On the Backs of the Australian Worker
mjdiv
G’day Australia!
As a business owner as well as someone looking for ways to improve the economies of all of our allies, I was curious to see how Australia has been doing in comparison to the rest of the world. We all know that, no matter who you are in the world, everybody needs food. So I decided to compare prices for Q1 food around the world. What I found out was that there were 165 offers in 33 different countries on the world market that had better prices for food than Australia. In other words, 33 different countries pay less for their food than Australia does. And since everyone needs food, that also means that the citizens of 33 different countries have more money to spend on weapons and higher quality housing and food than Australia does.
Okay, I hear what you’re saying…”we’ll just make that up by buying gifts”. I looked at gifts: There are 305 offers on the market in 43 countries which are cheaper than Australia’s. You get the picture.
Why should Australia have the most expensive food and gifts when Australia has high resource territories of grain (for food) and diamonds (for gifts)? If Australia owns these high-resource territories, shouldn’t Australia be able to offer the lowest prices to its citizens because of plentiful access to the resources? I took another look to find out why. When you look at Australia’s import taxes,, you’ll notice that the taxes are low on the raw materials, which means that Australian manufacturers can buy their supplies at low cost, but grain and diamond import taxes are 10%! If Australia already has high grain and high diamonds, then adding a 10% import tax will mean that foreign companies won’t be able to compete in Australia and Australian grain and diamond companies can raise prices due to lower supply. In turn, Australian food and gift companies will be forced to either pay higher prices for their supplies (which in turn leads to lower wages and higher prices for food and gifts for the Australian consumer) or they will have to use organizations to buy their supplies overseas from one of the 33+ other countries that sell these items for less than Australia in order to compete domestically. So the high import taxes which are meant to protect Australian business actually have 2 end results: More expensive products for Australian citizens and money going out of Australia (through the organizations which control the businesses) to other nations where cheaper supplies can be bought.
I already hear the voices shouting: “We don’t want competition because we already have grain and diamonds. If we lower the import taxes, then foreign companies will come in to steal our market and put all of the Australian companies out of business!” Really? Is there some nation in eRepublik that has slave labor with skill 7 workers working 24 hours a day for 0.000000001 gold per day that will sell their products in Australia and put all of the domestic food and gift companies out of business? I heard the same arguments a year ago when I was on Congress in eUSA and fought for lower import taxes - and yes, I’m a business owner as well. Now eUSA has across-the-board 1% import taxes - with no drastic drop in prices! I am a business owner in eUSA and I’m still able to make money and share profits with my workers!
I hear some more voices: “At least Australia will make money from the companies that export to us.” With 10% import taxes, however, I would like to ask how much revenue you think Australia makes off of foreign companies selling in Australia in diamonds and grain? Are there even any companies who can compete in Australia in diamonds and grain when you already have high grain and high diamonds? I know I’m not far off in saying that Australia makes very little to no revenue whatsoever from the 10% import taxes because hardly anyone else can be profitable selling in Australia.
A simple solution: What if you lowered your import taxes (not completely, but say down to 5😵
. I hear some more voices: “That will cut our revenue in half!” I will tell you for certain that it won’t and this is why: At 10%, companies will not find it profitable because domestic Australian companies will easily undersell them so there will be no foreign competition at all. At 5% or less, Australia will still be able to compete, but some of her allies will also be able to sell in Australia. If more companies can sell in Australia, then more companies will be able to pay the 1-5% import tax which will give revenue to Australia. In return, Australian food and gift companies will not have to go overseas with their organizations and they can actually buy domestically - from Australian companies who are competing with the other companies - which is better for Australia. Australian citizens will be able to buy less expensive food and gifts in Australia and will have more money for weapons, housing or whatever else they want. The Australian manufacturing companies (because they will not have to pay as much for their supplies) will also be able to afford higher wages for Australian workers while providing products less expensively - an all around benefit for Australia.
Citizens of Australia - ask yourselves this question: What is better for Australia? Is it better for a few Australian grain and diamond GM’s to make all of the money for themselves at the expense of Australian citizens by keeping import taxes high or is it better for Australia to be able to have outlets to sell to her allies and to put money in the pockets of Australian citizens to buy more stuff and improve the lives of the Australian manufacturing workers and citizenry in general? More money for a few or more stuff that ALL the people can afford?
Australia, you are position to have the best trading partnership in the world which will benefit Australia and her allies alike. As we work together to improve each of our economies, allies will become even stronger because we take a social and economic interest in each other and not just a military one. To find out what you can do to improve Australia’s economy, join the discussion in the Trade And Military Alliance channel on IRC in [url=irc://irc.rizon.net/TAMA]#TAMA[/url].
Have fun and enjoy another day in eRepublik!
mjdiv,
TAMA founder
Comments
/agree
Why would foreign diamond/grain companies buy a licence to a country that already has high diamonds and grain?
The price difference is due to high competition for workers in a labour starved market, GMs have to pay high wages or their workers will jump ship quickly.
For our resources and company count, eAustralia is incredibly underpopulated in workers but at least we aren't eChina 😁
...get over it?
