Unemployment Down

That's not going to happen until the price of labour falls.

Hopefully for the part-time worker no one will.

 

I'm don't think that is the real reason, high labour prices support government regulations and interference in the economy. In other words, they used to justify central planning.

 

The minimum wage by itself is a protectionist policy.

But I take your point and concede that it is possible. Of course, the tariffs could have the opposite effect by driving up the price of goods not produced in Australia, passing the cost on to consumers who will need pay rises in order to meet their budgets or face unemployment or a loss of full-time employment opportunities. And so continues the vicious circle of central planning as espoused by all folk economists.

 

Putting aside the subjective nature of value for a moment, consumption destroys wealth in that the only way to get wealthier is to create wealth. And the only way to create wealth is by investing in capital goods that make production cheaper. The more we consume, the less we have to invest. If we had to pay more for electronics, especially if the cost of those goods were artificially raised it would have a twofold effect: a. it would raise the cost of production in those industries reliant upon cheap electronic parts/goods possibly impacting their bottom line and their capacity to drive productivity improvements through capital investment, and b. it would reduce the amount of wealth that a consumer of electronic goods or iphones would have at their disposal to invest in wealth creating opportunities such as shares, business ventures, precious metals, savings, property etc.

Back to the subjective nature of value, those individuals that value an iphone even at 50% more than the current price would be spending an extra $400 - $500 on satisfying that need. Even though I would consider it foolish because i don't need a $1300 phone, and you may consider it foolish, it mightn't be foolish to someone who absolutely requires an iphone for whatever reason they have - and furthermore, it shouldn't be up to some central planner or politician to decide on behalf of another what constitutes fair value, because only the individual can decide for themselves. And by making a decision to increase the tariffs on imported electronics or phones, the central planners are doing just that, making value judgments on behalf of another - and in the process, destroying wealth.

 

I understand what you are saying but aren't you trying to force your values and your subjective judgments onto others. For example, you could try and reason with your wife, explaining to her that replacing her phone every year is unnecessary in your opinion and give her your reasons why. Failing the rational approach, you could restrict her household allowance or access to her bank account or demand a tariff from her every time she spends money on an item you consider useless.

But on a serious note, driving the cost of consumer goods down through competition and innovation has resulted in less waste in many occasions. Consumer goods such as mobile phones used to be the size of shoe boxes, they are now the size of wallets, they use less materials in their construction, work far more efficiently, are more flexible which means we can do away with also having to buy or carry around a wallet/computer/digital camera/a credit card/buy a dictionary/gps unit and all the other applications that allow us to replace many consumer goods with a mobile phone. Motor vehicles used to be slow, heavy, fuel guzzling behemoths that required frequent servicing and were often unreliable, they are now made with lightweight materials that reduce our fuel consumption, are far more reliable than in the past, more user friendly and comfortable, safer and require servicing only about once a year on average. In both examples the explosion in the consumption of phones and cars has reduced the pressure on resources, not to mention spawned recycling industries, measures which are good for the environment. And whilst much of our technology domestic/industrial goods are now built to replace or become obsolete within years or are made from less parts or materials, they are much cheaper and more efficient to run, washing machines use less water, TV's use less power, reliable second hand cars can be bought for a song, the lids on bottled water use less plastic etc allowing us to use the cash saved from our consumption to invest in wealth building opportunities if we choose and reducing the cost to producers. The demand for consumption drives innovation.

Australia doesn't really have a rampant and wasteful consumer problem, granted that some individuals are wasteful and spend too much on consumer goods (in my subjective opinion), we have a wealth problem because our opportunities to build wealth are either restricted or destroyed by our political representatives. Rather than restricting consumption, we should be encouraging wealth building opportunities, and the best way to do that is for the government to stop stealing the fruits of our own labour. Protectionist policies destroy our wealth.

 

Another way of looking at it is should we ban consumers from buying goods from those who have a comparative advantage?

For example, Coles are class leaders in offering fresh produce to consumers at an affordable price. It's hard to beat many of their products without growing it yourself (and dealing with the associated waste that back yard production always presents) or buying at the farm gate, buying from an actual grower selling first grade produce at a market (not the second grade stuff that most markets offer), or sourcing niche suppliers in specialty shops/online shops. For the vast majority of people Coles is the supremo, it is the best. The rest are in the main either expensive, overpriced or sell poorer quality. But just because Coles is the market leader, making it more difficult for much of the competition to turn a profit, doesn't mean that it should be excluded from the market.

We don't ban the All Blacks from Rugby carnivals just because they're better than us, in the same way we shouldn't ban the importation of cheap overseas goods or artifially raise their prices just because they produce them at cost better than us.