Published 20 March 2012
Blogger Delusional Economics suggested in a 3-part series run on the MacroBusiness website over the past week that Australia needed to have a more mature conversation about the structure of its economy to set the agenda for the future.
In his first article, on 13 March, Delusional Economics wrote: “For some reason this country appears to be unable to have an adult conversation about what is actually happening in the economy. The government refuses to acknowledge the structural weaknesses, preferring to blame the mining sector, while the media stands by with flaccid analysis of the major issue. The major structural issue with the economy is that for the last 2 decades fiscal policy has been used to steer national income towards housing.”
In the second article, he wrote about balance of payments data.
In the third article, he wrote that the government push for surplus was putting downward pressure on national income, while the private sector was attempting to push its balance sheet towards more saving: “This is leading to a fall in government income via consumption-related taxation, and so, every couple of months Wayne Swan has to re-inform the public that yet another couple of billion has suddenly disappeared from the government coffers. Lately he has been using the excuse that ‘mining boom II isn’t the rivers of gold of boom I’.
“As you may now understand, that is nothing like a valid explanation of what is happening in the economy.”
The argument is relevant to New Zealand: If Australia does have this mature conversation, its economy ought to be restructured and then pick up more strongly than if it continues its haphazard course, which would be to the economic advantage of New Zealand while also probably pushing Australia ahead of New Zealand. And if Australia doesn’t restructure, the poor performance will be reflected here while also giving a potentially more independent New Zealand the opportunity to catch up with its neighbor.
Want to comment? Go to the forum.
Attribution: MacroBusiness, story written by Bob Dey for the Bob Dey Property Report.