Tuesday, October 21, 2008

Sell Australian

One hand washes the other. I thought since the world seems pretty doom & gloom right now I'd go tabloid and stoke the flames of nationalistic outrage, I'm talking famine.

For years a massive media campaign has been urging the public of Australia to 'buy Australian' with fears that jobs may go overseas, or that we were being dooped into buying inferior products or some shit.
In reality the ask was to buy the produce of Australian business despite it not being competitive in delivering value over international businesses. I was assured in my marketing course that almost no economist would 'provide any argument in favor of buying Australian'.

If your friend starts making home made icecream, try it. If they start selling you their homemade icecream, by all means buy it. If it's shit you want to discourage them as quickly as possible and the best way to do that is to stop buying it.

Australian businesses unlike our friends have recourse though, they can go to the government and ask for subsidies. Which is your money anyway. So they can stay in business after they stopped being competitive. In some cases long after.

It's not a strategy for success, and that's probably why Ford is laying off so many employees despite Bracks finding in his report that the company had a future and needed more subsidies and it's also why I don't buy Australian.

But as a thought exercise turn the tables to see if we can uncover some hypocrisy. As the RBA cuts rates to stimulate the economy it may seem that Australian home owners are better off, getting $50 a month or so extra padding in their hip pocket. But the dollar plunges against other currencies, so the Australian home owner loses value on their house against other currencies, and purchasing power against foreigners.

What that means is that for Australian's houses got a little cheaper this year in Aussie dollars, for a US citizen however Australian houses already dropped 40% in value. Similarly, so did our beef, wheat, wood chips, minerals, ore, oil and whatever other exports are out there.

So now that an Australian consumer is about half as attractive to our farmers as a US consumer now, will they 'Sell Australian' even though we are so much less competitive?

Carried to an extreme it's the behaviour of producers during a famine. There's some quote from some guy I snatched off Wiki-pedia

Cecil Woodham-Smith, an authority on the Irish Famine, wrote in The Great Hunger; Ireland 1845-1849 that,
“ ...no issue has provoked so much anger or so embittered relations between the two countries (England and Ireland) as the indisputable fact that huge quantities of food were exported from Ireland to England throughout the period when the people of Ireland were dying of starvation. ”

Ireland remained a net exporter of food throughout most of the five-year famine.

That's disputed, but it's that extreme example of suppliers overlooking the struggle of hard working but uncompetitive customers. The same improbably could happen here.

I say it's improbable because Australia produces so much food beyond their domestic need anyway, but it's not impossible.

Say a decrease in the Australian dollar against world currencies means a decrease in buying power and an increase in selling power. Our exporters laugh, our importers cry.

So will there be a campaign that says "Sell Australian" will Aussie farmers turn their nose up at economic advantage and personal wealth in order to sell well below market prices to Australian consumers out of a sense of patriotic pride?

Somehow I doubt it. It just isn't human nature.

So don't buy fucking Australian, it's not how the world works.

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