I have an article at the conversation on the battler between taxpayers and the manuocrats.

What is a manuocrat? They are the modern equivalent of the physiocrats. However, while the physiocrats believed agriculture was the source of all wealth, manuocrats believe manufacturing is the source of all wealth. They believe manufacturing needs support from the government and they are happy for the government to raid the taxpayers’ pocket to get that help. And my fear is that the next year will be a golden time for the manuocrats as the lead up to the federal election creates the perfect environment for them to milk the public purse.

4 Responses to The rise and rise of the Manuocrats

  1. Michael says:

    John Kay has written a couple of times about the fetishisation of manufacturing, most recently “Fetish for making things ignores real work” http://www.johnkay.com/2012/11/14/fetish-for-making-things-ignores-real-work
    Despite understanding his reasoning I still have an uneasiness about the collapse of a manufacturing ecosystem. The continual demise of local firms makes it much harder for the remaining ones as skills are lost and capabilities are made more costly. The instances Kay points to as the top of the value chain ie. the designers, technologists exist in countries that had in living memory a manufacturing base. As these disappear will they be able to hang on to the expertise to design things? Should an economy be expected to provide meaningful work to people who are good at making things?

    • shorewalker says:

      Michael, it seems to me that if we want to maintain “top-of-the-value-chain” skills, such as car design, then we should be finding ways to subsidise those, rather than subsidising activity willy-nilly. In the case of design, a specific decision to subsidise design would involve telling Toyota we are proportionately reducing its subsidy, since it does no substantive design here and probably never will. Such a subsidy to designers and engineers is, however, outrageously expensive. (And it will never get us to some sort of sustainable new equilibrium. I love the art of car design, but our real problem with doing car design in Australia is that we have a low proportion of global car consumers.)

      But that’s a peripheral point. Your main point is that we are losing skills and capabilities. And you’re absolutely right. But it’s not a sign of impending doom; it’s exactly how countries get rich. I would point out that the same thing is happening to every advanced country. It’s been happening to Japan for years (and some Japanese hate it). It’s happening now in Guangdong, the most prosperous area of China and a region with the same per-capita GDP as Italy: Guangdong is losing manufacturing to places like Vietnam.

      Economic advance is all about the progressive loss of self-sufficiency, about giving up autonomy in return for the blessings of trade. First your family has to trade, then your city has to trade, then your country has to trade. At each point, self-sufficiency is lost. At each point, we grow an order of magnitude wealthier. This is the bargain we’ve made. If it disturbs you to rely on a huge web of trade connections with people who are not like you, consider the alternative: hunter-gathering.

      This of course is the same point the Physiocrats missed as they lamented the rise of manufacturing at the expense of agriculture. It’s not an easy point to see.

      By the way, if you’re worried about national self-sufficiency, worry about Australia’s near-total lack of manufacturing capacity in the more important field of IT hardware. But bear in mind that it would have cost an almost unimaginable sum to deal us into that game and keep us there for, say, the past 25 years. We would be much, much poorer as a result, and we would probably still be being out-competed by China.

      • Michael says:

        All good points, and yes I do get the gist of the argument. I’m not crazy about the car industry and I wouldn’t want to be limited to using only Australian made I.T. products. I’m not sure that it’s quite as simple as pure comparative advantage. There are historic reasons why particular countries have held onto their specialisations. I continue to ponder the issue.

  2. What’s the general economic opinion on the relationship between domestic manufacturing and military? Seems odd to even bother with a military unless you have rather extensive domestic manufacturing. Wouldn’t you need lots of steel, engines, missiles etc rather quickly? And doesn’t it provide a lot of bargaining power to your trading partners who do have military manufacturing capacity?

    These same arguments would have applied historically to agriculture. If you can’t feed your army… From your own Wiki link to Physiocracts –
    “Thus, whilst modern economists also recognise manufacturing as productive and wealth-creating, the underlying principles laid down by the Physiocrats remain valid.”

    Of course, you could always assume that you will have allies who loyally support your defence force with their own manufactured equipment.

    Or you could ignore geo-politics altogether and assume away conflict.

    So is it two birds with one stone, scrap the military and the manufacturing subsidies, or keep both?

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