The reason the direst predictions of Limits to Growth were never realised is because the warning was heeded -- industry became less resource-intensive and economic growth became decoupled from growth in consumption of raw materials. Productivity of laour and resources was intensified.

This was the direct cause of the commodities slump which began in the mid-1970s.

Right now, China (with some other countries) is in a similar position as the big manufacturing economies (the USA, Japan, Germany) were in in the late 1960s -- except that in China today the greatest limit to growth is the saturation of the local environment with pollutants and the rapid decline in usable agricultural land, rather than the exhaustion of raw materials.

China is well aware of the risks it faces. Either it will change the focus of its investment from the fastest and cheapest possible growth to cleaner production and more efficient utilisation of resources, or it will hit the wall with a sickening crunch.

Whichever happens, consumption of raw resources such as those Australia exports is going to decline, either soon and slowly or later and very fast indeed.

Australian investors would do well to anticipate this, for instance by investing directly in clean and efficient technology in China.

The current Establishment seems to think the Asian miracle economies are like a sun in which Australia basks. They could also be a death star that sucks in all our vitality leaving us vulnerable. Most commentators say the Chinese economy has too much momentum to ever implode, it will only slow down. However this European Tribune article http://www.eurotrib.com/story/2007/5/13/105158/220 suggests that China will have coal shortages as early as 2009. That would put the Rudd government in the excruciating position of wanting to prop them up with more coal shipments the same time as talking up climate action.

I'd guess that along the way the Asian middle classes will have a bit more, the Western middle classes a bit less and as always the really poor miss out altogether.

" I don't want to be alarmist " says the author, yet this (and pretty much all his previous articles) reveal that's exactly what he wants.

Yes the commodities boom is good for Australia. No, it won't last forever. But the prophets of doom who foresee resource depletion causing economic collpase will be wrong this time, as the "limits to growth" crowd, Ehrlich, Malthus and most of their other predecessors were wrong.

We are the lucky country. Lucky there is only one John Howard (well political anyway). And lucky that time has worn him down. His current mental condition is obviously deteriorating but no one behind him has the guts to say it. I do.

Australia has now become what was known in colonial times as the quarry economy, in which almost total reliance was on pitstock limited resources that will eventually run out.

As one formerly proud of our achievements in techological innovation, particularly related to agriculture, it is depressing to note most of our machinery needs now purchased overseas, with much money also spent on mining infrustructure which is really only temporary.

Also because we now purchase most of our machinery and techo- hardware from overseas we now have an overseas trading debt so large we have the IMF carefully watching our economy.

With the amount of money we are making out of our pitstock resources it is believed we should be bolstering our local manufacturing capacities better now than ever.

Errr... Taswegian, if that document about Chinese "peak coal" is right, all my optimistic guesstimates about opportunities to switch to renewable energies are waaaay out.

If it's correct...

The world economy *is* about to run out of energy. Suddenly and painfully. Solar, wind and nuclear power are but three drops in the ocean today, and if the coal is to be gone in twenty years or less they will not grow fast enough to replace it.

Global warming will be a smaller problem than I had feared: if fossil fuel is *gone*, we will be stopped from burning it by force. Perhaps not quite soon enough to prevent some of the 'tipping point' feedbacks like thawing tundra, but the (huge) human problems of (geologically minor) climate change will be trivial compared with the cold, the hunger and the land-clearing resulting from the energy famine: remember biofuels compete with food crops.

There won't time for market-based approaches to gradually replace fossil-fuel infrastructure with renewable electricity generation, and convert transportation to electricity or hydrogen. All those shiny new steam turbines will be burning green wood in 20 years, then they will sit idle in a barren plain.

I hope it's wrong. I really do. I hoped enough people amongst the Chinese government had their materialist heads screwed on straight to avoid disaster (although I knew enough of them were twisted that they carry on persecuting religious minorities).

Maybe I was wrong. Maybe the coal is almost gone.

I am now very afraid.