Mr Howes connections to The Socialist Alliance are well known, as are his claims to abandoning his socialist beliefs and recognizing the power of the market to provide prosperity. I wonder then why at every opportunity he advocates policies that could be described as none other than socialism by stealth.
Surely there has not been a more ridiculous claim in recent years from the unions to use government to dictate where one industry must procure such an integral part of its operations, steel. Although, I do believe to be left leaning in your politics stems from an inability to properly integrate economic history with current events.
Unintended consequence! Sometimes it is so obvious maybe it is intended.
Mr Howes economic genius was best expressed on a recent MTR segment on the 23rd of August featuring Steve Price and known conservative Andrew Bolt. Mr Howes expressed the view that if we had the Resource Tax on mining in place, the dollar could be down and allow our steel to remain somewhat competitive. His basic message is he wishes to use government to punish companies for productivity and reward those who do not compete via government enforced redistribution.
Mr Bolt engaged in a futile back and forth where Mr Howes was unable to have the consequences of his economics explored in full. Mr Bolt was able to ask some questions but they were readily dismissed by Mr Howes as he continued his Rant on protectionism.
Mr Bolts questions boiled down to these two essentials questions.
Will such a measure force up the cost of mining the iron ore that feeds the manufacturing of steel? Will this cost be passed on?
It does not take a business degree to be able to recognize that a measure to force mining companies to buy more expensive Australian steel will add further costs to the actual mining of iron ore.
Firstly the cost will be passed in full back to the Australian steel manufacturers; making their product more expensive to customers outside the mining sector. It will drive all but there government enforced customers away due to added input costs passed on from the iron ore companies.
Secondly it will establish a government monopoly for Australian steel manufactures allowing them to set monopoly prices to the mining industry and remove any pressure to innovate and improve their manufacturing process to become more competitive. Put simple, it is moral and economic hazard.
Lastly by putting upward pressure on mining costs we then make our mining operations less competitive on the international scene. Australia has high grade resources but we are not the only country, new deposits of various base metals and energy are being brought online around the globe every day to fuel China's appetite.
Australia already has expensive labour and tax costs; facing possible Mining and Carbon taxes, a measure such as that proposed by Mr Howes would simply allow foreign competition in mining and the already killer competition in manufacturing to damage our big industries driving prosperity and employment to new shores.
Mr Howes inability to grasp the consequences of his policy demands is staggering but not surprising. The left still pushing a raft of failed theories of economics from Keynes to Protectionism leaves me know doubt they are unable to integrate proven historical economic failures with current events threatening the global and domestic economic situation.
The arguments against protectionism are well founded, and the removal of a raft of protectionist policies in the 1980's are one of the biggest factors in transforming our country into the prosperous powerhouse it is today. The inability of Mr Howes and the current Federal Government to understand our countries success and how open market policies drove it through the last two decades is having very real consequences as we go into a new wave of uncertain times.
Australian manufacturing is under threat so if not protectionism, what?
Put simply I do agree with Mr Howes assessment of a high dollar driven by high commodities as the main cause of our manufacturing industries decline. It is however not the only cause; as we know manufacturing has been dying the slow death for over two decades in this country due to global competition.
High labour costs, heavy regulation especially on labor, and burdensome tax rates imposed by all levels of government are three major government created issues which are in our means to control. Global competition is not something in our control, how our government impacts our businesses is!
Taxation - Australia needs to be an easier place to do business!
The elephant in the room taxation. It is understandable but unforgivable how unions so tightly weaved into the power structure of the ALP refuse to acknowledge how hard all levels of government make it for every single small business through to large company to compete domestically and abroad. I always wonder why we never see unionists denouncing the Carbon and Mining tax despite the obviousness of their soon to be felt impact of jobs and living costs.
Union leaders always support these tax measures which will hurt every Australian provided their particular industries of concern receive nice healthy compensation packages from the government. Could rent seeking and payed support be so obvious? Unions then wonder why their membership and general community support wanes much like the manufacturing sector in this country.
Union leaders by their nature must be tribal and look after their members interests, but they do so at the expense of every other Australian and whichever singled out industry is poised to be shaken down by the ever cash hungry government.
Union members must demand their leaders to fight the Carbon and Mining tax for their own well-being and for the rest of the Australians whose living standards are under threat from big government far more so than competition abroad.
Labour costs will never compete with developing countries but they can be reduced by removing payroll tax. This abhorrent tax pushes employers for doing a moral and economic good of making people productive. Union bosses should be all over this tax if they really want to keep their members gainfully employed.
Unions like the ALP, simply out of touch!
It seems plain to me that union leaders such as Mr Howes are either wilfully ignorant of economics or deliberately exploit a form of class welfare between high and low performing industries to extort protection from government for their members industries. They do this with reckless abandon for the consequences to industries and workers outside (not entirely) their union membership.
It is no surprise the Federal Labor government has brought forward part of the 100 million dollar assistance package to the steel industry in Australia, it amount to nothing more than paying people like Paul Howes and his fellow union bosses to keep quiet. They get a handout whilst other companies and individuals will take the brunt of a new raft of government imposed costs on living and producing.
The better you perform as a company or individual the less likely you are to receive assistance. The productive part of the economy which exists because it efficiently meets market demand pays for those who do not. Short term such measures are affordable and politically popular, in the long term however it is unsustainable and will come back to bite us. It happen in the recent past and we responded, why do we now take a step backward?
No private industry should ever have to rely on government handouts to exist. Markets can only work if they are set free to work, otherwise scare resources are poured into economically unsustainable investments and it is only a matter of time before the government money runs out. Once these funds dry up those businesses much like the solar and insulation installers which made up the first stimulus response post GFC find they have no business and close doors and lay off workers.
The market forces innovation, it is a creative destruction, but countries that embrace it are best able to meet future uncertainty than countries whose economies need welfare to exist.
Union leaders will continue to drive membership levels south if they refuse to properly understand economics and continue to support anti-prosperity measures put forth by the federal government. The alienation of union bosses with their members is analogous to Federal Labor's alienation of the Australian public. Nobody in power is listening to who they are entrusted to protect and it seems power, special privilege and perhaps protectionism are the defining themes of this horrendous political paradigm now steering us head long into uncertain economic times.
Big government get out of the way!
The debate should not seek to force high performing companies to prop up lower performing companies but look at what is really making it hard for all Australian businesses to compete. Blaming some industries for doing well then punishing them is as immoral as it is dangerous; exploiting it to push protectionism, a character flaw.
Every business person can tell you how government regulation and endless taxes are making it hard to earn in this uncertain climate.
We cannot alter world economic conditions or competition. We can however lower taxes and make Australia an easy country to do business in, be it manufacturing, mining and everything in between!
Good article. We need an election now, to return to a deficit free Australia and to keep industry and business here; instead of being forced to look overseas because Labor has taxed and implemented policies that are untenable.
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