Speaking truth to populism

From the 60 Minutes interview with Pacific Brands boss Sue Morphett, introduced as the most hated woman in Australia:

ELLEN FANNING: … Does the Australian consumer have to accept some responsibility for this decision?

SUE MORPHETT: They do. We all do. Long, long gone are the days where, actually, Australians are prepared to pay more for Australian-made goods and the only way that we’ll pay for Australian-made goods is if they’re giving us something that buying elsewhere or cheaper isn’t giving us.

24 thoughts on “Speaking truth to populism

  1. Why shouldn’t she be Australia’s most hated woman – it was the contrast between shafting her workers and taking an obscene salary for herself that annoyed people.

    There was a reaction story to that one about a company called Aussie Bum
    http://au.todaytonight.yahoo.com/article/5378416/consumer/aussie-bum-australia
    in which Aussie Bum’s owner said that he pays himself $120,000 (IIRC).
    He seems like quite an inspiring character, so perhaps the answer to Morphett’s “the only way that we’ll pay for Australian-made goods is if they’re giving us something that buying elsewhere or cheaper isn’t giving us” is to say that it’s her job to explain and sell what that something is. Sean Asby sells his Australian-made underpants successfully, why can’t she? I’m adding her brands to my boycott list.
    .
    That said, people certainly have got their priorities wrong. They should be paying more for better quality (and mainly locally-produced) stuff. The best example of what’s gone wrong is food – cheap it certainly is, healthy it ain’t.

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  2. Ashby sells overpriced underwear to vain gay men, Bonds is a mass producer competing on price. Morphett’s basic point is correct – niche Australian-made products can survive but others cannot. If we want to know what people think about these issues, we should look at the trade figures, not opinion polls.

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  3. She is Australia’s most hated women because she has been subjected to vicious attacks by politicians and unionist with their own barrow to push. She has done nothing wrong and nothing she should be ashamed of!

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  4. Aside from Andrew’s point that Aussie Bum is not remotely comparable to Bonds, the salary that Aussie Bum’s owner pays himself is irrelevant because he is hoping to earn far more than that on the equity he has in the company!

    And the “obscene” salary increase Morphett received was due to her being promoted to chief executive, something that brushed over in the press. Her salary was actually a pay cut from her predecessor Peter Moore who was paid more than $2 million. In fact, her fixed salary of $742,000 is less than half of Moore’s $1.5 million, the rest is performance based. These salaries do not seem outrageous for a company with revenues over $2 billion and revenue and profit growth over 16%.

    It is also hard to blame Pacific Brands for being one of the last large clothing manufacturers to go offshore. To not do this would very likely result in slow decline in the company as its costs grew ever higher than its competitors. They probably should have begun the offshoring during good economic times, when the employees would have had a better chance of finding other jobs, but this is the fault of the previous executive team, not Morphett.

    It certainly was a disastrous PR failure. They seem to have decided to bite the bullet and take all the flack at once, but didn’t realise the publicity this would generate. In retrospect, a more gradual offshoring would have been more prudent.

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  5. The language of “responsibility” is interesting. More generally, am I (as a consumer) responsible for workers at a given business losing their jobs or a bad business going broke? I would like to think not! Certainly, not many would say that Oussama Mallouli was “responsible” for Grant Hackett not winning a gold medal in the 1500m at Beijing. Most would say that Hackett did his best but simply wasn’t good enough to win. Similarly, Australian-manufactured Bonds just aren’t cheap enough to attract sales. It’s just a fact of life. Why should consumers care about where their jocks come from? And anyway, until 12 months ago, we had virtually nil unemployment and strong inflationary pressures. So if in 2007, I had bought Bonds, would I have been responsible for the Feb 2008 interest rate rise? C’mon.

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  6. It was a truly shocking interview.

    The interviewer asked Sue M if she could guarantee jobs for the rest of the firm. She of course said she couldn’t. She couldn’t even guarantee her own.

    She should have asked the brain dead interviewer if Channel 9 had ever guaranteed hers and if 60 minutes lost money would she justify keeping her job.

