Economists in Reverse Over the Car Industry

[ryeman]

The Age(Fairfax) page 20 ......doh!......or should that be derrrrr!
Needs a link ....sorry, but one of you tech savvy ones might help, thanks.

How much do these guys (there wouldn't be any advice accepted from a woman) earn for blundering around enforcing their 'purity' on US?.

[Maka]

To be fair all new governments appoint bodies that reflect the party line or ideology behind the policies, but the bodies potentially (eventually, inevitably?) lose credibility in the public arena over the no brainer issues that require a balanced response ie in the best interests of "all" Australians. Whoever is in Canberra is always right, right!

cheers, Maka

[ryeman]

Originally Posted by Maka

To be fair all new governments appoint bodies that reflect the party line or ideology behind the policies, but the bodies potentially (eventually, inevitably?) lose credibility in the public arena over the no brainer issues that require a balanced response ie in the best interests of "all" Australians. Whoever is in Canberra is always right, right!

cheers, Maka

Ideologues don't bring 'balance' to the table.
We now have a petty 'alpha' male in charge, time to 'check out' me thinks.

[superyob]

Originally Posted by ryeman

Ideologues don't bring 'balance' to the table.
We now have a petty 'alpha' male in charge, time to 'check out' me thinks.

Better one 'alpha male' in charge than a collective of 'equals'... What system would you put in place?

[Maka]

Originally Posted by ryeman

Ideologues don't bring 'balance' to the table.
We now have a petty 'alpha' male in charge, time to 'check out' me thinks.

I would bet that balance will change for the better closer to an election time, its not going to bring some things back (rwd falcador) but for the future ie the first local car maker, the playing field may look considerably different & better, who knows?

cheers, Maka

[Dave_Obsession]

http://www.theage.com.au/comment/eco...203-31x6z.html

I once knew a humble economist. I hope he is still in work.

He said that economists should not prescribe for the economy as a whole. Governments should decide what they want the economy to do and then economists would tell them how best to do it. Governments might decide to give high priority to full employment. Economists would tell them how best to do this while keeping any adverse effects to a minimum.

Governments might decide to regularly accept considerable numbers of refugees who have few skills, not even the local language. They might ask economists how best to provide work for them - obviously a solely high-tech, high-skill economy would not.
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Governments might decide that they want a local car industry. The federal government's present economic adviser, the Productivity Commission, has just declared that the economy will grow more rapidly without a car industry. To this a government might reply: even if that is true we have strong reasons for keeping a car industry. We don't mind a slower-growing economy.

The Productivity Commission was asked to be a humble adviser about the car industry. It was asked to identify and evaluate possible alternative public support mechanisms for the industry so that it could be set up for the long term. This part of its instructions it has brazenly ignored. Having decided that the overall economy would be better off without the car industry, it saw no need to bother with support in any form.

The commission was also asked to report on the support the car industry receives in other countries. Nearly all countries that have a car industry support it in one way or another. The commission reported that these methods are so various and so secretive that it could not estimate their extent. Nothing more is said on the topic. Of course Australia is to be quite open and transparent on this issue by not supporting the car industry at all!

The commission did not reconsider its position in the light of the fact that other countries support their car industries. It regards this support as evidence that the overseas competition in this market is too strong.

In its interim report on the car industry in December it noted that while Thailand can export cars freely into Australia, Thailand imposes an excise that handicaps Australian sale of cars to Thailand. Anyone but an economist working for the Productivity Commission would surely recommend that Australia should put tariffs on Thai cars until it drops the excise on ours. But no; this again is evidence that the game is too hard. It's not wrong for Thailand to protect its industry; protection is bad only if we do it.

The car industry and its supporters have made a strong case for retaining the car industry because of all the spin-off effects that flow from it. It is a central industry to manufacturing in the skills it nourishes and the other industries it supports. The commission considers these arguments ''weak''. For what industry could a strong case for spinoff effects be made? In the commission's world: none. In its eyes all attempts to protect an industry are a ''distortion'' to the overall economy. So the detail of its report is worthless. Its answer has been predetermined.

It would be a great gain to the overall productivity of the economy if the Productivity Commission issued a final, one-paragraph report to the effect that all protection, subsidy, concession and encouragement to industry is counter-productive. And then resigned. Why are we paying for a body that always gives the same answers?

Of course the Productivity Commission is rightly worried that giving subsidies lessens the incentive to be efficient, innovative, and to develop new products. Part of its job was to make recommendations to avoid this. But we are not discussing support to the coach-building industry. Cars are and look like remaining a regular means of transport for most of us. And factories that make cars can be readily turned into factories that make other things. It never crosses the mind of the Productivity Commission that there might be an occasion when we need car factories to turn out military vehicles.

