In the AFR this morningBCA head Catherine Livingstone makes a heady call for the restoration of the corporatist state. She says,
Our approach calls for an investment in sectors with current significant strength to ensure they retain their capacity for sustainable job creation. Strong as they are, these sectors are at risk of losing their global advantage if we don’t pay close attention.
Government has a role, for example, in fostering new and emerging sectors such as biotechnology and advanced manufacturing through industry-led R&D, developed in collaboration with the research sector.
We also believe it is the proper role of government to do what it can to facilitate the transition of manufacturing sectors which are facing profound competitive challenges from low-cost economies. These sectors should be encouraged to innovate and have unnecessary regulatory barriers removed.
Had government collaborated with the automotive manufacturing sector a decade ago, to facilitate the transition to a business model based on supplying niche products into global supply chains, we may now have a viable sector.
There is so much wrong with this. Government will never be the saintly philosopher king gently guiding the ignorant in the direction that is necessary. It will always act out of political motives. If Ms Livingstone thinks the government was detached from the motor industry she is deluded. The Button Car plans of the 1980s were not the first or last such interventions. These sought to push the industry in certain product directions but more importantly heavily influenced the employment, R&D and locational policies that eventually caused the industry’s demise.
The sectors to be encouraged by government would not be those that the wise bureaucrat was in our best interests – even if such a person existed. They would be negotiated by politicians anxious to use patronage for political purposes and adding that they would have “regulatory barriers removed” as well is simply a sugar coating for a corporatist approach that would bring waste on the scale that the industry policies of yore brought.
Ms Livingstone adds
Government already has a role in the market through regulation, taxation, foreign investment controls, competition policy, publicly funded R&D and education. Its actions and inaction in these areas affect sector competitiveness:
•Australia’s emissions reduction policies were designed without an understanding of their likely impacts on sectors. This has had unintended consequences for jobs and competitiveness.
•A detailed understanding of the transport and logistics sector would have anticipated that cabotage restrictions would make it cheaper to ship some goods from Asia to Australia than it is to ship them around the Australian coast.
So, what we are suggesting is that government’s role needs to take better account of the circumstances of different sectors in the world in which they are now operating, and place greater emphasis on facilitation and co-ordination.
Everybody knew that cabotage imposed excessive costs. Some vainly thought the policy and negotiations with unions would reduce these costs and create a world class shipping industry. Others did not care but simply wanted the union support for political conservation of subsidised workers. Whether the goals were noble or pure cupidity does not matter. The outcome will always be excessive costs and failure.
And to suggest that more attention to the carbon abatement policies could have allowed that cake to be kept and eaten, shows a profound misunderstanding of the policy. Forcing the use of an inferior good (wind etc) must always involve a payment by someone and in the end it is the consumer that will cop it. Even the theoretically more efficient tax policy involved (as is inevitable) a tax and a redistribution to the less well off whose votes are more numerous.