Breaking windows
Another letter in The Age today. Unedited text below:
Ian Porter (Without car manufacturing, we are on the road to ruin, The Age, 13 Jan) believes that the government needs to keep throwing money at the car industry in order to support other industry in Australia. I'm surprised as an industry analyst, he hasn't heard of the broken window fallacy.
Throwing good money after a bad unsustainable industry that can't adapt is just a waste. It's exactly identical to sending soldiers to dig holes only to fill them back up again just to keep them employed and off the streets. The money could be better spent on doing useful things that will remain useful into the future. Yes, paying people to break windows and then paying the glazier to repair them will keep people employed, but couldn't the glazier be better employed building things that then keep other people employed into the future?
Why don't we do something useful with the money instead? Like built modern intra- and inter-city rail infrastructure? This won't become stranded assets when cheap oil becomes unavailable. We won't be left with vast tracts of useless motorways - we will continue to be able to use the rail infrastructure well past these boom times.
Ian Porter (Without car manufacturing, we are on the road to ruin, The Age, 13 Jan) believes that the government needs to keep throwing money at the car industry in order to support other industry in Australia. I'm surprised as an industry analyst, he hasn't heard of the broken window fallacy.
Throwing good money after a bad unsustainable industry that can't adapt is just a waste. It's exactly identical to sending soldiers to dig holes only to fill them back up again just to keep them employed and off the streets. The money could be better spent on doing useful things that will remain useful into the future. Yes, paying people to break windows and then paying the glazier to repair them will keep people employed, but couldn't the glazier be better employed building things that then keep other people employed into the future?
Why don't we do something useful with the money instead? Like built modern intra- and inter-city rail infrastructure? This won't become stranded assets when cheap oil becomes unavailable. We won't be left with vast tracts of useless motorways - we will continue to be able to use the rail infrastructure well past these boom times.