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whither Australia? « Previous | |Next »
May 12, 2009

The full implications of the current global financial and economic crisis are hard to assess at the present conjuncture, whether in relation to Australia's economy, or with regard to wider political dynamics at the level of the nation state or globally. The range of responses that can be made were explored at the Progressive Governance Conference and Summit in Chile late March 2009

Internationally, the governance task is to devise a more equitable and sustainable system for international cooperation, regulation and intervention which addresses the diverse needs of industrialised, developing and the least developed nations, as well as the emergence of a global society exposed to common risks. Climate change makes that difficult.

Domestically, the response is about rethinking a modern role for the nation state in shaping a more stable economy which combines economic dynamism and growth with a more equal distribution of wealth and life-chances. This requires a critical but forward-looking debate on the issues and options available for reform.The global crisis has led to growing calls for the state to be a more prominent facilitator of growth, by spending on public works and/or by providing incentives for new “green” industries.

Robert Reich makes a useful distinction in his contribution to the conference:

Those who support the economic stimulus as a desperate measure to arrest the downward plunge in the business cycle might be called cyclists. Others, including me, see the stimulus as the first step toward addressing the economy’s deep structural flaws. We are the structuralists. These two camps are united behind the current stimulus, but may not be for long. Cyclists blame the current crisis on a speculative bubble that threw the economy’s self-regulating mechanisms out of whack. They say that we can avoid future downturns if the Federal Reserve Board pops bubbles earlier by raising interest rates when speculation heats up. For structuralists, however, the stimulus is but a first step towards a more sustainable economy.

This reform current to a more sustainable economy appears to have weakened in Australia. What we have is an economic nationalism that props up old industries amidst the rising levels of unemployment and distress.

| Posted by Gary Sauer-Thompson at 1:52 PM |