As Alan suggests below Mark Latham has a must read op-ed in the AFR ($) this morning:
The wonder of Australian car manufacturing is not that it’s closing down; it’s that governments wasted so much public money ($30 billion since 1998) on unsustainable jobs in an unsustainable industry. In the past decade, no Australian-based car company has recorded an operating profit.
The industry’s demise is a tipping point in Australia’s political economy. It’s a victory for consumers over the ineffectiveness of subsidisation. It’s a sign that after 23 years of continuous economic growth and wealth creation, the consumption side of the economy has become more powerful than the production side. Cashed-up shoppers are exercising greater purchasing muscle than the feeble industry plans of union hand-maidens like Carr. Consumerism has finally beaten interventionism.
The political class does not want to hear this, but we have entered an era of marginalised government. Each day, the big news in the Australian economy is the strength of millions of consumer decisions, but this is essentially unreported in the electronic media. Where’s the headline or controversy in people shopping? If politicians focused on the importance of consumer decision-making, how could they blame each other for economic uncertainty and unemployment?
In Canberra, it’s business-as-usual. The opposition has latched onto a fear campaign, holding out false hope for “jobs plans”. The media have a new round of conflict-based stories to report, interviewing workers and managers from ailing industries. No one’s told them the war is over. Consumers have won.
Good to Mark Latham channelling his inner Ludwig von Mises.
Neither the capitalists nor the entrepreneurs nor the farmers determine what has to be produced. The consumers do that. The producers do not produce for their own consumption but for the market. They are intent on selling their products. If the consumers do not buy the goods offered to them, the businessman cannot recover the outlays made. He loses his money. If he fails to adjust his procedure to the wishes of the consumers he will very soon be removed from his eminent position at the helm. Other men who did better in satisfying the demand of the consumers replace him.
The real bosses, in the capitalist system of market economy, are the consumers. They, by their buying and by their abstention from buying, decide who should own the capital and run the plants. They determine what should be produced and in what quantity and quality. Their attitudes result either in profit or in loss for the enterpriser. They make poor men rich and rich men poor. They are no easy bosses. They are full of whims and fancies, changeable and unpredictable. They do not care a whit for past merit. As soon as something is offered to them that they like better or that is cheaper, they desert their old purveyors. With them nothing counts more than their own satisfaction. They bother neither about the vested interests of capitalists nor about the fate of the workers who lose their jobs if as consumers they no longer buy what they used to buy.