I can see this idea getting flamed
Aus Askar -
"Why would foreign diamond/grain companies buy a license to a country that already has high diamonds and grain?"
Exactly! So keeping the import tax at 10% really doesn't serve a purpose because you're not going to be getting any revenue from foreign importers. But if the import tax was dropped, your allies may be able to sell some of their excess to Australia, prices would stay competitive and the Australian manufacturing companies could afford to continue paying high wages (and be even more profitable) because their supply costs would be less.
"I can see this idea getting flamed"
I cant, XG has already talked about it in the #TAMA chat channel
It's more of a psychological tactic, to be honest. If you had a 5% or lower import tax on grain and diamonds, Australian companies would still outsell any foreign companies because of stiff domestic competition. To the outside world, however, Australia would look much more inviting and, when they do venture to sell in Australia, your citizens get less expensive domestically-produced products along with a revenue boost which will come from import taxes (which you don't get with the import taxes at 10😵.
This is a valid idea. If you read my newspaper, I have canvassed it several times. Believe me, it ewas hard enough getting import taxes cut to 10%. People would prefer to have overpriced goods and shortages it seems.
Awesome article mjdiv o/
Trade with allies is a key component to a better functioning economy. Set your trade barriers low and the world will follow. We set them low in the US and things are going well. Are prices are still a bit high, but at least they're not as high as the prices in Australia.
The US maintains high prices despite low import taxes in part because we are a high consumption nation. Consumption makes damage which leads to power which leads to awesome. Our low import taxes help us be more awesome. So, join the club of awesome nations with low import taxes.
did you compare wages? without out a wage comparison the data is meaningless!
Infin -
It also wasn't easy getting Congress to agree to drop the import taxes in eUSA but, since we did, all the things that people were afraid would happen never did. We ended up having a healthy economy with no shortages goods of any kind, even at times of war. Before we did this, gift and weapons prices would skyrocket to unaffordable levels during big battles. Now the prices are more level.
Haha tell that to Schoft! If we go any lower the sky will fall in. Also the best way to measure goods in a comparative sense is to divide the number of goods that can be bought in a country for a median wage (say level 4). I saw a fellow do it in a Canadian article and it was very insightful.
Rincewind Waylander and Infin -
You've already seen the data for prices of food and gifts, so let's look at the data for wages:
Current average wage for Australia: 0.278 g/day
Current average wage for USA: 0.471 g/day
Australia's wages are lower than USA's, yet it's harder to pay the workers. With a system that's open to her allies, Australia's companies will be able to afford higher wages and have lower operating costs.
Great articele mjdiv. Australia took a big step to 10% 2 months ago. the adjustment was painful but we are now reaping benefits. Our manufacturing is still a bit behind as you point out and we could close that gap by going to 1%.
I think the raw material argument is a little different. Although I would agree to 1% - I dont think 10% on diamonds and grain is having any adverse impact. Diamonds in partuclar are sold globally from the Australian market (volume well exceeds domestic use) and so pricing must meet the global best - backed up by ereptools. I havent seen any diamonds imported to australia recently.
venja -
You won't see ANY diamond imports to Australia at 10% and you probably won't see many at 1-5%, although you may see some. Like I said before, putting them at 1-5% simply sets the stage for possibilities and shows your trading partners that you are open for business. Australia can only win by doing this.
This is actually something Senate has been discussing. As you'll see here, we are taking some modest action to try and alleviate the supply problem.
http://www.erepublik.com/en/Australia/law/34023" target="_blank">http://www.erepublik.com/en/Australia/la[..]34023
Aeros -
With the kind of tax structure proposed for weapons, Australia will be a more attractive place for nations to do business and Australia won't have to worry about being in the middle of a battle and running out of weapons. And during the big battles when other nations will be supplying the extra weapons, Australia will get the needed revenue from the 5% import tax that you may not have gotten at 10%. Great move 🙂.
Excellent article mjdiv - bottom line though change in import tax on diamonds would make no difference. If you check tools you will find aussie diamonds are equal or cheapest in the world constantly -
I do have an issue with the lowering of import taxes on grain. The fact of the matter is that if this was done our grain industry would be wiped out - as all labour would shift to diamonds. When we lost our high diamond regions to Brazil in December it was only the fact that we had a grain industry that saved us losing our valued land workforce to more lucrative jobs overseas. Grain needs some protection.
Further who would have ever predicted Diamonds and Wood to overtake Iron as the highest value land industry. There is a constant juggling of order in land as labour moves between industries. Who knows maybe one day grain will be the land industry with the highest prices. This is a further argument in favour of at least nurturing the lesser of the 2 land industries.
It is one thing about the future it is unpredictiable. This is why people buy insurance.
