Nailed it in one Ben!
We went from a model that created unprecedented general prosperity to one that clearly didn't!
And in the process set in train an economic vehicle with one only, possible destination.
The GFC, or worst economic crisis since the Great Depression.
And given we retain this fundamentally flawed focus on supply, seem to have made ourselves completely dependent on foreign capital?
That unfortunately seems always to include problematic operators, who strip away once only assets/value/wealth, and destroy iconic industries?
Then having done so, move on look for new more palatable victims.
The tiny teeny NBN is already creating more real wealth for Australians, than the entire iron ore industry!
We who once owned all cash cow essential service, a bank, a telco, an airline, with the world's most enviable reputation; and were once the third wealthiest nation on earth; and a creditor one at that!
Have descended to where we were around number 30 the time the GFC kicked in. And as nothing to write hone about, have just not risen, but have been passed by others sinking far further!
And to give credit where credit was due, were saved by the mineral boom and extremely healthy trade with a booming China!
Who seems to have based their extraordinary growth, on largely Keynesian economic policy/principles.
Pragmatism should tell us if it ain't broke don't fix it!
And if it is, throw it out and return to the tried and not found wanting model; and or, something new and visionary, if only to win back our economic sovereignty and complete/real independence!
Rhrosty.

The author overlooks one crucial point about the abandonment of old-style Keynesian demand management in the 1970s. The theory was not supported by the evidence.

Demand-side management was based on the assumptions of the Phillips Curve – that there is a trade-off between unemployment and inflation. Policy makers could achieve a lower unemployment rate if they expanded demand, but the price would be somewhat higher inflation.

This theory was blown out of the water by the “stagflation” of the 1970s, when Australia and many other economies recorded high and rising levels of both inflation and unemployment.

Friedman’s insight was that workers and employers take into account expected inflation when negotiating wages. If inflation is expected to be high, wages demands will be set at a level that matches or exceeds expected inflation to maintain the “real” value of wages. So there may be a short-run trade-off between inflation and unemployment, but in the longer term, inflationary expectations adjust.

Abandoning Keynesianism was not a sign of moral turpitude, but recognition that the theory did not fit the facts. Striving to reduce unemployment by expanding demand is futile and economically destructive.

Incidentally, monetarism in the sense of controlling the growth of the money supply was only briefly in vogue and is no longer advocated by any central bank.

It's time for change.

The stagflation of the seventies was a direct result of jettisoning the gold standard.
Followed closely by fundamentally flawed Thatcherism and Reganism, and already disgraced trickle down theory.
Rather than creating and spreading wealth, this model just concentrated more and more of our finite wealth in fewer and fewer hands; thereby guaranteeing the subsequent GFC!
Simply put, we cannot build wealth with ever increasing debt levels!
None higher than current foreign debt, that is reportedly as large as China's foreign reserves, four odd trillion!
What gives anyone the idea, we can pay this money back!?
Instead, after servicing it with premium prices all over the place; we seem to be asking for more of it as foreign debt, merely masquerading as foreign capital.
Not only that, but most of this money comes replete with foreign operators, repatriated profits, and quite massive tax avoidance!?
For we Australians, that's just more of the same insane lose lose, mad hatter's tea party politics, or an economy that is run the way the inmates would run the asylum?
Probably the place that created impressively sounding terms like a patently meaningless Philip's curve. Or should that read, hockey stick.
Growing unemployment coupled to increasing inflation, is just not possible when simple pragmatism replaces all the flawed theory currently in vogue!
If these people like their theories so much, let them accept personal responsibility for outcomes, like the current foreign debt!
Or the current record domestic debt.
Made worse by equally asinine policies that allow foreigners to speculate in our real estate market!
Where were these people when Spain and or Ireland went to the wall?
Out buying up as much real estate as their privileged political positions, high salaries would allow?
And then we wonder why we seem to be experiencing a housing bubble, or try to understand why we are the only nation on earth with obtuse negative gearing!
The real reason why we now have the highest median house prices in the english speaking world!?
And some want more of the same?
Unbelievable!
Rhrosty.

Rhosty

Australia abandoned the gold standard in 1932. It is a very long bow to blame this for stagflation in the 1970s.

Thatcher was elected in 1979, and Reagan in 1980. Again, a bit hard to blame them for what happened in the early and mid 1970s. Thatcherism and Reaganism were reactions to stagflation, not its causes.

Wealth is not finite. In 1970, the estimated total wealth of Australian households was $104 billion. By 1999, it was $2,254.3 billion.
http://piketty.pse.ens.fr/files/capitalisback/CountryData/Australia/Other/TreasuryWealthSeries/1960-2007.pdf

More recent estimates from the ABS show real average household wealth increasing from $585,264 to $728,139 between 2003-04 and 2011-12

Australia’s net foreign debt is $858,896, or about 55% of GDP. This is more than it should be, but by international standards is pretty modest.
http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/5302.0Mar%202014?OpenDocument

Australia’s net foreign debt is $858,896, or about 55% of GDP. This is more than it should be, but by international standards is pretty modest.
Rhian,
Wow ! Are there any countries that don't have a debt ? Is the whole world in debt & to whom ? Where is that money ?
Ah, I know the money is tied up in incompetence, inefficiency & social services, failed education, a health bureaucracy in tatters & quite a lot is in the futility of defence.