Wednesday, 13 November 2013

How do you kill this zombie?

On Monday evening the chairman of the Australian Prime Minister's business advisory group gave a speech, 'Working with government to drive economic growth and a thriving business sector' to the Committee for Economic Development of Australia, CEDA. And it included this:

"In this regard [the challenge of Australia becoming more internationally competitive], it may be timely to review Australia's competition laws. It is clear, in a global sense, we are lacking economies of scale and that Australian companies find it hard to acquire the necessary critical mass in a small domestic market without running up against trade practices issues. If we are not ultimately to become a branch economy, the opportunity for Australian companies to become national champions at home must be considered by re-balancing the interests of consumers and businesses. To do otherwise is to encourage companies to shift to more friendly domiciles, sell to foreigners, or, if all else fails, to close their doors".

Other folk - most memorably John Quiggin in his book, Zombie Economics: How dead ideas still walk among us - have written about zombie theories that, however misguided, mistaken, illogical or outdated, live on and on and on.

Of all the zombie theories, this "national champions" zombie is the one that I would most enjoy burying at a crossroads at midnight with a garland of garlic around its neck and a silver stake through its heart.

Is there a sliver of truth in it? Maybe. Has the sliver turned septic and infected the rest of the body of the argument with dangerously noxious toxins? Yes it has.

The whole thing, apart from the manifest self-serving of the corporates who subscribe to it, has a core implausibility. We're supposed to believe that the way to create more competitive companies is to give them a less competitive home market where they can rort their own fellow citizens without having to worry about the fundamental drivers of creating an attractive product offering. Give me a break.

And I'm pleased that at least some of the Australian business media are having none of it, as in 'PM's top adviser trapped in a time warp', an opinion piece from the Sydney Morning Herald.

What really worries me, though, and also worried the Herald columnist, is that this line of thinking is re-stirring just when the Australian government is embarked on a bottom-up review of Australia's competition law. I don't currently have any good feel for the politics of it - anyone closer to it might care to throw in a comment or two - and I don't know whether the pollies are minded to tighten the law to deal more harshly with the usual suspects (banks, energy companies, supermarkets) or to loosen it to enable this "critical mass" guff. If it's for loosening, then from a competitiveness point of view, Australia is going to score a spectacular own goal.

And I'm also worried that this Australian zombie carries a communicable disease, which our pollies could easily catch.

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