Buying "Australian Made" is irrational.

I believe and deliver the following argument to anyone who is interested; however, it is not mine. The Economist published an article on this subject in the 90’s which had me sold back then. I am amazed that people still lean on the shaky notion of patriotic buying habits. I refer to the article, but have long since lost the actual document, I can’t refer you to it.

Before I continue, you should note that I am making my argument under the following assumptions:

1. The belief that real growth in our economy via an increased GDP is a good thing.
2. That a surplus budget, low interest rates and low unemployment etc are all good things.
3. I assume that competition in the marketplace is a good thing that results in a wealthy Australia.
4. The above in turn means more money available per capita into our economy and that will breed new services, innovation and products in response to cheaper imports or new offerings.
5. I assume that the above then means more taxes for our government which means better services, safety nets, education and public goods.

Ok, so my assertion is as follows:
Rather than buying Australian, when you are faced with a choice, you simply buy the best product (for your needs) for the best price (you can find).
Example:
If you had to buy a fridge, and had the choice of two identical fridges, one made here, and the other made in say in China, and the one from China was $100 less, then I say you should buy the Chinese one. Paying $100 more for the Aussie product helps no one. Not Australia, not your community and especially not you and your dependents.

Here is my rationale:

Lets say I owned the fridge business. I make the fridges here in Oz for $700 and can sell them competitively for $1000. For the argument, let’s assume that the $300 is what I make as the owner after all my costs, including labour are incurred. With that $300, (assume no personal tax in this hypothetical, to keep things simple), I can spend on living, food, cars, holidays whatever.

It is important to also understand that what I spend on my life, particularly as discretionary sense (ie; other than the necessities) has a multiplier effect. Feel free to look it up, but a simple example is:
I spend $50 getting my lawn mowed, the gardener pockets the $50 (I have what I want in the fresh cut grass), he’s left with $40 after costs and spends it on say a hair cut from his neighbour. The neighbour is left with $30 after costs and on it goes. Of course the costs are going to other businesses, and then there is a multiplier effect with them, including if he saves it, given the bank then lends it for investment and earns money on it. Anyway you get the idea, a dollar is more than just a dollar. Let’s assume for this argument that the multiplier effect here is 100. So my $300 take home profit is actually $30,000 for the economy.

Ok, so now I find out that I can make the very same fridges in China for $200. I change my business, sack my staff (in line with obligations under whatever law is in place) and now I get $800 per fridge not $300. Of course that means a greater multiplier effect of $80,000 which is more money for investment, and a better standard of living for me and my family.
What about the poor worker I hear you say… what is he or she doing?
Well I ask you this. What did you type your last letter on? A typewriter or a computer with software? What about the poor typewriter maker from 30 years ago? What about them? Shouldn’t you all be reading this on typed paper?

I feel for people who lose their jobs because the role becomes redundant but that is why we have safety nets and support to get re-engaged in the employment market. I know it’s not always a fairy tale ending but we are collectively better off. Their kids will be better off, with better education and other services in their life. Of course, this type of activity pushes the bounds of innovation, so I may be able to make my fridges here for $150 using robots or whatever, which would mean taking risks and maybe entering new markets and hiring new skills or retraining my staff.

This is a macro argument, but I think that that is what government programs are there fore. Saftey nets when the economic system loses someone through the cracks.

My personal view is that paying more for poorer quality products just because it’s got an Aussie flag on it is ludicrous.

If we all focus on looking after the best interests of our selves and families, then the benefits will come around via better economics.

Some caveats:

Fully costed – If the Chinese factory is secretly using child labour or spilling industrial waste in the river it is playing without fully realising its costs and or not fully informing the market of the social and environmental costs. You may find that if the Chinese factory fully costed its fridge business, then the Australian company would be competitive. In that case, I say buy the Aussie product.
Also, if the market knew that kids were being used and industrial waste was not being disposed off appropriately, then the demand for those particular fridges may plummet in Australia.

If the market is fully informed, and the costs have been fully realised, then on a apples for apples, or fridge for fridge situation, go for the best price and quality every time.