The free-trade world of which Australia is the most enthusiastic supporter may bring in the thousand years of peace. But it may not. We are no longer to make cars, soon we will not service planes, we will lose our national airline, we are not to refine petrol. The dangers to which this exposes us are beyond the computations of the Productivity Commission. Australia is more than an economy. The government needs to find new advisers who understand this.

[Road_Warrior]

*snip*

The free-trade world of which Australia is the most enthusiastic supporter may bring in the thousand years of peace. But it may not. We are no longer to make cars, soon we will not service planes, we will lose our national airline, we are not to refine petrol. The dangers to which this exposes us are beyond the computations of the Productivity Commission. Australia is more than an economy. The government needs to find new advisers who understand this.

This isn't about the car industry in isolation from everything else, this is about Australia's capacity to do things. This capacity is crumbling all around us, and that Banana Republic Paul Keating warned us about will be here before we know it.

[BHDOGS]

Liberals always the same as usual abbot bangs on about the golden age of Howard while we live in the post gfc age he needs to wake up

[ryeman]

^^^^the 'golden age' of ramping up 'middle class welfare', blowing the 'surplus' (politically impossible to unwind) funded by the mining boom.....all gone, then blaming the other mob, left with the GFC to clean up after them.....the hide!

[AU1XLS]

Are we talking politics?
Because if we are maybe you all should read

Site T&C
http://www.fordforums.com.au/announcement.php?f=51&a=2

Especially this Clause
1. Posts about or containing references to: religion, race, politics, sensitive or controversial subjects except at the discretion of the admin team.

[superyob]

[QUOTE=AU1XLS;5012054]Are we talking politics?
Because if we are maybe you all should read

No we are not talking politics. Ryeman mentioned 'one male', and I mentioned 'many equals'. This is akin to asking if we are being sexist because the word 'male' was used... Nobody was arguing political ideology here...

[AU1XLS]

[QUOTE=superyob;5012128]

Originally Posted by AU1XLS

Are we talking politics?
Because if we are maybe you all should read

No we are not talking politics. Ryeman mentioned 'one male', and I mentioned 'many equals'. This is akin to asking if we are being sexist because the word 'male' was used... Nobody was arguing political ideology here...

Well good wont be a problem then

But to quote Ryeman again
"
^^^^the 'golden age' of ramping up 'middle class welfare', blowing the 'surplus' (politically impossible to unwind) funded by the mining boom.....all gone, then blaming the other mob, left with the GFC to clean up after them.....the hide!

Looks political to me

[ryeman]

[QUOTE=AU1XLS;5012255]

Originally Posted by superyob

Well good wont be a problem then

But to quote Ryeman again
"
^^^^the 'golden age' of ramping up 'middle class welfare', blowing the 'surplus' (politically impossible to unwind) funded by the mining boom.....all gone, then blaming the other mob, left with the GFC to clean up after them.....the hide!

Looks political to me

Some can hand it out, BUT..........

[AU1XLS]

[QUOTE=ryeman;5012355]

Originally Posted by AU1XLS

Some can hand it out, BUT..........

But what????

[Franco Cozzo]

Originally Posted by AU1XLS

sensitive or controversial subjects.

Lol thats about 99% of the discussions around here, someone always fires up about something.

[aussie muscle]

We'll be stuck in the same position as we were in 1941, when the war in the pacific hit it's stride. Australia struggled because we depended on most of our imports from the UK and suddenly that was cut off. It's the reason the govt and GM set up Holden in 1946. With China, Japan and Korea all shouting at each other, a war is not a completely unthinkable event.

[Bill M]

Good point Aussie Muscle,
armed conflict is one possible scenario, the other is trade embargoes by belligerent nations. Remember the Iran Iraq tanker war of the 1980's and what that did to the price of fuel?
Those nations who don't reserve some capacity of self reliance for themselves are at the mercy of others.

[mik]

Imo war becomes more likely with every passing day, look at all these countries amassing hundreds of thousands of soldiers and military hardware.
Does anyone really think know they are building up troops because they like to see men in uniform????

Also look at some of these countries with masses of population and not much land............ I can see some possible scenarios.

[superyob]

Originally Posted by mik

Imo war becomes more likely with every passing day, look at all these countries amassing hundreds of thousands of soldiers and military hardware.
Does anyone really think know they are building up troops because they like to see men in uniform????

Also look at some of these countries with masses of population and not much land............ I can see some possible scenarios.

Agreed, but I think in Oz there is an 'If we don't think about it, it will never happen' mentality. In a day and age where negatives have been abolished, this was bound to be the result...

