Is regional industry development an answer in the current economic environment?
One of the cardinal sins of blogging is not to do it regularly. That’s pretty much a weekly sin here, then. The difficulty arises in spending a lot of time reading stuff by people who know more than you do in your claimed area of expertise and write about it better, to boot. And with such a febrile political atmosphere in Australia, which simply replicates some major trends happening worldwide, it’s also hard to keep current political considerations – whether policy or just grandstanding – out of the debate. With that brief background, this is an attempt at a more personal set of reflections on ways forward for regional industry development.
The fact that my last piece induced a couple of commenters – albeit, I must confess, both known to me personally – was, I guess, some indication that I’m at last airing “stuff” that is of interest. To lapse into the obvious for a moment, if there were easier answers to the economic issues facing regional Australia, Australia as a country and many other western democracies at the same time, they’d have been identified and implemented. As it is, we can easily identify some of issues and/or symptoms:
- “hollowing out” of previously more diverse economies, particularity in industries that relied on lower and semi-skilled workers, with a resultant loss of jobs at these skill levels
- leading to a backlash against the policy settings that brought these about, including global trade deals that enabled low wage countries into these industries and competition policy that led to vastly fewer opportunities for apprenticeships, etc
- the impact of the boom brought on by (mainly) Chinese demand for energy, principally coal, both in driving up the Australian dollar (and subsequent “Dutch disease” impacts on sectors reliant on a lower dollar, eg tourism) and then loss of jobs as the boom subsided
- governments aiming to reduce their expenditure to tackle debt or increased demand for support from a range of citizens driven by various trends – the ageing baby boomers, those unemployed through inadequate skills or simply that there aren’t enough jobs
- the poor societal outcomes of multi-generational families without work
- the last great liberalisation – that of people, following goods, services and finance – opening up deep issues of nationality, identity and culture that every citizen can relate to and have an opinion on
- finally, resulting in a backlash at the ballot box against the mainstream parties, with those voices peddling simple (or no) solutions, mainly to symptoms such a refugees, gaining favour.
In this article (which I think is a very good encapsulation of current global issues), one respondent says:
“For all of us who believe in liberal democracy, market economy and globalisation it’s not exactly a fun time to hang around.”
Once you’ve read the article and placed the speaker as a progressive “web” supporter, the claim of a final leap to globalisation as an immutable fact makes sense. But it is precisely the formative components of globalisation that have driven much of the current distrust, disengagement and unrest. (Also note the very cogent reference to the influence of education on opposition to recent economic policy and indeed the major parties).
But if we are to continue the global project, then those who it is leaving behind need to be assisted far more than has happened to date (as an aside, in a life many years ago, I would read trade policy papers that inevitably concluded, “There will be some adjustment costs.” That was code for people losing their jobs, people who were unlikely to ever work again, or gain similarly compensated jobs. Nothing much was ever done for them apart from claims of jobs in the “new economy”).
So reintroducing trade barriers isn’t going to solve anything and is most likely to simply induce a rerun of the Great Depression of the 1930s, if not worse. What, then, is to be done to give the forgotten middle the promise of secure jobs that will enable them to raise families and obtain property? Casual jobs in the lower paid portions of the service economy isn’t going to cut it.
Similarly, any attempts to kick-start major industries such as motor vehicle manufacturing aren’t feasible unless one of the existing global manufacturers sees an Australian plant as viable in the absence of government support. The market has spoken here, as well.
That leaves smaller-scale manufacturing, from relatively simple to more complex and – dare I say it – innovative production, a a likely starter. In this, demographics is likely to be helpful. Many baby-boomer fitters and turners and similarly skilled workers are entering retirement and many don’t want to stop practising their skills. Quite a few pursue these on a hobby basis, for example restoring classic cars and old machinery. At a regional level, the opportunity to bring like-minded types together presents as an opportunity. Mens’ sheds are a simple example but surely opportunities for operations on a more commercial scale also exist. There’s some more useful background from one of Australia’s leading demographers here.
So: no easy answers, but keep on looking.
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