When I was in Melbourne last week and riding in one of those electric conveyances they call a train, I saw a sign painted on the side of a factory building that said, “Buy your kids a job: Buy Australian.”
I wonder how this would work? If everybody in Australia only bought Australian products then everyone who produces exports would be out of a job. This is because you can’t export without importing and if everyone only buys Australian no one will buy imported goods. Unless of course the people who want us to buy Australian expect the export industries to just give away their production to other countries for free? My, if that’s the case, how generous they are with other people’s money. But it might be a bit hard to convince those workers it’s a good idea. “I’m sorry, but as Australia no longer imports anything and this mine only produces coal for export it’s not possible to actually receive payment for it anymore, so the wages of all you miners will have to be reduced to zero. In addition, since there is no income to purchase fuel we will soon be reduced to digging coal by hand. On the bright side, the Japanese will be very grateful. Now stop standing around and get to work!” No wonder so many people support weaker unions.
If buying overseas products is so bad it’s a wonder we didn’t ban it ages ago. In fact Australia made strong moves in that direction during the great depression. This was so successful that Australia soon became an economic powerhouse and entered the period known as the roaring thirties. Any stories you’ve heard about hardship at this time, or indeed swagmen, are lies spread by the black armband type of historian.
I have heard people say, “It’s better for the money to stay in Australia!” But I wonder why that is? Does the money get scared when it leaves its home country? If it were better for the money to stay in Australia, wouldn’t it be even better if the money stayed in its own state? Or perhaps even its own town? Wouldn’t it be best of all if the money never left the pocket of the person who owned it? Just think how rich we’d all be if no one ever bought anything!
But Australian money always comes back to Australia. It has to. It’s like magic. Let’s say some filthy foreigners, in an attempt to hurt Australia’s economy, take a heap of Australian notes and burn them while dancing and gloating around the rather stinky bonfire. Well, all that money value would return to Australia, as the treasury would print up a new batch of notes as soon as it noticed there weren’t enough in circulation, magically creating money out of nothing!
Okay, you say, so filthy foreigners burning or eating Australian notes won’t result in money not coming back to Australia, but surely buying filthy foreign products made by filthy foreigners, or even clean ones, must be bad?
No. Not at all. To explain, let’s say you want to buy a toilet brush. To keep things simple will assume that all transactions are in cash and that there are no banks or other institutions that exchange money.
Let’s say that down at the shop you have a choice between two toilet brushes of equal quality. An expensive one made in Australia and a cheap one made in China. Now you might think that if you bought the more expensive Australian one, you’d be helping an Australian company. Well you’d be right, but you’d also be hurting an Australian, yourself. It costs you money to buy the more expensive product. If that’s what you want to do, fine, go for it. But it might be more efficient to buy cheaper foreign goods and then just give the money you save to Australian companies as a gift.
But what happens if you buy the cheaper Chinese toilet brush? Won’t the money go out of the country? Well, yeah, it’ll go to China. But it won’t stay there. Somewhere in China there will be some toilet brush factory owner with a stack of Australian money. What’s he going to do with it? Australian dollars aren’t much use to him. He can’t go down to the corner store and buy a bowl of noodles with them. He needs Chinese currency for that. All his employees expect to be paid in Chinese money too and so do the suppliers he buys plastic stock and bristles from. Unless he wants to go on vacation in Australia and spend it himself he’ll have to swap it for Chinese money.
But who in China would want Australian money? What good is it in China? Well it is useful for buying things from Australia. For example, the local meat distributor might be interested in buying some Australian beef. The power company might want some Australian coal. The noodle factory might want Australian wheat. All our toilet brush businessman has to do is call up these companies and find out which one will give him the best deal on Chinese currency in return for his Australian dollars and then the Australian dollars will return to their home country as they are used to pay for Australian products. Hey presto, no money leaves the country for long.
Using checks or electronic money transfers don’t change this situation at all. Nor do the existence of banks that act as middlemen for exchanging money. So buying goods from overseas isn’t somehow bad for the economy.
But wait a minute! What about Australian companies that are going to the wall because of overseas competition? If the Australian toilet brush company goes out of business won’t Australian workers lose their jobs? Shouldn’t we help the owners of these companies? Well no, we shouldn’t. We should help the workers, not the owners. If the owners want they can receive the same training/relocation/government work program that their former employees get. You see, business owners have a very important job and that is to make good business decisions. If we protect them from the results of bad business decisions, such as producing toilet brushes in Australia, then they haven’t got such a strong incentive to do their job well.