Good morning all,

@Ludwig, thanks for your comments on donors. Agree mostly.

Thanks also for the immigration input. Will continue to read and ponder this. You have certainly raised pertinent questions.

Re: “We are forever struggling to build ‘much-needed’ infrastructure and improve services. No matter how much effort goes into this over the years, the need remains.”

Yes and no, Ludwig. Infrastructure and services provide jobs, apprenticeships, incomes, profits and add to the national estate. All good?

Re: “If we were to head towards a stable population, we would be able to divert a great deal of this effort from duplicating I&S for evermore people into improving it for the existing population.”

No problem with this, Ludwig. But the world is a long way from population stability. Meanwhile, Australia can accept migrants and appears to be doing so beneficially.

Re: “We need an ever-greater rate of mineral exploitation, agricultural produce and all the other resources, just to stand still in terms of average per-capita provisions ...”

Yes, understand zero-growth, Ludwig, and am generally supportive. But the doomsday prophecies of the 60s have not been realised.

Re: “The carbon tax/ETS, is supposed to reduce our greenhouse gas emissions. But even if it is successful in lowering the average per-person output, the increasing number of people in this country would considerably lessen this gain, or cancel it out ...”

Carbon emissions is a global issue. Yes, lower population will lower emissions. But Australia taking more migrants won’t change the total global population, will it?

Happy to discuss further, Ludwig.

@Yabby, re: “Some of his [Murdoch’s] journalists, including some of his Australian journalists, do in fact publish informed comment.”

Correct. Herein lies the problem. Much of Professor Ergas’ work is informed and instructive. But much is distorted, manipulative and false.

The problem is telling which is which.

Re: “the Australian economy is … quite unbalanced, with a continuing current account deficit, meaning we borrow more and more each month to bankroll our lifestyle, unlike healthy economies.”

Hmmm. Depends.

Which nations do you regard as having “healthy economies”, Yabby?

More soon …

Cheers,

Alan

Alan,

Caught you lying again, The Leveson enquiry did not conclude that Newscorp employees routinely fabricate facts and figures.

However, it is plain that you do.

Greetings,

@Rhian, re trade with China. Some challenges here.

To assert exports to China rescued Australia we need more than simultaneity, don't we?

Did nations with second, third and fourth highest levels of trade with China fare second, third and fourth best through the GFC? Is there any such correlation?

What's so magical about China, Rhian? Or iron ore?

Would vast exports of other commodities in strong demand to another nation work just as well? Mexico and Canada export 78% and 74.5% respectively of all exports to the USA.

Both suffered badly through the GFC.

Re: “So now you shift the goalposts again, introducing Taiwan and South Korea as comparators. Taiwan did indeed suffer a contraction in GDP when the GFC hit, of 1.8%, but its economy rebounded with 10.8% growth in 2010, hardly a ‘disaster’.”

Yes and no. We must consider both the experience during the GFC’s onset – 2008 to 2010 – and the later phase – 2011 to now. Clearly some did well at first, but fared poorly later. Others, the reverse. Some fared badly both ends. Only one developed nation did well throughout.

South Korea is in the second category. Taiwan the third.

Re: “Your use of debt data in national currencies was clearly selected to imply Australia’s debt was comparatively small.”

Correct. As was using billions rather than millions.

Re: “The data are meaningless, as you concede.”

Correct. As was EQ’s data. That was the point.

Re: “Have you not followed the anguished debates on the negative effects of high and rising debt in Japan and the USA?”

Aware of the discussions, Rhian. But Japan has decided net debt will expand each year until 2018 to 154.8% of GDP [IMF projections]. The USA will expand net debt next year to 89.67%, then reduce it marginally to 86.57% by 2018.

Puts Australia’s 12.66% now, projected at 5.61% in 2018, in perspective, doesn’t it, Rhian?

Re: “Do you accept you are wrong to allege that Henry Ergas’s statements about structural deficits were ‘untrue’?”

Not at all. All criticisms were validated. Nothing since has disturbed that.

Cheers,

Alan

Alan, when it comes to globally competitive economies, countries like Switzerland and Singapore runs rings around us, despite having no natural resources. Luckily for the Swiss, they also rejected joining the EU dinosaur, when they voted. In the latest global competitive index, we rate about 134 when it comes to labour market regulation. No wonder we can't compete globally and are bankrolled by international investors, to pay our bills.

Only "some" of your friends read "The Australian"? I presume that the rest of them read 'The Green Left Weekly"?

Honestly, Alan, you should be more particular when choosing friends. Those still inhabiting the cloistered halls of academia are in a time warp.

Alan
Unlike you, I hold no single factor responsible for Australia’s economic growth since 2007. China, commodities, lack of exposure to the toxic derivatives behind the US financial crisis, a relatively well-regulated financial system, a strong starting fiscal position and, yes, economic stimulus, all contributed.

So a country with strong exposure to China but also large exposure to US derivatives market would not have escaped recession, but that does not mean that China was unimportant. To expect China alone (or anything else) to completely explain relative economic growth, as you propose, is facile. No economic story is ever that simple. There is obviously a strong correlation, though, as your own data demonstrate.

China’s importance to Australia is not only in iron ore, but also coal, gas, and agriculture. It is not only in exports, but also the increase in mining investment in recent years. Australian exports to China rose from $23.8 billion to $73 billion between 2007 and 2012 – that’s 207%, or 25% a year. Investment in the mining sector rose from $26.1b to $94.5b, (261%, or 29% a year). These two factors alone accounted for more than 30% of nominal GDP growth over this period, before one even considers spillover effects in the construction, fabrication, manufacturing and service industries. If Canada or Mexico had enjoyed similar growth in their major export market, I’d expect them to escape recession too.

Australia did not do well throughout the past 5 years. Its per capita GDP contracted in 2009, coincidentally by exactly the same amount (0.16%) as Korea. In three of the other four years, Korea’s per capita growth exceeded Australia’s

Re debt, I accept that net debt relative to GDP is a better measure of fiscal position than the dollar value of gross debt. But EQ’s data are not meaningless – they show time series growth in a consistent metric that allows comparisons over time in a measure comprehensible to their audience. Yours don’t.

Re Henry Ergas – do you actually understand that the structural deficits he referred to are not the budget data you linked to?