Our worker-first mindset is becoming very problematic. Here's why

Is a price war between the big supermarkets a bad thing?

Are exports better than imports?

And if a foreign government starts subsidising their manufacturing sector, is that bad for Australia?

If your gut instinct was to answer "yes" to the above questions, I've got news for you: like most Australians, you've got a worker mindset. This is becoming increasingly problematic.

Economics is about trade-offs and perspectives.

Low interest rates are great if you've got a mortgage, but terrible if you've got savings.

A low exchange rate is great if you're an exporter, but terrible if you're an importer.

Low wages are good if you're an employer, but terrible if you're an employee.

The same is true for prices. Low prices are great for consumers, but terrible for producers - and their workers.

When it comes to prices, Australians have picked their side. We have a worker mindset. This means that we instinctively side with industry over consumers. Consequently, we typically see low prices as a bad thing.

We slammed the supermarkets when they had a price war over milk.

We prefer Made in Australia even if it means higher prices.

Politicians proudly herald the high prices for meat, fruit and vegetables as a good thing.

Even in competition law, Australia is poised to abandon the "consumer welfare standard". Under the consumer welfare standard, the objective of competition law is to advance the interests of consumers. Soon, competition law will also be about protecting workers, protecting suppliers and protecting farmers.

The latest example of our worker mindset is the wave of government subsidies being unleashed overseas. These subsidies are targeting everything from batteries, solar panels, electric vehicles and AI through to the critical minerals and semiconductors that go into them.

A consumer mindset would see this as a good thing. All these things will now be cheaper. A world where foreign governments tax their hard-working citizens so they can use this money to make cheaper products for Australians sounds like a pretty good deal.

But a worker-mindset would take the opposite view. A worker-mindset would side with industry and see these price reductions as a threat to our industries and thus our workers, warranting a wave of counter-subsidies from our government.

As always, Australia has adopted the worker mindset. This is a problem for two reasons.

First, in most of the examples mentioned thus far, the benefits to consumers far outweigh the costs to Australia's industries.

Second, our worker mindset is out of step with today's challenges.

Whether we care more about consumers or workers should depend at least in part on the times we live in. In economics jargon, it should depend on what side of the 'Phillips Curve' we are on.

The Phillips Curve shows the stylized relationship between unemployment and inflation. It posits that when inflation is low, unemployment tends to be high (think: the 2010s), and when inflation is high, unemployment tends to be low (think: the 2020s).

Logically, when inflation is low and unemployment is high (the 2010s), we should be more worried about workers than consumers. The government should be focused on creating more jobs.

But when inflation is high and unemployment is low (i.e. today), we should be more worried about consumers. The government should be focused on getting prices down, not creating more jobs.

Creating more jobs and supporting industries makes little sense when an economy is at full employment. It just fuels more demand for non-existent idle workers, fueling inflation.

It's no wonder Australians have a worker-mindset. 'Jobs, Jobs, Jobs' is all we hear at elections.

There's also some behavioural economics at play. Trade, for example, benefits millions of people a bit and hurts a handful of people a lot. The winners stay quiet while the losers complain loudly. The result is that national conversation is dominated by those who lose.

The upshot of all this is that consumers take a back seat, or don't get a seat at all. Australia rarely, if ever, puts consumers first.

The usual retort to this is that cheap products are meaningless if you don't have a job. Sure. But the reverse is also true: having a job is meaningless if you can't afford to buy anything.

So, what does a consumer mindset look like in practice? Here's five examples.

First, imports are good. Exports have zero value to Australia outside of imports. As Nobel Prize winning economist, Milton Friedman, famously said: exports are the price we pay to get imports.

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Second, competition is a wonderful thing, even if it kills-off businesses.

Third, subsidies from foreign governments are wonderful for our consumers and any costs to our industries need to be careful weighed-up against those (often very large) benefits.

Fourth, GDP is a flawed measure of welfare. Consumption is a better measure of how Australians are faring.

And finally, only real variables matter. The dollars in your paycheck are irrelevant. Only real wages - your purchasing power - matter.

And if you ever get confused about which side to take, just remember: the customer is always right.