Follow Number One Bag by email

Saturday, 1 September 2012

China syndrome

In the seventies in the main street of my hometown there was a factory. It made clothes for David Jones  (from memory; it may have been some other big store, but it was a big store). The factory provided local employment for many women, but was closed after a concerted campaign buy local worthies who considered it an eyesore in our faux art-deco idyll.

The building housing this anachronism was pulled down in the eighties and became a yawning gape in the streetscape for a several decades; a living testament to the worthies ability to project their values onto living space. They got the eyesore they warned us about.

Then a developer turned up during the boom years of the 2000's and built a two story glass and pastel thing that houses some doctors, with a gym upstairs. For a while it also was tenanted by the local Member of the House of Representatives, before he wisely retired when a redistribution rendered his seat uninhabitable by politicians of his persuasion. Eyesores come in all shapes and sizes and exist in all eras.

But the women's semi-skilled manufacturing jobs are gone, replaced by casualised service jobs in retail. Managing the kids when your work was all over the place has become a barbecue stopper.

Even if the local worthies hadn't visited their wrath upon this house of humble industry, changes to Australia's trade policies from the seventies onwards would have knocked it down anyway.

For what is globalisation but the opportunity to swap economic security for cheap t-shirts?

Being an historical accident of the West we, as a society, largely shared in its colonial bounty – unless your skin was a different colour than that of the worthy northern European stock that composed Britain during its age of empire.

This colonial bounty morphed into the post-war boom through a series of pork barrel trade arrangements where the Country Party used its pivotal role in propping up the conservative Liberal establishment to inject some hard-headed socialism into the free-enterprise sophistry of the Menzies era. An extensive set of protective trade barriers and a Kafkaesque bureaucracy to administrate them grew like Hobbes Leviathan to become an article of faith that transcended party politics.

Until the lone voices in the wilderness began to grow; first from outsider Liberal backbenchers such as Charles Robert 'Bert' Kelly, stillborn under Gough but later reaching a roar under Hawke (Forget Fraser, he had Doug Anthony and Ian Sinclair to deal with, and there as no way they were going to ruin the Polo match by forcing graziers to work for a living).  The arguments of economists - influenced by Milton Friedman -  consisted of chanting the mantra of free trade and a minimalist role for government. It swept state policy in  the West like a crazed cult. Out of the laboratory of Pinochet's Chile sprang words like  Thatcherite, Reaganomics and, across the ditch, Rogernomics and Ruthanasia, to explain the phenomenon.

Trade barriers were relaxed (but strangely, never quite torn down despite the rhetoric from many international “leaders”), Financial markets were deregulated and the role of creating money shifted from central reserve banks to credit providers. Government owned enterprises were privatised or corporatised. Public owned assets were transferred (sold is too generous a word) to the private sector. Public debt became an immutable evil while private debt became a righteous necessity.

The end result was a series of stock market crashes culminating in the happy events of September 2009, which are still playing out.

One of the great themes for Australia in all of this tumult has been the evaporation of this country's manufacturing base. Whether this is good or bad depends on where you stand and what you do for a living, but we can be certain that it is never coming back.

If you're a consumer (and, ironically, aren't we all?), superficially, its a good thing. Heaps of cheap stuff at Bunnings and in the department stores.

But if your livelihood depends upon making stuff then the retreat from Australia making stuff is resoundingly bad, especially if it is your livelihood that has retreated. Your future lies in retraining or a low paid and probably casual service industry job. Training, now Gillard has shifted TAFE to the private sector, is expensive.

Following the trend of the States rather than Europe, Australian jobs are largely in the services sector, not the stable Middle Class manufacturing jobs (now gone) that defined both the post-war Western boom and rising global consumer demand. As an official with the storemen's union, the National Union of Workers, told me recently “...the economy of southeastern Australia is turning into a warehouse”.

There has been much angst since our manufacturing sector went a-roving across Asia. The closure of many textile factories brought to the surface that latent fear of inscrutable orientals descending from the north to slit our throats in the night. It was a tangible appellation that Asia was not us, and not our friend, which is awkward considering where we are geographically. It is an opinion that has wide currency amongst workers in the looser parts of the labour market occasioned by semi-skilled and unskilled workers.

The ACTU, who claim to represent those semi-skilled and unskilled workers, shamefully lent their name to the report by the non-government members to the Prime Minister's manufacturing task force.

Columns of weasel words hemming and hawing with ideas like  turning Australia into Asia's Cannery Row by propping up the Food Industry. Given the ownership of the Food Industry (thank you Ms Emily) where would the profits of that little exercise flow?

The reason why manufacturing jobs have headed to Asia is a no brainer: Heather Ridout from the bosses union puts it succinctly: "It costs $A45,000 to employ a process worker in Australia; it costs $A4,500 to employ the same worker in China."

Ah, we're back to China. The argument goes that the working stiff has to cop it in the neck if we are to compete with the yellow peril to our north in the making of things.

But the argument also runs that; no worry, as one door closes another shall open and opportunities lost in making stuff will be replaced by our ability to do other things – like design stuff, and then sell the designs to other countries where our designs are easier to manufacture.

Well, according to the China Daily, the Chinese are planning the same way forward.

When Adidas announces it is to quit China for the low wages of Bangladesh and Cambodia the soothing voice of the Chinese Communist Party assures us that: This change means China should gradually transform itself from a manufacturer to a designer. It also means China’s competitiveness in the world trade is no longer based on its cheap labor, but on its innovation and product quality.”

Does that sound familiar? 

If China joins the mantra chanted by collapsing Western manufactories and becomes a designer and innovator of products then does the price of labour for innovative ideas also sink like a stone? Are we are left with an economy where everyone does everyone else's laundry for a living?

Seems like a race to the bottom for the price of labour to me.

1 comment:

  1. Its been estimated at 30million unemployed across the "Eurozone" as it seems to be called, US, Japan, Canada. At the meeting at the appropriately named Jackson Hole this week they are talking again of "quantitive easing". This will give more money to banks etc not to anything like what you are talking about as necessary for jobs. Michael Hudson in Counterpunch says that US cities are all broke and the impact is less social and public services, less teachers, hospitals. Remarkably the blame for this is transferred to the public sector employees who are struggling with no pay rises and more work. It also shows the folly of relying, as we do in Australia, on the outsourced pension ie superannuation. Its all being burned by those guys its been entrusted to, so they remain firmly at the top