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  7. Rajat, if a decision/action of yours adversely affects other people, you should at least take that into account before you act.
    Bruce, I think we just disagree about those salaries. Nobody is worth more than a million dollars a year. Pacific Brands could be managed just as well by a management team paid half as much as they are now. ‘Greed is good’ Sue is making money from the underpants she sells, but she could make more if she just imports them from China – she doesn’t apply the same standard to the management team, howabout saving the shareholders some money there?
    Mitch, I think Ashby has a point about lack of innovative ideas and lack of values at Pacific Brands.
    .
    Disclaimer: I did once buy an Aussie Bum product. I swim everyday and heard of these Australian made trunks so I ordered the most conservative, substantial, dark blue pair on their website. Unfortunately, what arrived was a small piece of nylon that just didn’t offer the support we, ahem, larger men need, so it was back to Speedos.

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  8. So, Russell, perhaps you can advise me. I’m about to go off and buy lunch. My choices are Subway and Blue Bag. Subway is cheaper, but the staff all look like overseas uni students (hence, undeserving?) and it’s probably owned by some Amercian. Blue Bag tastes a bit better, has lots of nice feel-good mottos on their sandwich wrappers, groovy-looking anglo staff and is probably owned by someone born and bred in Melbourne. But their sandwiches are a bit more expensive and less filling than even the Subway six inch. What you seem to be saying is that instead of just trading off taste and size against price,which is my usual naive practice, now I have to consider the wellbeing of the staff and the producer’s ownership. Help!

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  9. Okay, thanks Russell. But just in case, should I check with the Subway guys whether they are Australian citizens or not, or whether they are supporting a spouse and kids and if so, whether they are in Australia or at home in India? The Blue Baggers are probably single or de facto (no arranged marriages to create problems), and their parents are probably all affluent eastern suburbs types while the Subwayers’ parents are probably struggling to send their kids here to study. Does that matter? And what if the Subway guys’ outfits are locally made but the Blue Bag outfits are imported? I haven’t asked, but should I? Then there’s the whole issue of food miles to consider – I know for a fact that Subway bakes their bread on the premises.
    As you can see, making decisions based on these sorts of value judgments rapidly becomes incredibly complicated, so to impose moral responsbility for various consequential outcomes on average consumers for day-to-day decisions seems a bit rough to say the least.

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  10. Russell, Morphett is paid what she is because, presumably, the owners have judged (via their representatives on the board) that hiring someone else for say, $500k less would result in worse management decisions being made, causing greater than $500k drop in profit.
    .
    I have no idea whether they are right in that judgment, but I do know that it is not a decision for you or me to make, but is a decision for the owners. And given the fact that top-level management decisions can make or break a company, it does not seem like an outrageous decision to me.

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  11. Russell

    If you think she’s too highly paid, set up and a compensation consultant and get boards to pay you fees for service. otherwise telling people waht they worth is nonsense.

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  12. JC – no, I’d rather get the government to do it, maybe by taxing Greedy Sue’s income at 99 cents in the dollar for anything over $500,000.
    Bruce – “it is not a decision for you or me to make” – of course it is! That’s the difference we all enjoy between classical liberals and social democrats: we social democrats believe that everyone benefits from living in a society where the less desirable human traits, such as greed, are held in check. The evidence for this is here:
    http://www.equalitytrust.org.uk/
    .
    Rajad – maybe it’s just your name but I sense a strong ‘leave them to their karma’ philosophy in your sandwich analysis. Did you not have a teacher at school who explained the ‘feel good by doing good’ connection?

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  13. Actually Russell I do agree that a progressive tax system is a much better way than salary caps to lessen severe inequities in wealth, as well as being a good way to fund reasonable social services: free education, health care, social safety net, etc. My main objectives to your extremely punitive approach is that I believe it will, like most populist policies, worsen the condition of the very people you are trying to help by lowering productivity, raising unemployment and stripping funding from these social services.
    .
    Many of us are neither classical liberals nor social democrats, but believe in using the power of competitive markets to better society. This includes probably a majority of centrist and left-of-centre mainstream economists. They are pragmatic, no ideological. They support free trade and carbon taxes, are very wary of labour cartels, and are against governments setting prices and salaries or running businesses. And they take these positions because they believe in good policy and good outcomes, not in class warfare.

