Countries concerned about employment (and which country isn't) need to think more intelligently about how employment is generated. For some reason, modern democratic governments seem not to understand that at core, employment comes from the successful establishment and growth of enterprises. Putting more people on the public payroll, or welfare doesn't improve GDP or tax revenues - it just provides another way to spend the money. You need to build successful companies to generate growth, tax revenue and export earnings that can support all the rest.

It seems obvious that encouraging enterprises to establish and grow is the foundation for a healthy economy. Yet in countries like USA and Australia very little is done to foster that growth.

Governments should look at Germany's "Mittelstand" sector - small to medium sized enterprises that seek to achieve a world leading position in narrowly defined niches, where they can compete. The Mittelstand sector in Germany is thriving and competing very effectively in world markets. It is one of the main foundations for the strength of the German economy. And there are similar examples in Japan, Taiwan, South Korea and so on.

There are areas where Australia is a world leader. In mining technology, mining and petroleum support services, in some areas of agriculture. And even in high tech - look at CSL and Cochlear which are world leaders in their fields.

Continued in second post.

What can a government do to encourage such businesses? Here are a few thoughts.

1. Support the right kind of R&D, focussed on technology to address real needs.
2. Make it much easier to establish and grow businesses. Dramatically reduce red and green tape. Reduce the administrative burden and costs imposed by government at Federal, State and Local levels.
3. Reduce (or even eliminate) corporate taxes, payroll taxes and similar burdens that suppress/depress enterprise.
4. Encourage investors with sensible tax incentives to make it easier for serious players to secure capital.
5. Modify the education system in ways that can help. Include classes on entrepreneurship, business competitiveness, technology, world markets. Study examples of success.
6. Ease industrial relations restrictions/blocks.
7. Encourage and assist businesses to compete internationally.
8. Assist companies to research world markets, and particularly to study niches where Australian enterprises might be able to compete.

Clearly, there is a need for a regulatory system to ensure that abuses of the system are minimised. But that can be done