[mik]

Originally Posted by superyob

Agreed, but I think in Oz there is an 'If we don't think about it, it will never happen' mentality. In a day and age where negatives have been abolished, this was bound to be the result...

Spot mate, there i think is an over whelming thought process in this country that good old US of A will come and fight our battles for us if it hits the fan.

No doubt as long time allies they would do their best to help us out , but economically US is still struggling, and if media reports are true they are as we speak down sizing the military because it is a case of have too , they will not always be able to fight our battles for us, and neither should they be expected to.
People here need a bit a bit of a wake up call.

[Road_Warrior]

http://www.watoday.com.au/comment/au...205-321mo.html

Auto report is a fantasy tale with a tragic twist

John Legge

The Productivity Commission's damning verdict on the car industry has no basis in reality.



Lewis Carroll's poem Jabberwocky has fascinated children and adults alike for 140 years. The words sound like English and there appears to be a story, but it is still a nonsense poem.

The Productivity Commission report Australia's Automotive Manufacturing Industry has a lot in common with Carroll's poem, but it probably won't be fascinating people 140 years from now. It seems to be written in grammatically correct English but it belongs to a totally imaginary universe.

In the imaginary universe, the Productivity Commission prognosticates there is no such thing as unemployment or idle capital: in their view, once the closure of the automotive industry is complete, the workers affected will find new, better-paying jobs and the capital released by the closure will be put to more productive uses. Down here in reality we know no more than a third of the workers made redundant by the end of the industry will find equally good or better-paying jobs and a third will never work again.

Some of the capital employed will be in machinery, most of it specialised to the automotive industry, and if it is redeployed there is no reason to expect it to be redeployed in Australia. The rest of the physical capital will be no more than scrap metal.
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A substantial part of the capital of the automotive manufacturing industry is in the skills of its workforce. Human capital does not appear on company balance sheets, and quite properly not; but without it, neither companies nor the Australian economy as a whole could function. Human capital is like specialised machinery: it is valueless if it can't be used in the industry for which it was developed. It too is headed for the scrap heap.

The basic methodology used by the Productivity Commission belongs to a universe where the laws of mathematics are optional. And we know any gypsy in a showground tent will be at least as good at forecasting as the Productivity Commission. The commission's crystal ball tells it China will keep increasing its imports of iron ore and coal, even though China's output of steel per capita is already the highest in the world; even though China already has more than half the world's high-speed rail, more than half the world's metro construction projects and has complete cities of unoccupied apartment blocks. As soon as China's demand stabilises - it doesn't have to fall - the price of coal and iron ore will come down and Australia will really miss its largest value-adding exporting and import-competing industry.

The Productivity Commission is as immune to history as it is to logic, but a few facts are worth stating.

The commission uses a discredited concept from the 1970s to come up with a scare headline - car industry protection cost $30 billion, how horrible! - to justify its scorched-earth recommendations. When importers face a tariff barrier they absorb a lot of it: tariffs are one of the few taxes a country can levy where foreigners meet half the cost. Additionally, a point ignored by the Productivity Commission is that the crucial problem facing the automotive manufacturing sector is volume, not direct cost.

In the past Australians may have bought Commodores and Falcons when in some other universe they might have bought imported cars; but there is not and never has been any evidence that the price they paid for a local product was raised by the amount of the tariff or by anything like it. While the Button plan guaranteed Australian manufacturers a fair share of our market they operated profitably; the plan never envisaged an Australian dollar rising above US70¢, and the rising exchange rate has done far more damage to the Australian industry than tariff cuts have.

The commission pretended to analyse the value of incentives offered by governments outside Australia, and trawled the literature until it found a report that ingeniously divided the government assistance per vehicle by 45 (times, not per cent) in Canada and more than 50 in France. This sort of argument is more often found in carnivals, where the gullible are skinned by thimble and pea trickery, than in serious government reports. The commission may have egged the pudding further by ignoring cars produced for export by Toyota and Holden.

To return to reality, the first, and possibly the fatal, nail in the coffin of the Falcon came when the US state of Michigan promised Ford almost $500 million to locate its next-generation engine plant there. Ford Geelong makes a fantastically efficient but very heavy cast-iron engine, and with no money to move to an aluminium or magnesium block the Geelong factory was doomed. Without a local engine Ford couldn't see much point in running a local body plant, so Broadmeadows is redundant to Ford's global operations as well. Australia had the chance to outbid Michigan and chose not to; and it was government money, not workplace flexibility, that forced the issue.