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  14. Bruce – the very wealthy (greedy Sue) throwing people out of work, in a recession, for greater profits is not class warfare?
    .
    We’ve been concentrating on using competitive markets to better society for some time now and the consequences are completely unsustainable lifestyles. Free trade, as we have developed it in the last 30 years, is unsustainable. Full stop.
    .
    We need to combine (ecological) pragmatism with principle (what you might call ideology).

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  15. Russell has never considered that, according to his criteria, billions of poverty-stricken Asians and Africans would be justified in calling him ‘greedy’.

    Andrew could you please delete Russell’s reference to his penis at #9? And perhaps also ban him altogether? I think this comment risks creating the ‘lemons problem’ to which you refer in your comments policy. It has certainly put me off. I can’t imagine what Senator Conroy would make of it.

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  16. Russell comment 1:
    “I’m adding her brands to my boycott list.”

    I notice that you clearly feel no moral responsibility for the 5000 jobs of Australians still working for Pacific Brands.

    You may have missed the pleas of PacBrands workers to keep buying the socks and jocks they make (in direct opposition to the union bovver boys calling for a boycot).

    I for one am going to keep buying from a company that has at least some Aussie workers and a fantastic boss who had the guts to expose the hypocrisy and feigned outrage of the media, pollies and ordinary Aussies.

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  17. “Russell has never considered that, according to his criteria, billions of poverty-stricken Asians and Africans would be justified in calling him ‘greedy’. ”
    .

    Yes I have considered it, and yes they would.

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  18. Yep, that’s right, when Russell demands a pay increase either through personal negotiation or most recently getting the union or the government tribunal do it. That of course isn’t being greedy. Everyone else is greedy except Russell of course.

    Hey Russell are you still on the same salary or wage you ecived when you left school?

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  19. JC – I think I’m poorer. These last couple of decades my salary has always been exactly what articles in the paper say is ‘the average wage’.
    But, the average wage doesn’t go as far as it used to. (Perhaps because I prefer to buy on quality rather than price). If you read my previous comment you’ll see I admit to being greedy, but there’s a difference between being averagely greedy and stand-out greedy, don’t you think?
    .
    There’s also an ideology and power thing involved – I should have made it clearer in my ‘class-warfare’ answer to Bruce. I remember, before globalisation, when employers had to deal with the employees they had, and vice versa, that there was quite a bit of friction, but by and large various factors kept everything going. But technology and time were on the employers side – containerisation, electronic communications etc made it possible to take the jobs and give them to serfs in third world countries. Awards were abolished, IRC abolished. So the rich and powerful, like greed-is-good Sue, have won the war. The only thing they need the working class for is to clean their pools and iron their clothes. But I’m not on the same side as Sue – I don’t have her values, and I don’t have her power.
    .
    I forgot to say to Jeremy that I would never be so coarse as to mention any particular part of my anatomy and that he would be well advised to avoid further embarrassment by keeping his imagination to himself!

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  20. Andrew Norton March 24th, 2009 06:03

    Ashby sells overpriced underwear to vain gay men, Bonds is a mass producer competing on price.

    Andrew, I’m shocked – really – that you would say such a thing. You are normally such a diplomatic fellow. I fear that some of the coarser ways of the blogosphere are rubbing off.

    Andrew Norton says:

    Morphett’s basic point is correct – niche Australian-made products can survive but others cannot. If we want to know what people think about these issues, we should look at the trade figures, not opinion polls

    I dont have a problem with firms shedding labour and setting up overseas. But it does seem a bit rich to pay one self a monster salary in the midst of a cost-cutting exercise.

    Any one remember the old saw about “everyone having to tighten their belts?”.

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