Monday 17 September 2007
brookesnews via dissectleft
Australian manufacturing is now about 11 per cent of GDP, the lowest ratio in the OECD. For years I have been warning our so-called free marketeers that the condition of manufacturing needed to be addressed. Their insouciant response is that the decline of manufacturing — no matter how severe — as a proportion of GDP is only to be expected in an advanced economy. In support of this assertion they appeal to the law of diminishing marginal utility and the concept of comparative advantage ...
If any readers think that what I’ve written so far indicates that I’m fed up with the current fiasco — they are absolutely right. I have tried to explain to numerous people that if the manufacturing question is not dealt with we would be back to wholesale interventionism — which is exactly what Rudd is promising. And why not? He recently noted that manufactured exports grew by nearly 15 per cent a year during the Labor governments of 1983 to 1996 while growing by barely 2 per cent a year under the Howard Government*. No amount of sneering by our self-appointed defenders of the market can conceal the fact that Rudd has a valid point and that it will resonate with the electorate, and that includes a lot of Liberal voters.
What is needed is some genuine economic thinking instead of empty shibboleths.
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