Holden asked for a trivial level of ongoing assistance and was ridiculed in the Australian Parliament for waiting for the government's answer. To rub the issue home, Tony Abbott tore up a recommendation to use enhanced Holden Commodores for the VIP fleet and ordered BMWs. The Productivity Commission has seized on a press release from General Motors denying political considerations affected its decision to withdraw from manufacturing in Australia; if you can believe that, you can believe anything. The Productivity Commission is a complete waste of money at a time when we are assured that the government must make savings: whatever question is asked of it, the answer is known in advance. Any report the commission produces, the IPA will produce the same answers for free.

Abbott, when asked about the Holden workers who will lose their jobs, said they should be grateful they were being liberated from slaving on an assembly line, moving to living off Newstart and Work for the Dole. If this sort of liberation will suit Holden workers on $60,000 per year including overtime, how much more delightful it should be for Productivity Commission analysts on three times that. It can't happen soon enough.

I have some issues with the above piece in that it glosses over some of the factors that have led to the demise of Ford and Holden, but in general I agree with the sentiment.

[dmat2391]

Clearly not a likely scenario but many of these skills were created because of ,as we were often told at uni 25 yrs ago, the tyranny of distance Australia suffered from. WW2 brought many home truths about the reality of things when they turned to manure.
In Europe they spend billions every year subsidizing wheat and agriculture in general, ensuring a local supply. As a direct result of the famine that struck the region during and just after WW2. My old man recalls a story back in our old town in Italy, where a very rich man from the town offered to pay $1000 (in our modern values) for a cauliflower. The young farmer said get stuffed, the rich bloke died 2 weeks later from starvation, the farmer didn't.

The productivity commission has fits about this distortion of the markets as I, having learnt while doing applied economics for 4 yrs. You can't deny the facts of empirical analysis.

Nor can you deny the realty of a dead rich man and a farmer that is actually still alive (pretty old now though lol). Hence the farm subsidies in Europe (just to make the point clear).
This 1000 1000 years of prosperity for all , Star Trek style . Is for me, a pipe dream of analytic economist stuck in their own little world of assumptions and fictions. All in the name of pretending to be a "real Science" in the classic science sense of the word. For me I'll stick to working with wood and actually knowing how to "do stuff" when the proverbial hits the fan.
cheers for the chance to vent my "non polical opnion"

[Nikked]

How are we supposed to discuss the end of the Australian automotive industry without a discussion that involves politics? We are discussing the policies, politicians, political implications of the whole scenario...


Otherwise we are just ignoring the big white elephant and just accepting that its just American corporate greed that shut us down...something that is far from the truth...

[dmat2391]

you can't really

[Maka]

.....for me anyway, looking at it from a historical point of view.

cheers, Maka

[Bossxr8]

I just don't fathom how having a whole industry basically cut off and left to die, with tens of thousands of workers to lose their jobs, most in cities that will suffer enormously, is somehow good for our country.

WTF am I missing here.

Same goes for letting SPC rot, 3000 lost jobs in the Shep area would be a unemployment disaster to a town that relies so greatly on SPC.

I think our country would benefit enormously without a bunch of f-wit pollies whose only productivity is in screwing up this once great country.

[b0son]

Originally Posted by Bossxr8

Same goes for letting SPC rot, 3000 lost jobs in the Shep area would be a unemployment disaster to a town that relies so greatly on SPC.

So why are they (the union/workers) are unwilling to compromise?

Why is it that when times are good the workers expect a share of the spoils, but when they're not, they wont give any of it up?

[ryeman]

Originally Posted by b0son

So why are they (the union/workers) are unwilling to compromise?

Why is it that when times are good the workers expect a share of the spoils, but when they're not, they wont give any of it up?

SPC have said any worker 'benefits' represent 0.01% of their cost of bringing product to the customer.
The local member Sharmon Stone (Coalition) is on record as saying yesterday that that the PM LIED! when he described the workers penalty rates.
She said, it's simply not true! (But they ARE only Victorians as opposed to the 'western suburbs of......')

[b0son]

Originally Posted by ryeman

SPC have said any worker 'benefits' represent 0.01% of their cost of bringing product to the customer.

'benefits' .... pffft

that depends on what they choose to define as benefits and what they define as necessities.

http://blogs.news.com.au/heraldsun/a..._some_savings/

SPC must allow the union to have eight delegates and must provide them with facilities and time to be unionists on site. Ten paid union meetings with workers can be held every year. Each union delegate is entitled to five paid union training days a year, capped at a total of 40 paid days per delegate.

Further to that, workers get paid redundancy at the rate of 4 weeks per year (extraordinarily generous), and they can cash in sick leave.

To argue there is little scope for saving is quite frankly a load of rubbish.

[ryeman]

Who paper is that?.