As regular as calls for tax cuts, there’s
another Australian Industry survey out painting a bleak future for local
manufacturing. That in turn feeds the usual broadcast and paper tabloids’ appetite for Dick
Smith stories about the end of Australia
as we know it.

It’s no comfort for the manufacturing
workers who are regularly played for media fodder as they lose their jobs, or
the investors who drop their dough, but a more rational view is that this may
well be good news.

The case for playing down the
manufacturers’ lobby was succinctly put in a Eureka Report interview
last month with BT Financial Group’s chief economist, Dr Chris Caton. It
isn’t the stuff of manipulative television and Murdochian headlines, but it makes a lot more sense. Here’s the key
part:

EUREKA REPORT: Retail
investors see tabloid television shows
saying China’s stealing
our jobs; we’re not going to have any industry left. Dick Smith campaigns about
it. Are they getting the wrong message?

CATON: They’re getting a very wrong message. It is true that the share of
manufacturing jobs in Australia has gone down, down, down in the
past 30 years. The same is true for every major developed nation and, believe
it or not, the same is also true of China.

There seem to be a group of people out there
that think that it’s not economic output if you can’t drop it on your foot;
that we can’t possibly exist if we’ve all just got jobs in the service sector.
We’ve got to make the stuff otherwise we can’t be prosperous.

I would turn that argument on its head right
now. The stuff, be it cars or be it DVD players or be it computers, can be made
so much cheaper elsewhere, you really can’t be a rich nation if you keep on
making that stuff. It’s far better to create what you can create — health services,
education services, tourism, finance, insurance services, etc — and trade with
the people that make the goods cheaper. A declining manufacturing sector is not
a symptom of a decaying economy. It’s a symptom of a growing economy.

No Dick Smith imitation Tim Tams for you, Chris.