitability by imposts for whatever reason, is not the fault of markets, free or unfree. Anyone who thinks you have established a criticism of free market economics is only displaying confusion on the most basic economic categories in issue. On this point you are agreeing with neo-classical theory on laissez-faire.

As for the anti-trust/uncompetitive point, the criminalisation of such activity only begs the question whether such laws are justified, which is precisely what is in issue. The Austrian argument is that the standard that monopolists, the trusts, et al, are alleged to breach, cannot be distinguished by any rational criterion from economic activities which are universally acknowledged to be necessary and beneficial. The convicting court will not concern itself with whether the definition also applies to many other common and necessary activities; only with whether the statutory definition applies to the defendant.

I have a monopoly of the sale of my own poetry. But that doesn’t mean I can get whatever price I care to ask, does it? And everyone has a monopoly of the sale of his own labour. A monopoly, of itself, is no guarantee that one can charge high or unfair prices.

Everyone charges for his services as much as the market will bear. At some stage, everyone refuses to work more at ...
Posted by Jardine K. Jardine, Thursday, 28 November 2013 7:24:00 PM
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