A J Philips wrote "Balance is what's needed. Dreaming of a socialist utopia is no more absurd than dreaming of a capitalist utopia." Very true, only left-wing fanatics dream of the former, I don't know of anyone who envisages the later, as opposed to a basically free market approach in a mixed economy but with a much smaller government. Some years ago I read many studies which found that economic growth was fastest when government constituted around 22% of the economy, rather than the 40-45% which is more typical.

Of course, economic growth isn't an end in itself. It needs to be a major focus in economies where people live in poverty and disease, at least until the stage where reasonably comfortable survival is assured and people can focus on other goals, such as spiritual development. But trying, as I do, to promote policies which make the best use of our resources without favouring vested interests opposed to change for selfish reasons, or arguing that if we are going to incur costs to reduce greenhouse gas emissions, we should adopt measures with the highest benefit-cost ratios, does not prevent anyone from pursuing spiritual development, from contributing to society, from being unselfish. I proudly wear the badge "economic rationalist", and for 30 years voluntarily helped people practise Vipassana meditation (giving up because of serious illness which affected both my own practice and my ability to serve). I regard honesty and integrity as far more important than further economic growth in an affluent society (or a non-affluent one), but that doesn't make economic growth a non-option. And I think the pro-liberty policies which underpin free markets are also most conducive to self-reliance, self-realisation and dissolution of ego.

And, no, I neither have nor want a big house, plasma tv or luxury car

Faustino, I guess my question to economists such as yourself is what do you see as the problem with Australia aiming towards a most socialist type economy, as per many Northern European economies? Almost all of them are doing exceedingly well on both economic and social indicators, yet have much stronger government involvement in the economy, and high levels of labor market regulation (though more typically through collective bargaining rather than legislation).
Ultimately I believe the level to which the government intervenes in the free market to assist with wealth distribution and supports services that benefit us all is best left to democracy – and generally, polls in Australia indicate that the bulk of population do want to see more government spending on services, and do expect that pay and workplace conditions get legal protection. Looking at a country like the U.S., where government spending on services (other than the military) is minimal, and employment arrangements are largely left in the hands of the employers, it’s hard not to disagree with them.
I've read quite strong arguments for both conservative and progressive economic policy, though the conservative ones appear to me more based around ideology rather than actual evidence (indeed I’ve read more than one commentator state that it doesn’t matter what the outcome is, it’s the achievement of liberty that matters). In most cases I fully agree with the ideological principles of liberty and individual responsibility, but they can’t be considered in a vacuum (and further, most conservative governments seem to only apply that ideology to economic issues – when it comes to personal decisions on marriage or abortion or euthanasia or drugs, they’re all to happy to be interventionist and paternalistic, apparently assuming individuals aren’t capable of rational self-determination in such areas).

WoA,

You asked: "how much has really changed since 100 years ago, when employers routinely exploited employees under conditions that today would most would consider shocking, and what happens when the next recession hits and it becomes an employer's market again?"

I hope you're not seriously asking this question. Even in it's most stripped down form, Workchoices provided significantly more protection than 100 years ago. But that's not really the point, is it: We have a situation in this country where a mining boom will provide jobs and growth for decades. It's not realistic to be imagining us to be fighting on the wharves for scant jobs - other things will change long before the end of the mining boom.

And then you say "Faustino, I guess my question to economists such as yourself is what do you see as the problem with Australia aiming towards a most socialist type economy, as per many Northern European economies"

http://www.brusselsjournal.com/node/510

This is the myth about the Scandinavian economies. It is not all peaches and cream. If you want Australia to have the brain drain caused by those tax rates, suicide rats going up and up and so on... Well perhaps we have different ideas of what Aus should become.

The evidence is that socialism doesn’t deliver, free markets and free trade do – higher living standards, more opportunities, more employment, more freedom, more scope for innovative, entrepreneurial behaviour. Evidence that some Scandinavian economies have at times done well with a high government share of GDP doesn’t invalidate that, there may be culture/country-specific factors at work, they might have done better with a bigger private sector.

In my experience, a very high proportion of government spending is inefficient and ineffective, and not driven by concern for people’s welfare. Keating and Howard, for example, both spent excessively to lock-in support from particular segments of voters. In general, governments and bureaucrats seek to cultivate dependency rather than independence, because it strengthens their position. I don’t think that this in anyone’s interests, I believe that the welfare of each individual is enhanced by development of self-reliance and responsibility, and governments undermine that. A small-government approach is not only economically effective, it is also conducive to the well-being of individuals.

I think the greatest good for each individual, and for society, comes from spiritual development; and that’s something which takes place within each individual; governments but rarely provide an environment in which it’s easier for people to develop self-awareness, wisdom, I think it’s easier with less government, more self-reliance.

I grew up very trusting of authority, but gradually found that those in authority were, in general, either ignorant or not focussed on community welfare. I’ve worked for the UK, Australian and Queensland governments. I did find good ministers and officials in the first two, very few in Queensland; but the most disinterested tend to be seen as a threat by those with more selfish goals, and rarely carry the day.

Re democracy, of course governments reflect society, to get better government and a better society (with higher levels of honesty, trust, compassion etc) we need genuine leaders, people with insight who can help others to develop insight, but these are few and far between. I’d give Bob Hawke some credit here, in spite of his massive ego.

Not too coherent, perhaps; at word limit.

BN, I wonder about your assumption that we won’t be fighting over scant jobs at some time in the near future – there are a large number of factors looming on the horizon that combined could potentially result in a significant levels of economic downturn within the next 5 or so years.
Asking “how much has really changed” is a very serious question – it’s a question about human nature. I’m not suggesting that WorkChoices is less protection than we had 100 years ago, just questioning the idea that we shouldn’t really need much protection because employers all know that it’s good business sense to treat employees well. Good employers knew this 100 years ago, but they clearly were thin on the ground.

No, of course not all is peaches & cream in Scandinavia. But I’ve never read anything about those countries that have made me think “gosh I’m glad I don’t live there” (other than perhaps the weather). And yet I seem to read such things on a weekly basis about the US (my wife grew up there and feels the same way). Where is your evidence that the suicide rate in Scandinavia is high and climbing? And how does it compare to similar cold climate countries with long, dark, depressing winters?

I’m not suggesting Australia should try to turn itself into Finland or Denmark, but it does seem that many of the more serious problems we have could be best addressed by improving government funding for public services. If this can be done without raising taxes, fantastic, but if not, then I don’t believe the majority of Australians would feel their liberty or sense of personal responsibility had been substantially encroached upon were we to look at increasing tax revenue, provided of course we could see that the money was being spent well.

Faustino, “socialism doesn’t deliver, free markets/ trade do” is a false dichotomy. The Nordic countries are still market-based economies, but have stronger social spending than we have here. I’d like to see evidence that increasing social spending in Australia would have a detrimental effect.

"Free" market.

Thats funny.