The Price of Everything

The Price of Everything

Cultural nationalism feels good but Australian stories have a cost

Who gains from trade policies based on cultural nationalism? Matt Nettheim/AAP Image/ABC (Still from ANZAC Girls)

The warmest, most welcoming home of cultural nationalism is appeal to the provenance of “our stories”. Real Australian stories are made by Australians, for Australians, using only Australians, and only in Australia. Trade Unions love this type of cover, and the Media, Entertainment and Arts Alliance (MEAA) has been bumptiously running this line recently to hold firm on restrictions on hiring foreign actors.

While it seems even the MEAA’s members don’t buy this nonsense any more, the Vegemite-stained sentiments animating the cultural nationalist instinct remain a popular but potentially very costly delusion.

Economists have made considerable progress in persuading voters and politicians of the fundamental truth of the principles of specialisation and the gains from trade – or its inverse, the enormous costs of seeking industrial self-sufficiency and isolation. We specialise in producing what we’re comparatively good at – a wide but also very specific range of goods and services – and we trade for the rest. Australia is a wealthy and prosperous nation because it specialises and trades, not in spite of it.

This is no less true of arts and cultural production. And we risk doing a great harm to the production of Australian stories if we allow this fallacy of provenance to run unchecked. But to understand why, we need to dip into some economic reasoning.

On the face of it, it could seem plausible that a comparative advantage to the production of Australian stories would lie with real-born Australians using Australian technologies in Australian production companies. But if that were the case, we wouldn’t then require laws prohibiting such trades, or requiring various union permissions: there would simply be no demand for such inferior inputs.

That this is an issue signals that someone wants foreign actors, writers, producers or directors involved. So the question is why. Is it because they come at lower price, or because they offer higher quality? If lower price, then the higher-priced Australian actors are an additional cost. Australian stories will cost more than they would in a free market, which means we’ll produce fewer of them.

Australians as consumers of Australian stories are harmed by that restriction – although some Australian actors will benefit. So that’s perhaps just a transfer from the many to a few.

But if it’s higher quality – which is the more likely account, and note that quality may not mean acting chops but may be composed only of better global name recognition – then the Australian story-telling industry is actively engaged in self-harm if it does not choose these higher quality inputs.

A further harm the pursuit of cultural autarky (self-sufficiency) causes under cover of Australian stories is a long-run distortion of the Australian cultural production sector itself in relation to the global economy of arts and cultural production.

The goal of cultural autarky is to have a complete arts and cultural production economy within Australia with every stage of production represented locally. That sounds like a good plan – who wouldn’t want that? – so it’s easy to vote for policies that push in that direction.

Yet we tried it with manufacturing for many decades and it was an utter disaster because of what we give up when we try to do that. The opportunity cost is specialisation and concentration of all our resources and energies into what we’re best at. Instead, you end up with a mediocre everything, rather than a smaller space of excellence that you can then sell to the world.

Who gains, then, from trade policies based on cultural nationalism? A primary beneficiary is the Trade Union itself, as it captures the right to sell the permissions – a type of action economists call rent-seeking. It’s also good for a handful of Australian actors, screenwriters or others who likewise capture the rents created by the artificial market distortion.

But that’s it. It harms everyone else – including Australian and overseas consumers of Australian stories, because now there are less of them and they’re more expensive. And it harms the long-run prospects of the Australian arts and cultural sector by distorting it away from fitting into global production and markets.

Now perhaps these effects are small, and maybe the production of Australian stories is vigorous enough to withstand these insider taxes. But let us not fool ourselves that there is any solid logic to this.

It feels good, but really we shouldn’t do it.