Savonrepus
In relation to high manu prices - one day we will realise that we do not have the population to cover all manus effecienty and this is why our prices are high. I believe as a nation we need to make decisions about which manus are strategic and which are not. Given our grain and diamonds we probably should leave food and gifts. This leaves MTs Housing Weapons as industries which could be opened up to free some labour. It appears whether by design or default the decision has been made recently by the senate that it is weapons that has to go. This may all be very well in times of peace but if we go to war and the imported weapons suddenly dry up? Guess we can throw food and gifts at our attackers. 🙂
By the way I am raising the question above not providing the answer.
Savonrepus
Sorry need to explain why manu prices here are higher than the rest of the world. I have businesses all round the world - if i lose a worker in say Poland through deployment - I guarantee I can have a +90 worker in an hour provided i have the best offer on the labour market for skill. In Australia I can have the highest offer on the labour market for days without any takers. This is a major industry cost (due to lack of productivity) that is reflected in higher prices.
I take exeption to anyone talking about GMs making excess profits. Any nob economist will tell you that in perfect competition (which is close to the markets we have here) there are no profits to be made. - Hence part of the issue attempting to be addressed is to encompass product differentiation in V2. Personally each of my businesses on a stand alone basis would not make much - I make money through strategic relationships and attempting to predict outcomes from miltary and legislative changes.
The only way to reduce prices on manus and encourage competition is to lower import tarrifs and I look forward to the outcome of the recent lowering of tarrifs on weapons.
Savonrepus
Savonrepus -
If you feel that grain or diamonds needs some protection (even though they already are the lowest prices in the world and would be competitive even with 1% tariffs), then Australian Congress could consider a 5% tariff. This certainly would not put companies out of business because there would be no appreciable change to those industries - the tariff itself would not reduce prices on domestic products, but MAY allow some allies to provide to Australia in the event that supplies dry up by providing the proper environment to do so. Even a 5% tariff would increase costs of business for allied traders doing business in Australia, but not completely shun them from the markets.
TAMA is a multinational organization which is committed to improving the economies of all allied nations as well as providing preferred trading status as well as full military support to the nations that open their markets to allied trade. While reducing tariffs on raw materials down to 5% will have no significant direct impact on the grain and diamond industries, it will set up an environment where business owners in other nations will feel more confident doing business in Australia in general as well as making sure Australia has places to export its goods to with preferred trading status.
mjdiv
Savonrepus I don't have any trouble getting workers in Australia 😛
TAMA you mis read what I said. Clearly lowering tarrifs on diamonds would NOT impact that industry. Lowering tarrifs on Grain would significantly impact that industry because currently diamonds are more profitable than grain. I do not see any value in killing the grain industry because currently diamond prices are so much higher. If we lose our 2 high diamond territories as we did in December we only have grain to rely on. So we need to protect the grain industry - by ensuring we have a working capacity - whilst diamonds have the price advantage so that we do have something to fall back on if necessary.
@Sir Terrifico - if you compare the skill base in our high quality companies in comparison to similar businesses in other countries you might understand what I am saying. Have a look at the top company by sales in aussie - average skill level around 9 - have a look at the top country by sales in USA - average skill level around - 12 so the US company has a 33% productivity advantage yet both companies are selling to the same market - citizen gold.
Australia, savonrepus is speaking as owner of a couple of grain and diamond companies and, considering the number of companies he owns, is obviously a seasoned business person who knows how to make money.
For those who are worried, a 5% grain tax will certainly not put savonrepus out of business because food is a necessity rather than a luxury and outside companies will not outsell his Australian food companies in this case - but he might lower the price by 0.05 AUD and remain competitive. Collectively, however, the Australian citizens who all must buy food every day will have more money to spend on other things after they've bought their daily food rations.
I would venture to say that even 1% imports will not "kill the grain industry" but, if Congress wants a trial period (it can always be reversed), see what happens to the Australian economy over a month with imports set at 5% - see if it helps or if the unfounded fear of destruction of a staple industry really occurs. A law can be changed in a day, but progress limited by fear is permanent.
Thanks for the wages data, it puts it all in perspective 🙂
Excellent well researched article.
To clarify what I am saying - the tarrif level on diamonds would be totally irrelevent. I would be open to a 0 tarrif on diamonds if it means that we could convert aussie into an international trading market. This would assist our money market. Our grain industry needs tarrif protection - personally I sell grain internationally (more as a charity rather than making money 😁in the main so tarrifs are not a problem for me but as I have stated earlier if we have all the land labour transfer to diamonds then we have no grain infrastructure left if we lose our high diamond regions - like what happened in December - there would be no place to employ displaced diamond workers. Also it is a double bet - as price scales change who knows it is possible grain prices could outstrip diamonds and we also need the infrastructure in place to take advantage of that.
Savonrepus
To add - if grain prices outstripped diamond prices I would be advocating tarrif protection for the diamond industry for precisely the same arguement.
QFT - nice article
Thank you for the fantastic article, mjdiv! Hopefully the Aussies can see the value of TAMA and how it would be of so much value to everyone involved in it. It is a a Win-Win situation for the citizens of each and every member country!
Best wishes,
loftedraptor
Wow nice article, it's pretty easy to follow for us eAussies who don't completely know how the economy works yet, and the idea in it sounds really cool! so two thumbs up from me 😃