We got another dose of John Howard followership this week.
The theory is that we elect representatives not only to implement what a majority of people might want but also because the business of government is too difficult or time-consuming for the masses to be up to speed on every issue.
And people are not up to speed on tariffs. A poll by the Australian Business Chamber said 85 per cent of people would happily pay higher prices to protect jobs and that they believed that higher tariffs protected jobs.
Both views are nonsense.
People may tell a pollster they are prepared to pay more “”to protect jobs”, but most do not behave that way in the shopping malls: they go for price and quality rather than “”made in Australia”. The trick would be to get people to think that “”made in Australia” means quality.
The protecting-jobs belief is also nonsense.
Tariffs increase the cost of imported clothing — a GST on imported clothing, if you like. It means more people are likely to buy local product made at an inflated cost because labor costs are too high or the industry uses capital inefficiently — a GST on local clothing, if you like.
This unnecessary higher cost for clothing means Australians have less money to spend on other things: Australian-produced goods and services, for example. So that means fewer jobs in those industries.
It also means that Australian businesses that buy clothing (uniforms for bank clerks and so on), have to spend more money and have less money available to employ more people.
In short, all tariffs do is shift jobs from one part of the economy to the other. Moreover, in the case of textiles it shifts them to the worst sort of jobs: tedious, semi-skilled, low-paid jobs. There are teeming masses of people in Asia ready, willing and able to do these jobs for a small fraction of Australian minimum wages. Let them get on with it.
But there is a political snag. In the job shift, tariffs hold up existing textile jobs and cause fewer theoretical jobs elsewhere in the economy. The trouble is that the textile jobs are held by real people with a vote, whereas the jobs in the other parts of the economy are not yet created and votes are not attached to them, other than in the woolly sense that bad employment figures cause people to vote against governments.
The other political snag is people’s belief. If people believe that high tariffs protect jobs or magically create jobs, it makes it more difficult for governments to lower them. People are much more willing to think that the Government is wrong than they themselves are wrong.
That puts the Government and its leader in a bind. They can either do what is in the best long-term interests of the nation and attempt to persuade people that what they are doing is right (leadership) or they can do what is to the long-term detriment of the nation and appease the voters in the short term (followership). Howard chose followership.
There may be a case for tariffs and development funds for hi-tech industry and services that pay well. This is called industry policy. But to protect low-paid, unskilled jobs is called politics.
The only justification for protecting the clothing industry (aside from hi-tech materials technology, fashion and the like) is to treat it as social security. It would be like imposing a tax on clothing to pay textile workers some money to keep them occupied. It is a glorified work-for-the-dole scheme. Perhaps that is why Howard was so attracted to it.
But the failure of leadership is instructive.
This decision ignored a Productivity Commission report. That report of several hundred pages was not even read by the Cabinet ministers making the decision because it only came down the day before.
If governments are going to take knee-jerk, populist decisions, they are no longer acting as filters and moderators, but just reflectors. They are abrogating part of their role. So why let them have a monopoly on decision-making? The citizens should be allowed to decide issues directly from time to time.
There is one circumstance when the case for an issue-based referendum is very strong. This is when there is a deadlock between the House of Representatives and Senate. If the Senate blocks a Bill twice, why have a full-scale double-dissolution election. Why not just a referendum on that Bill?
Indeed, this method was under active consideration 100 years ago at the Sydney constituional convention. And perhaps should be considered next year if the convention agenda widens.
A referendum solution is cheaper than a double dissolution and resolves the question at stake: the rejected Bill. A full-scale election, on the other hand missed the point. People might want to continue with the party in power but reject its proposed Bill or it might like the proposed Bill but not like the party.
If, as the tariff decision shows, politicians are not willing to lead and filter the debate they have little argument against direct voting on ocassions — to decide on Bills rejected by the Senate, to veto laws passed by Parliament or even to enact laws proposed directly by the people.