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Author: Subject: Australia is rich, dumb and getting dumber
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[*] posted on 9-10-2019 at 12:59 PM
Australia is rich, dumb and getting dumber

Bangladesh, Cuba, Iran, Mali and Turkmenistan share an unexpected connection to Australia, and it isn't membership of a tourist destination hot list.

All are among the economies that are so lacking in complexity, and have such limited natural opportunities to develop new products, that Harvard University recommends they adopt industrial policy straight out of the post-colonial developing world: the "strategic bets" approach.

The advice comes from the Harvard Kennedy School's Center for International Development, which two weeks ago launched an online database of 133 economies that combines remarkably rich data with beautiful presentation.

Designed to map, literally, the economic progress and opportunities of the industrial and non-industrial world, the Atlas of Economic Complexity exposes an under-appreciated truth about Australia.

The enormous wealth generated by iron ore, coal, oil and gas masks, and probably contributes to, an economy that has failed to develop the industries needed to sustain its position among the top ranks of the developed world.

Put simply, Australia is rich and dumb, and getting dumber.

On the primary metric used in the database, an index of economic complexity, Australia fell from 57th to 93rd from 1995 to 2017, a decline that is accelerating. Australia's top trading partner, China, rose from 51st to 19th over the same timeframe.

The Australian paradox

The index measures the diversity and sophistication of national exports, based on research by Harvard economist Ricardo Hausmann that finds trade in a globalised world is the path to riches.

The Harvard data exposes the paradox of the Australian economy: the eighth-richest nation in the study has the export profile of Angola.

About 70 per cent of products sold to foreign buyers, on a net basis, are minerals and energy. Add in food, alcohol, wool, tourism and metal products, and the figure rises to around 99 per cent.

Notwithstanding the success of CSL, Atlassian and corporate pioneers, Australia sells the world almost nothing, relative to total exports, that requires a degree to make.

"Australia⁩ is ⁨less complex than expected⁩ for its income level," the study says. "As a result, its economy is projected to grow ⁨slowly.⁩"

As a consequence, the economy will grow 2.2 per cent a year over the coming decade, ranking in the ⁨bottom half⁩ of countries globally, according to the Harvard projections.

Countries can do very well selling a narrow range of simple products. But to become richer – and end the wage-growth malaise that is a frequent political complaint – they need to develop new products. More sophisticated products support higher wages, according to Harvard's Center for International Development.

Innovation deficit

Lulled into inaction by the resources boom, Australia has been appalling at innovation.

In the 15 years to 2017, Singapore – a nation with no natural resources apart from human capital and proximity to big markets – expanded into 19 new global industries that generated $US14.4 billion ($21.3 billion), or $US2560 per resident. They include gas turbines, x-ray machines, synthetic rubber and imitation jewellery.

Over the same period, Australia broke into seven new products in a meaningful way, according to the Harvard database: precious metal ores, ammonia, rare earths, activated carbon, hydrochloric acid, scrap rubber and wax residues.

The value per Australian: $US33.

The most remarkable, and damning, conclusion of the research is that Australia is part of a group of simple economies that should adopt policies that single out specific industries for support.

Countries that many Australians would regard as economic peers, including Japan, Israel and the US, are on the frontier of technology and should be developing products that don't currently exist, it says.

Product proposals

For Australia, the study proposes a couple of dozen exports based on research that suggests, logically, leaps are easier when you manufacture similar products, such as moving from woollen socks to business suits.

The suggestions include serums and vaccines, laboratory reagents, vehicle bodies, butter, frozen vegetables, pig fat, chemical wood pulp and linseed.

So much for innovation nation.

Even if the suggestions are overly pessimistic, they point to Australia's struggle to break into international markets beyond resources and agriculture.

Despite being a preoccupation of both main political parties, industry policy has done little to improve the economy's sophistication.

As the government manages the current downturn, it might muster the courage to remove barriers that make it harder for business to thrive.

After all, surely an advanced economy such as Australia can do better than Senegal, which is one rank higher on Harvard's list?


