Australia’s chronic economic underperformance

I have this piece in Quadrant.

It was triggered by this graphic presenting a 300 year review of the rise and fall of nations in the GDP stakes.  By 1913, the Western world’s living standards were two- to tenfold those of the rest of the world. Fast forward to 1973 and this picture had not markedly changed. At that time, (in US 2011 $) China and India had per capita GDPs at little more than $1000 compared with $20,000 for the Western world (by then including Japan).

Demonstrating the absence of barriers to achieving high living stgandards, by 2016, Western nations (now joined by the “Asian tigers”, South Korea, Taiwan, Hong Kong and Singapore) had per capita incomes in the $30,000-53,000 range. Income levels of China ($12,500) and India ($6,100) were on rapid growth trajectories.

These developments have provided Australia with a magnificent base on which to build our own prosperity.

Per capita, the 25 million Australians are sitting on the most valuable natural resources in the world but we have not performed well. Our natural wealth is not matched by our income levels for reasons that include:

  • Hostility to the development of and over eagerness to tax coal, gas and other resources, which are the nation’s most important exports
  • Determination to ensure the destructive substitution of high cost, unreliable wind and solar for low cost reliable coal for electricity generation
  • Measures that restrain the use of water for farming in Australia’s most important agricultural province, the Murray Darling, and in building new irrigation facilities and preventing land clearing in Queensland
  • The chronic inability of government to wind back expenditure programs once set in train, with a consequent reduction in labour and capital resources available for productive ventures
  • An industrial relations system that is especially vulnerable to trade union and government pressures to require wages and conditions which exceed the productivity levels that can support them
  • An education system that is focussed upon equality of outcomes rather than the promotion of excellence and which has been redirected away from school training in basic three R skills in tertiary institutions from engineering and the hard sciences
  • Wasteful spending, pandering to political fantasies, best exemplified by the decision to convert French nuclear submarines to less effective diesel power

Pressures generatong these policy misdirections are becoming more prominent.

The consequent lower living standards are regretable per se but also condition our ability to provide the greater self-reliance in defence that will increasingly be required.

Our independence, like that of many other countries, is reliant on the US.  The abilities of the US to perform this role will diminish in relative terms, all the more so if the pro-growth policies followed by the Trump administration are replaced by a return to the Obama era’s focus on social welfare, virtue signalling and the appeasement of rogue and aggressive states.

This entry was posted in Economics and economy, Federal Politics. Bookmark the permalink.

13 Responses to Australia’s chronic economic underperformance

  1. Dr Fred Lenin

    The answer to Australias problems is lack of a patriotic government ,we havent had a real government since the voters were conned into voting for the incompetent fool rudd,followed by the communist incompetent giliard ,then the Abbot DLP who were overwhelmed by their own incompetence finally the complete incompetent perpetual loser turnbull . Its a sad moment for Australia when the best we can do for a PM/ is morrison or shorten . Politics is now a nest of incompetent leftists in all parties time it was eliminated and a more democratic system imposed this one is beyond repair .

  2. stackja

    Voters keep electing ALP, thinking they’re different to those of past.

  3. Pete of Perth

    My first conference call for 2019 this morning. Sitting in the room I spied small cards on the table suggesting that the user should acknowledge the traditional owners at the start. We have a Dept. Dedicated to the stone Age and da diversity. Canberra needs to be struck by a large meteor to sort things out.

  4. Mr Kates goes on about it all the time;
    productive GDP is a turbocharger,
    unproductive GDP (basically Wayne Swan) is a governor on productive GDP.

  5. The A.D.

    Australians, like most of the west, are lazy, stupid entitled donkeys only interested in getting their fat hides tattooed, sticking various items up their arses and gobbling down copious amounts of drugs, alcohol and fast food.
    If cornered and forced into actual labour, from their very earliest school days until they cark it, they do the least amount possible.
    The story of the last fifty years is the transfer of technology from decadent lazy swine to peoples prepared to work.
    It all starts in the homes and schools with a culture of degeneracy and proud stupidity.

  6. Bruce of Newcastle

    It was notable that for a long time 7 or so of the Chinese Politburo Standing Committee were engineers. I think that is reflected in the commitment to infrastructure and industry in the last couple of decades.

    By contrast most of our politicians seem to be lawyers or political apparatchiks of some kind. Thus they have little real world experience and few analytical skills to draw upon to comprehend the fallaciousness of the many political fads that are so damaging our country.

    I very much dislike the Chinese CP but our lot are rapidly becoming as totalitarian as their lot, but without the smarts.

  7. Squirrel

    A wise political leader (send out a search party) would have responded to the climate change alarmists by asking hard, practical questions about how Australia’s economy will cope, and how we will pay our way in the world, if, for instance, coal truly does become a “stranded asset”.

    Such a leader would have demanded answers which go beyond the usual blather about focusing on “clean, green, high-skilled jobs” – that would have very quickly highlighted how precarious our situation is, and how our only strategy is to hope for the best. With persistence, it might have caused people to face up to the facts. It’s not too late to do this, and some of those who are likely to be in Opposition by the middle of the year could do worse than pursuing such a line against a new Government of climate change crusaders and virtue-signallers.

  8. Win

    The reason Australians buy Chinese produxcts because they are cheaper than the Australian products loaded and handicapped with regulations taxes and garrotted by the Trade Unions.
    We hear of Chinese billionaires bringing their work force on trips to Australia we’ll once Australian businesses could do the same un till we were priced out of the market place by Keatings and Ganauts flat earth economic policies.

  9. Win

    That is small Australian businesses .the difference between. China and Australian businesses are the Chinese owners are billionaires and Australians are very ordinary man in them he street now bankrupt.

  10. DaveR

    Wasteful spending, pandering to political fantasies…..

    $25b for unused desalination plants is a key example. How much necessary priority infrastructure could that have sum have built?

    Until Australians analyse the these national-scale errors and identify the reasons they occurred, we will not learn and will make the same mistakes all over again – eg wind and solar energy.

  11. struth

    Pressures generatong these policy misdirections are becoming more prominent.

    All down to subservience to the socialist UN by the socialists who have wrecked our institutions.

    We must get past whining about the outcomes specific, and get to the root cause and eliminate it.

    For example, it’s no good arguing about the science or lack thereof of the warmists regarding the climate, with them.
    Once you understand the root cause and the attack on the west, you’d realise how stupid you are being.
    It’s futile.
    We must understand how this is all driven by a deep hatred of the west and to kill it by any means possible.
    Truth is not even considered.
    We never fight understanding our enemy and it’s very real insanity.

  12. max

    Murray Rothbard : 
    “It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a “dismal science.” But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.”

    Why should we learn economics

    “knowledge is power”

    All the great issues of present-day political controversies are economic.

    If you do not understand the logic of an economic argument, you are vulnerable to economic forecasters who also do not understand economics. Jesus called this the blind leading the blind into the ditch.

    The bottom line is that an understanding of economic would prevent us from falling easy prey to charlatans, hustlers and quacks.

    this 2 easy books you can find online for free:
    Henry Hazlitt Economics in One Lesson
    Thomas Sowell Basic Economics

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.