Victoria puts local first.
ANALYSIS. Melbourne. – In a common-sense decision, State leader John Brumby declared in Melbourne, that the Victorian government would support local manufacturing.
According to The Age, the Victorian Government would buy local, even when local may be slightly more expensive.
Well done.
Local innovation, global context.
It is rarely acknowledged that the price of Chinese manufacturing does not include all costs.
It does not include decent wages for labour. Nor environmental impacts. Nor legal rights. And although few now say it, freedom of speech.
What Chinese prices do include is defacto subsidies on steel & inputs.
The Chinese price is not always the true price.
What do all world-leading economies have?
Strong domestic economies. With strong local markets.
Even now we’re talking about demand from emerging China’s domestic market purchasing goods that would otherwise be exported.
Government is often the largest customer in many markets. Which is why government’s buying local is important.
One factor that demolished ICT in Australia, is a lack of Government local development of software.
The 2thinknow View.
Build local markets to support innovation.
The key to wealth where people live is local jobs, local economy, local innovation. Sure excess can be exported, as can specialization benefit.
It is inefficient to manufacture all goods in any location. Trade historically has strong benefits, as does specialization. Shipping and economies of scale can be more efficient on for some goods & services.
But in order to have infrastructure to export, local industries need local support. Australia has returned to spending too much energy selling the volatile inputs, not enough on value-add outputs.
China has Local Support.
China supports it’s domestic suppliers. China imports services & resources from Australia. China does not naively destroy its own industries, as Australia does.
During its wealthiest periods, the US has supported local manufacturing. Local skills. Local jobs. Local economy. In recent years this has been forgotten.
Winners & losers is fine in theory. Yes, overt subsidies do weaken quality, as do state monopolies. Competition is key. Yet competition cannot survive long against subsidized competition.
The 2thinknow view is that the key to local wealth is a strong domestic market to build upon for exporting.
Good decision, Victoria.
Author: Christopher Hire (197 Articles)
Executive Director of Innovation, at 2thinknow. Innovation analyst. Based in Melbourne, Australia.