Bobby. wrote on May 7
th, 2020 at 10:26pm:
freediver wrote on May 7
th, 2020 at 10:18pm:
Their best, not the best?
A company not firing all of it's staff doesn't prove anything Bobby.
Was is your point with the auto industry? Is it a symbol of innovation for you? Would you have Australians take lower salaries to prop up a local auto industry just so we can "be innovative"?
Not really - we don't work for a bowl of rice every day
and we have expensive health and safety standards -
it's hard to compete when you're not on a level playing field.
We still have niche industries where we do well but not enough of them.
Also - Germany does well without paying people peanuts.
By "not on a level playing field" do you mean we are getting paid too much?
Quote:Also - Germany does well without paying people peanuts.
Australia ranks 6th in the world by salary. Germany ranks 16th.
https://www.numbeo.com/cost-of-living/country_price_rankings?itemId=105
Quote:We still have niche industries where we do well but not enough of them.
Should we bring in a billion or so immigrants so we can get a few more?
Quote:It's easy to assume that the loss of certain industries is based on the availability of cheap labour. It isn't a correct view. To entertain such a thought one would have to assume equal rates of productivity.
No, one wouldn't. If we were willing to work for half as much, Ford and Holden would be expanding their factories here, not pulling out.
I don't have to know anything about actual productivity to say this.Then you would be wrong. Productivity is the sole consistent driver of wages growth. If wages are halved it doesn't matter a fuuk if productivity is also half. You've missed the point by long shot.
Quote:Absolute cost plays only a minor part. Industries relocate primarily due to opportunity cost. They move to where there is a higher comparative advantage rather than a higher absolute advantage.
What's the difference?
If you don't know the difference I suggest you purchase a decent textbook. Opportunity cost is generally covered in the first chapter due to it's high importance.
Quote:It doesn't even matter if we can produce undies and singlets at a lower absolute cost than the imported items. They will still be imported as long as the opportunity cost of forgoing fat cattle is higher than the value obtained from the undies.
Incorrect. If there was money to be made making singlets locally, someone would do it. Whether you think of it in terms of absolute cost or opportunity cost, it still boils down to making a profit. It's just different ways of thinking about the same thing.
Untrue, and grossly untrue. Your suggestion relies on an unlimited supply of capital. Unfortunately, capital is limited and precious. For this reason industry will gravitate to those activities where opportunity cost is the lowest.
It's a bit like Freediver if he had $10 million of spare capital. He may have a choice of making ball stroking machines or making blow updolls. The opportunity cost of choosing blowup dolls is the forgone profit from making ball strokers. The opportunity cost of making ball strokers is the forgone profit from making blowup dolls. The end solution will gravitate to which one presents the lowest opportunity cost.
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