The darkest hour of Humanity is upon us. The world
shall meet it's end and we shall be submerged into a
new dark age. Repent your sins, for the apocalypse,
and the end, is extremely f@#king nigh!
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[*] posted on 10-10-2019 at 01:43 AM

They aren’t wrong. Our political leaders are fucking luddite imbeciles. Every. Single. One of them.

In a low speed post-merge manoeuvring fight, with a high off-boresight 4th generation missile and Helmet Mounted Display, the Super Hornet will be a very difficult opponent for any current Russian fighter, even the Su-27/30
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[*] posted on 10-12-2019 at 01:26 PM
What is hiding the true position of the Australian economy is people

The Australian economy has been a global standout since the 1990s, but the numbers are starting to paint a worsening picture.

Though Australia has experienced 27 years of economic growth without a recession, the data underpinning that feat is replete with contradictions and the economy is not performing as well as government would have most believe.

Profits are kicking along around 10 per cent annually, the stockmarket is high, there’s a major infrastructure boom visible in our big cities but wage growth is at record lows.

If you look at Australia’s performance among its OECD peers, it looks fairly robust.

We’re performing better than everyone except China, the US and New Zealand, and our growth is double the inflation rate.

But viewed another way, the figures are not nearly as healthy.

On the basis of GDP per head – which measures the output for each person – Australia is the laggard in the same bunch of countries.

Over the year to 2019 Australia has come in last among the same list of countries, which means that while the whole economy grew very nicely, the output per head of population has lagged.

[The GDP per capita figure is bigger for 2018-19 than the current level of GDP growth because last year was a better one for the Australian economy than 2019 has been]

To make sense of the difference in overall growth and per capita growth you need to look at one other factor: The rate of population growth.

What the next chart shows is that since the Liberals took power in 2013, Australia has experienced a far quicker rate of population growth than its major economy peers [except for New Zealand, which is also on a low per capital growth trajectory].

“If you increase the population by 1.5 per cent, then you increase the rate of consumption by that amount and that adds to the GDP without increasing real income per head,” said Nicki Hutley, partner with Deloitte Access Economics.

So if the only thing growing is your population, the growth figures you present to the world are misleading.

“People laugh at Japan because its population has been declining [making the GDP figures look weak],” said Peter Brain, executive director of the National Institute of Economic and Industry Research.

“But if you compare it to Australia, even when we were growing quite strongly, Japan was growing more on a per capita basis than we were.”

All this shows that Australia has been using a “lazy” economic model that relies on immigration to boost the economy rather than using business investment to increase productivity.

“Our strategy over the last decade has been very short term,” said Stephen Anthony, chief economist with Industry Super Australia.

“We’ve got population growth twice the average of most OECD economies and then some.

“It has been a real estate-driven strategy, especially in the major cities.”

That means population growth has spurred property development as an employer but there has been no real emphasis on non-mining investment and skills development.

Rather than training Australians through the TAFE system there has been a reliance on bringing in skilled workers who often get sub-par qualifications aimed at only delivering an Australian visa, Dr Anthony said.

“It’s a tragedy for them and for us.”

Because of a lack of non-mining sector capital investment, there is no way to drive sustainable economic growth.

“Productivity is going backwards,” Ms Hutley said.

“Australia has been through a resource-driven boom in national income without anyone having to do anything and we got a bit slack.

“Mining does bring in a lot of national income, but the money is not going to households.”

That’s because the industry doesn’t employ many people and is heavily foreign owned, she said.

Despite our history of strong population growth, Australia has been underinvesting in the infrastructure necessary to underpin it.

“From 1985 to around 2007 we saved on infrastructure relative to population growth and we’re now paying the price for that,” Dr Brain said.

“While there is a lot of infrastructure investment at the moment, we are just playing catch up and it’s not catering to the current population.”

That lack of infrastructure investment is partly what is undermining productivity improvement and GDP per head.

If you combine a run up in household debt, flatlining wages, falling productivity and investment rates, the end picture is not pleasant.

“We are setting the precedents for a really significant slowdown,” Dr Anthony said.


The darkest hour of Humanity is upon us. The world
shall meet it's end and we shall be submerged into a
new dark age. Repent your sins, for the apocalypse,
and the end, is extremely f@#king nigh!
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