COVER STORY Free-trade policy sending manufacturing into free-fall
News Weekly, February 11, 2017
The following is a summary of the address by Craig Milne to the 2017 NCC National Conference in Melbourne on January 27–29.
The announcement by Toyota of the date of its closing its plant at Altona was an unhappy reminder of the loss Australia is about to undergo. It is not just the 2,000 jobs that will disappear from Altona, as bad as that is, but also the loss of knowhow to the dole queue (or to the “service industries” that are supposed to replace the jobs in manufacturing) and the loss of jobs in associated industries.
Despite fierce opposition from one
little old lady, the Free-Trade Bill
was eventually passed at 3am.
The little old lady was not available
In the face of such vandalism, we need to take an aggressive position against free trade, because that is the ideology that is driving the decisions in government and in government departments to let go such viable businesses as the local motor manufacturing industry.
Australia has been valiantly doing radical free trade for over 40 years. The results are in and it has been a dismal failure. Let’s tote up its failures.
Unemployment has risen steeply and unremittingly, from an (accurate) 1 per cent between 1950 and 1970 to a claimed 5.5 per cent today. In fact, the rate of unemployment plus underemployment is more like something between 12 per cent and 19 per cent. Not to mention the uncounted thousands who have had to take whatever low-paid job they could get in a market vacuum that has no need for their skills.
All this has been caused by the wilful destruction of manufacturing via trade deregulation. It is worth remembering that the share of gross domestic product (GDP) from manufacturing has fallen from 29.7 per cent in 1957 to about 6.5 per cent of GDP today. Then there are the estimated 2 million jobs that were sent offshore.
The rise in unemployment has caused a massive enlargement of government expenditure: from 18 per cent of GDP in the mid 1960s the welfare bill has risen to over 36 per cent of GDP today. The government largess takes a variety of forms. There are the large welfare handouts to cover job losses, allied with the rise of unproductive employment to compensate for loss of real, well-paid jobs in manufacturing.
The employment growth sectors have been in unproductive industries such as gaming. The tertiary education sector has, meanwhile, been turned into a series of giant warehouses for the young unemployed. (So long as someone is at “uni”, they don’t turn up in the unemployment figures.)
There has been an associated explosion in Australia’s foreign debt because these days we must import what we used to make. We have had no sustained current account surplus since 1974, and there is no prospect of any in sight.
The loss of skills is nothing short of shameful. We used indeed to be the clever country, able to build things. But not any more; we have been overtaken by other countries, including near neighbours, in this respect.
Australia was peculiar place to adopt free trade in the first place. It had been a high-income nation since the 1820s. That is, it has always been an expensive place to produce. Ours is a geographically small, fragmented market, where it is hard to get scale and expensive to cover the entire country. Beyond that, we have had generally “B” grade technical skills (a very good B grade, and with exceptions, but we can’t do what the Swiss or the Germans do.
Yet, radical free trade has been the main feature of our economic policy since the late 1960s.
Why? Four reasons come to mind:
American influence, overt and covert.
An ideological heritage; the Reid legacy from NSW.
The incompetence of our governing class.
A distorting dominance of economics in policy-making.
We need to push back first because radical free trade cannot enable support for family values or care for the working class. Second, a primary task of a national government is to secure a nation’s sovereignty. Free trade prevents any government from doing that. And, third, despite the claims of economists, free trade contributes to moral decay (an inherent element of liberalism) and leaves the economy at the mercy of global markets; and the focus on consumption leads to hedonism and the cult of individualism.
Part of the pushback is to repudiate the economists’ worldview (they are a secular priesthood for the globalist elites). We must highlight the free market’s failure in the Australian context.
The augurs are good, however. Deep globalism has taken some hits from Putinism, Brexit, the rise of European nationalist parties, and Donald Trump’s victory. We are not dead yet; and Australia has vast resources, not the least of which is its people.