Australians are lucky the Australian Manufacturing Workers Union doesn't write horoscopes -- if it did, every day would be "stay in bed" day.
If you want a pessimistic view of the future just ask the AMWU. Its recent "study" on the impact of an Australia-China Free Trade Agreement doesn't deviate. According to the AMWU, free trade already hurts our economy and an FTA will worsen the effects.
But what more can Australians expect from the AMWU? During the debate on the Australia-United States FTA, the AMWU commissioned a study showing Australia would lose up to $52.4 billion from its GDP and lose more than 57,700 jobs. This FTA has been in place since 2005. Is union secretary Doug Cameron really going to argue we have higher unemployment because of the FTA?
Similarly its China FTA report concludes our manufacturing sector would be decimated under a flood of cheap imports produced by cheap Chinese labour. The report's tone of economic xenophobia is disappointing when most Australians left behind these sorts of attitudes following the dismantling of the White Australia Policy. Clearly it still resonates in the manufacturing sector.
Yet even with the cheap flow of imports consumers would win. The AMWU argues that it would come at the expense of machinery and textile, clothing and footwear jobs, primarily.
Furthermore, it argues that 170,000 manufacturing jobs will be lost and will be offset with only minimal gains in the agriculture and mining sectors due to increased exports.
This is bogus. It ignores the fact that capital now directed to manufacturing jobs will be lost, when it will really be reinvested to create new sustainable jobs in another part of the economy. But the larger problem with the AMWU's argument is its static view of Australia's economy. Protectionists of all stripes have always failed to comprehend the dynamic potential of a free market economy. While they argue that jobs are lost, they do not comprehend the cost of the present situation and the unpredictable benefits of liberalisation.
They spin their argument as protection for the industry to preserve jobs, families and livelihoods, but they are actually arguing for a halt to Australia's economic growth to protect their way of life. The beneficiaries of protectionism can always be seen, but the unseen costs dog our economic potential.
When an industry is liberalised it is always easy to point to the losers. It is much harder to point to the people who have been losing out because of the existing protection precisely because everyone is losing in small doses. It is just as hard to point to liberalisation's beneficiaries because the benefits haven't flowed yet.
The AMWU excels at this short-sightedness. It is not surprising that its union leaders push this position -- any drop in membership numbers hardly benefits the power and prestige of their union. But it comes at the long-term expense of their members' interests. While in the short term their members' interests may be preserved through protectionism, their long-term job sustainability is undermined. The higher the protectionist wall is built, the further workers and industry have to fall when it comes crumbling down.
If we have learnt nothing from the structural reform of the Australian economy, the sooner industries begin structural reform and liberalise the more likely they are to adapt and provide sustainable jobs.
The real opportunity of free trade flows from the decisions of the allocation of resources by the market. Dismantling protectionism brings benefits to the economy because it frees up capital dedicated to an unproductive purpose and redirects it to a productive one. The consequence is the development of sustainable industries and jobs. It is also impossible to predict the industries that would develop. Recent history demonstrates this well. In the 1970s it would have been impossible to predict how our economy would appear today. The extent and impact of technology and the growth of technology-dependent industries were unknown, largely because much of the technology and its application had not started.
As a case in point, only a few years ago the US Bureau of Labour suggested that travel agents were going to be in high demand as rising incomes and decreasing flight costs encouraged more people to travel.
What the study didn't predict was the role the internet would play in individuals taking responsibility for booking their own travel arrangements. The eventual outcome was the demand for travel agents decreased in a short time-frame.
Cameron and the AMWU genuinely believe manufacturing jobs will be worse off if Australia has an FTA with China. But hindering free trade will only delay an inevitable restructure of an uncompetitive industry. The best interests of AMWU members will be served when their jobs are sustainable, regardless of the industry they work in.
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