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The Forum > Article Comments > Perfect competition and the Australian car industry > Comments

Perfect competition and the Australian car industry : Comments

By David Long, published 27/12/2013

We live in an age when it is not only fashionable but scientifically correct to answer almost every economic question with 'don't interfere with the market'.

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“Like the professors, however, politicians also like the idea of leaving the market to its own devices.”

Some professors and politicians. Socialist Laborites, Rudd and Gillard certainly did not; nor does socialist Obama. And most professors are so left-leaning and feather-bedded by taxpayers themselves that free markets are an affront to them.

There are no “falsehoods” in the free market, and governments should never interfere with the market under any circumstances. The wreckage left by meddling politicians seems to have been totally ignored by this author.

No “conditions” will be arranged with Toyota to stay in Australia. The Coalition will not last more than one term if it ignores the clear message from taxpayers that propping up inefficient industries, with their greedy employees, is a thing of the past which will no longer be tolerated.

Those “thinking” men and woman (those who don’t agree with the author are not ‘thinkers’ – pretty dumb really) DO NOT know “...that Australia needs a large scale manufacturing industry like the car industry.” What most Australians now know, is that we cannot compete with low-wage countries, and car manufacturing is history.

David Long’s “thinkers” don’t even buy Australian cars, preferring the imported ones that suit their needs and pockets better. Australian cars are too dear to export. Australian cars are too dear, without anti-global, anti-competitive tariffs.

The “thinkers” are sick and tired of paying for inept manufacturing of cars they don’t want and can’t be exported, and providing jobs for people who are paid too much via politicians interfering with the market with taxpayer money.
Posted by NeverTrustPoliticians, Friday, 27 December 2013 10:38:58 AM
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I wonder if this bloke, David Long did any research for this article. If he did, it sure doesn't show.

We had a car industry for 4 reasons. Tariffs, duties, quotas & government assistance.

1/ Tariffs & duties virtually eliminated the import of lower priced cars. They were priced out of the market. The more expensive "luxury" cars could support the costs involved collecting heaps of taxes as they did so. Anyone wishing to sell average cars in Oz had to build them here, or have someone assemble them from CKD boxes of parts.

We instituted a tariff system, allowing some complete car imports. The more components sourced locally for those CKD cars, the more complete car imports, without tariffs, a company could import.

Companies had to produce here, or get out.

2/ Quotas were applied to all imports. Government realised we were a poor exporter, & restricted imports to match. No US dollars meant no US cars allowed effectively. Restrictions on European & UK cars meant cars were in short supply.

3/ Governments everywhere were worried about availability of jobs for returning armies, & partly funded GM to build the Holden.

It worked well for Sydney, Melbourne & Adelaide, the main car industry sites, but meant the rest of the country paid far too much for most things. Either inflated local production prices, import duties, or taxes for government to support that industry.

The car industry thrived. Holdens waiting list for a car stretched out to almost 2 years in the early/mid 50s.

At the same time there was no Asian industry to compete with, & no roll no/roll off car transport ships to make freight costs low.

Keating & Button did the job on the car industry, with the Button plan. They progressively cut import duties, forcing our industry to compete more. This was in the day of low factory wages, & little Asian industry, except in Japan.

Since then, with our osculating wage structure & Asian manufacturing competition, it has simply been a matter of when, not if the industry would fold it's tent & disappear.

Posted by Hasbeen, Friday, 27 December 2013 12:19:26 PM
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Your message seems to be “put the politics aside and just do what is right for the country”. However in doing that you don’t seem to be looking very deep at what the problem may be.
Car manufacturing is a failing enterprise in Australia, so we must put public money into it. Are you suggesting we subsidise car industries permanently?
Where then is the incentive for any industry to be efficient if they know they will always get a handout whether they succeed or fail in their endeavours?
What will it say about the Australian worker, that as time goes on, an increasing amount of them are employed in sheltered workshops? The sheltering being done by our bizarre industrial relations laws where, according to one recent newspaper report, most factory floor car workers are paid over $100,000 per year, taking overtime and benefits into account.
Yep, I agree it is hard to compete with Asian manufacturers, whom I bet don’t pay their shop floor workers $100,000.
Posted by Edward Carson, Friday, 27 December 2013 12:27:19 PM
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David pushes this bit about the loss of skills. Come on mate, it was girls, who had never seen the inside of a factory that screwed most of the spitfires together, built the machine guns for them, & produced the ammunition.

No skills are not the problem. I will admit the loss of the factories, with the heavy presses, & molding equipment could be a problem if we ever had to fight WW11 again. However those fighting the last war always lose this one.

Any major war today will be long finished before we could even swing our manufacturing effort to war equipment, let alone scale it up to anything like what would be required.

Besides all our uniforms come from Asia today. We can't expand our armed forces, without China making our uniforms for us.

God what a fools paradise we live in.
Posted by Hasbeen, Friday, 27 December 2013 12:30:13 PM
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Hi David,

I’ve tried hard to tease some context out of your article and I also can’t find any structure. It rather sounds like your are having a “bob each way” whilst not reaching any substantive conclusions.

To draw on Churchill and Keynes during WWII in nonsense. During declared war conditions the entire economy, production capacity, resources and workers are commandeered for the war effort. There is no choice and markets are not a factor.

The link you posted on “tautology” is from an article based upon Economic Policy, it is a “treasury and regulatory” perspective and not a market perspective.

If it helps, a market is defined as Product, Market, Channel, Service, Customer, Supplier, Regulator and Competitor. The only place for government policy is as a “regulator”. To create the legal infrastructure, rules and governance. These “regulations” are seen by the “market” as either enablers or disablers.

“Perfect Competition” is a construct of economic policy, it is treasury politics and of no other context.

Free markets are created by investors who risk their capital to create wealth (Return on shareholder investment), employ people, feed supply chains for other businesses and pay taxes. Any direct or indirect public moneys paid by government into such markets will inevitably distort that market. In most cases to the detriment of all those who invest their labor or money.

IMHO, any objectivity you might have claimed in your article was shattered with this statement.
<< The criteria for any industry or indeed the incentives must be the common good which is inextricably bound up with the national interest>>. What rubbish. Where on earth did you dig that up from? Karl Marx? Max Weber?

Sorry David, but you have jumbled up, confused, misinterpreted and tried to string together so many apples and oranges that I can’t make any sense of it.

Perhaps your interest in “classical political philosophy” has resulted in the socialization of your selected topics and your application of “narrative theory” to try to explain what it is you can’t comprehend
Posted by spindoc, Friday, 27 December 2013 12:38:45 PM
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Australia is doing ok but headed for a mess (higher unemployment rates & so on) due to lower level education, not much innovation and way behind in IT . 3 main reasons though there are others too for the bust in manufacturing and challenges in most other sectors. Chef robots already exist; assembly workers over; even traditional retail, admin, legal, supply chain, etc over; self service revolution has been existing for the last 100 years - ATMs, airports, retail & so on.

All industries are being changed by technology and innovation as they have been for centuries. is 1 article while is the other article that shows the dying and thriving careers within next 10 years and these came some time back. Also, this - is the McKinsey article that came early this year showing disruptive innovations that would save the world $14 trillion to $33 trillion per year from 2025. Additionally, is a blog that shows how technologies are shifting some industries. For example, Bitcoin (medium of exchange) or that robot chefs already exist in China, Japan, etc
Posted by alexthomas1980, Friday, 27 December 2013 2:38:33 PM
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