…by bad mouthing Australia. It has been a while since I have read such an ill-informed piece of diatribe as the ABC’s Stephen Long’s piece about Australia’s ‘dumb luck’.
…the Treasurer, the Treasury and the Reserve Bank were set up for success by a wave of pure, dumb luck: a litany of lucky breaks and historical accidents that allowed Australia to – by and large – avoid the financial crisis.
This is the Donald Horne thesis about Australia as the ‘lucky country’. All our economic successes are down to luck. This thesis has been widely discredited in economic history circles, yet the left keep rolling it out as a way of undermining national pride – which they hate.
The main problems with this thesis are that it completely ignores the high level of scientific, engineering and managerial skill and innovation required to run massive mining and agricultural operations and the political skill required to forge trading links with other countries to sell those products.
Secondly, there are many other countries in the world that have similar factor endowments as Australia yet remain complete basket cases - South and Central America ring a bell (Chile and Costa Rica possible exceptions)? So much for it all being about luck. Success requires laws and institutions that ensure property rights, etc… Readers should note that unlike in Argentina, no Australian Federal, State or Colonial government has ever defaulted on its debt and no Australian in the last 100 years has lost their bank deposit, despite the absence of a US style FDIC deposit insurance scheme. So that says something positive about our financial dealings that the ABC would like to ignore.
Thirdly, it is hypocritical and cynical of the political left to keep harping on about Australia’s economic luck. It implies that politicians and government are mostly inept. Yet the political left want more government control and regulation. So where does that leave them on the role of government? Stuck, that’s where.
The substance of Stephen Long’s article seems to be based on what-if scenarios not on historical and current economic realities. Living in this type of fantasy land is unsurprising given that Santa is just round the corner. If the facts don’t fit the thesis, just make the facts up.