The Revival of Protectionism and Australian Manufacturing.

Protectionism.

Protectionism is the economic policy of restricting imports from other countries through methods such as tariffs on imported goods, import quotas, and a variety of other government regulations. We need to accept that we protect the construction industry in many ways the latest being Home builder. We protect the renewable power industry. We protect Australian industry against international companies through the NBN. We protect South Australia by building out of date Submarines there. We protect the shipyards building frigates by extending the construction period at a substantial cost. We protect our banks with government guarantees. I would suggest the Australian Government is spending more on protection at present than it has in our entire history.

Let’s not think that we haven’t already lost the moral high ground on protection.

But its about fair trade not free trade. And fair trade is about a level playing field that Paul Keating would so often say.

Trade.

We need to increase our wealth as a nation and that can only be done by exporting more than we import. Therefore we need trade.

Manufacturing.

For many the discussion on manufacturing is an economic one. What is the cost of manufacturing something here versus importing the same product?

However being a manufacturer for most of my life I would suggest it is a sociological problem and not simply an economic one.

Sociological issues.

Sociology is the study of the development, structure, and functioning of human society. It is the study of social problems and that is what we are dealing with.

Vilfredo Pareto looked for help from all learning to grasp the issues of social problems. These learnings included science, philosophy, history and literature. Where science included economics, biology, physiology, psychology.

1. Philosophy. Humans are born with a desire to survive, procreate and believe. Survival means feeding and clothing yourself and your family. Take away the need to survive and you take away the meaning of life. Many argue for a UBI, but that takes away the meaning of life and the will to live.
2. Psychology. Most people need to be useful to themselves, their families and society. Work is the key element to being useful. It is the dignity of work that allows people to hold their heads high and march through adversity. I don’t care who you are when you lose your job you lose a certain dignity. With people in high places it is laughed at as relevance deprivation syndrome. For others is it just loneliness and depression. And by nature when the government looks at these issues there is not one person sitting around the table that doesn’t have a job and is feeling the indignity that comes with unemployment.
3. Cultural. Many would say Australia has been said to be a multi-cultural society. John Howard would say we are a multi ethnic mono cultural society and that has been achieved by migrants coming to this country and finding work in low paid jobs, many in manufacturing, where they learned the language and the culture. This has been born out by John Carrol in his book The Golden Cities where he says that migrants assimilated by marriage by 30% in the first generation and 70% by the third generation. This lead to Bernard Salt writing last year on the diversity of our suburbs. 
4. Morality. In Australia we increase the cost of manufacturing well above those of our competitors in four main areas:
   1. Industrial Relations. IR
   2. Occupational Health and Safety. OH&S
   3. Corporate Social Responsibility. CSR
   4. Environmental, Social and Governance. ESG

Yet we find no issue with our competitors not applying the same standards. I call it exporting pollution and human misery, yet we seem to have no problem.

There are two stories I tell in the Parallel University. The first is buying honey in Switzerland. There are two brands on the shelf. One is 5 Euros and the other 10 Euros. The 10 Euro one outsold the cheaper French product 9 to 1. The Swiss knew the French honey was subsidised and they wanted to look after their own bee keepers.

The other story is the main thrust of the Parallel University is to understand your environment yourself and then filter these through your values before you develop a game plan for your future. 

We need to seriously evaluate our values on these issues. Giving our own people the indignity of no work while allowing others to pollute the environment, work in unsafe places, and neglect human rights.

There is an old proverb so to speak that says Europeans buy with their eye, Americans with their stomach and Australians with their wallet. We cannot continue to keep one set of standards for ourselves and another for the rest of the world.

5. Pareto. And when Pareto finished looking from the aspect of all learnings he found 20% of people will product 80% of the product. 
   1. This was told to me first in Melbourne in 1968. I was interviewed by the Personnel manager at BASF in Flemington Road, Melbourne. He told me there were 350,000 employees in the company worldwide and they were arranged in 18 levels of management. He then said that once you got past the third level there were more jobs than people who wanted them. It appears the world is designed by the 20% who think very differently to the 80%. 
   2. The vast majority of people just want to survive and procreate they do not need to be high achievers. The problem is that we as a society are pushing them into positions where they are not comfortable.

The Benefits of Manufacturing.

1. A more self-reliant country. We get to make stuff.
2. Lower welfare payments.
3. Reduction in mental health issues.
4. Reduction in health issues.
5. Increased tax revenue.
6. The multiplier effect.
7. Wages can only rise when as a nation create more wealth than we destroy. And it is Mining, Agriculture, Manufacturing, International Tourism and education that create wealth.

What’s the point of having a whole lot of high achievers sitting around a table defining a system for the 80% that don’t want to play their game? I think more and more people are finding out with COVID-19 that they don’t want to play anymore.

Manufacturing Culture.

1. Get it right the first time.
2. Reduction of waste.
3. Quality, Cost and Leadtime.

Economic Issues.

1. The multiplier Effect.
2. Creating Wealth.

The biggest political issue of the next decade is: do you want to be self-reliant or do you want to be looked after by the state? I would hate for my grandchildren to say in 30 years time nobody gave them the alternatives.