Alchemist, Fred isn't a life-time academic, but a former Commonwealth department head involved in economic policy development at a high level for many years.

Fred, you wrote in your response "Why not take a few small steps towards the Nordic model e.g. adopt their ideas on training, education, active labour market programs, work-to-welfare incentives and early childhood intervention policies? The American way isn’t the only way." I don't have info on what the Nordic countries do, but in general active labour programs seem to have little success, a poor benefit-cost ratio. Education reforms and wtw incentives are under considerstion here, if moving far too slowly. I agree that one of the most effective areas for intervention is in early childhood, particularly in disdvantaged/dysfunctional families. This is in fact an area where America leads, in terms of having tried and empirically tested many models - there's an enormous US literature on this topic. James Heckman is a good starting point. Part of the economic interest in the US comes from human capital aspects of endogenous growth theory.

Geoff,

I have some bad news for you. Although the federal government has achieved a budget surplus for some years, our balance of payments deficit continues to balloon to the point that our net foreign debt is approaching $500 billion. The reaction of the media to this is that it doesn't want to know, and only mentions the balance of trade (which is also in massive deficit), except for one or two references a year. The real meaning of this is that Australia is living very much beyond its means, and when the day comes that the debt is called in, there will be a major crisis, similar to what happened in Argentina. This has happened twice before in our history, in 1893 and 1932, when the federal government defaulted on its bonds. This crisis will result in a marked decline in the living standard of average Australians, but the internationally competitive sector will be able to maintain their standard, leading to a much greater gap bewteen rich and poor.

Plerdseus is right.$500 billion is more than half our GDP.This is $50,000.oo for every working person.Our balance of payments will continue to accelerate as China and India take not only our manufacturing but IT jobs also.Once the knowledge and skills are gone,it will take decades to catch up,if ever, when we realise our folly.

Why not choose industries to compete in and make the playing field truly level.Presently it is like pitching a Dolphin against Ian Thorpe and saying compete you laggard.

There's not much to argue about with your statistical models, Fred.
The consequent value judgements are,of course, another matter entirely. They can only be subjective, political assessments.
My particular slant is that government is a necessary evil; more evil than necessary though. Accordingly, the less they touch the better off we all are in my own peculiar estimation. I see redistribution as larceny; unforgivable under almost any circumstances. A dollar once filtered through the social kidney of a government is irretrievably corrupted and forever diminished. In turn it contaminates everything and everyone it touches..

What are the immediate moral consequences and longterm economic results of causing people to believe that 'redistribution' is not just acceptable but morally good?

The (very visible) dead hand very clearly gains the upper position.

So, as a matter of sociobiological health we move towards a US model based on pitting everyone against each other in socio-economic competition. Is it right or good? Who cares? At least we're not demonstrating to our kids that they might be OK going into this world with the expectation that it will feed and nurture them even if they are silly enough to choose the wrong job, wrong industry, wrong country...

Have a happy week.

Alf.

How is it that the $ is the value being used to judge the success of governments and societies? Money is simply an idea that humans use to value exchanges. It is the quality of our lives that is the real measure and to that end our government is a failure.

Yet somehow that $ has become the focus rather than the items exchanged.

Surplus budgets really only prove one thing don't they? That governments are spending less than we are being taxed. In other words by over taxing. No more, no less.

The US basic wage is a great deal less then ours. Wal-mart is currently being targeted by the left as a cruel low paying employer while the right is saying the wal-mart over pays. Do we really want to follow the US down that road. Surely there is another way. Great piece Fred.