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Thomas Carlyle coined this epithet in 1839 while criticising  Malthus, who warned of what subsequently happened, exploding population.

According to Carlyle his economic theories: "are indeed sufficiently mournful. Dreary, stolid, dismal, without hope for this world or the next" and in 1894 he described economics as: 'quite abject and distressing... dismal science... led by the sacred cause of Black Emancipation.'  The label has stuck ever since.

This 'dismal' reputation has not been helped by repeated economic recessions and a Great Depression, together with continuously erroneous forecasts and contradictory solutions fuelled by opposing theories.  

This article reviews some of those competing paradigms and their effect on the economic progress of Australia.


 

In Australia economic thought took a couple of U-turns last century

For its first one hundred and seventy years the economy of New South Wales (and then Australia as a whole after 1901) was extraordinarily vulnerable to climate and agricultural trade cycles.

 fluctuations

 

Phil Ruthven IBIS: ‘The chart shows Australia’s economic progress over 140 years... ‘The volatility was enormous both before and during the Industrial Age (1865-1964) largely due to weather. Agriculture remained over 15% of our GDP for most of that period…  ‘a 25% fall or more in output would slice 4% off the economy by itself - with a domino effect through the food & fibre input-output chain - causing a recession. We had 27 such years or one every 3-4 years...

 

During the 20th century Australian governments experimented with the full spectrum of government interventions to develop manufacturing; both to reduce our dependency on agriculture and to increase Australia’s military resilience.  To grow and protect manufacturing Australia applied, then abandoned: selective tariffs; publicly owned businesses; and enforced government purchasing preferences.  

Until the start of the 20thcentury the political differences in pre-federation Australia were polarised around the issue of ‘free trade’ verses protection (NSW versus Victoria).

The electoral success of the Australian Labor Party (in 1910) (following the Marxist social analysis in the mid 19thcentury, and English Fabianism) led to a new polarisation around worker’s rights and the socialist alternative to capitalism; retaining a strong protectionist sentiment. With the split in the Labor party, at the start of the ‘Great Depression’, a new ‘United Australia Party’ (in government from 1932 to 1941) formed around ex Labor Treasurer Lyons and Labor splinter groups, together with the older establishment dominated parties (both free traders and protectionists).

Thus by the middle of the century, both major parties had elements combining the older protectionist movements, as well as elements supporting socialism and public ownership. Protection and government owned enterprise became an accepted reality on both sides of politics, reinforced by industrial mobilisation during two world wars.

By the mid 1960’s, under the protection of import tariffs and direct government involvement in economic production, manufacturing in Australia had grown to become the largest and most productive sector in the economy, long supplanting agriculture, services and mining.

But as the Menzies/ McEwen era drew to an end in the late 1960’s it was already apparent that much of this manufacturing and government enterprise was inefficient and unable to compete internationally.  Within the new Universities, post-war academic sentiment was swinging towards Neo-Keynesian (eg Samuelson) or Monetarist (eg Friedman) economics together with a strong belief that freer markets would deliver greater economic efficiency and administrative simplicity.  The intellectual climate had changed. 

Free trade and free market arguments prevailed, in both major political parties, and the progressive withdrawal of protection followed, along with the disposal of government owned businesses and local buying requirements.

 

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Travel

Hong Kong and Shenzhen China

 

 

 

 

 

Following our Japan trip in May 2017 we all returned to Hong Kong, after which Craig and Sonia headed home and Wendy and I headed to Shenzhen in China. 

I have mentioned both these locations as a result of previous travels.  They form what is effectively a single conurbation divided by the Hong Kong/Mainland border and this line also divides the population economically and in terms of population density.

These days there is a great deal of two way traffic between the two.  It's very easy if one has the appropriate passes; and just a little less so for foreign tourists like us.  Australians don't need a visa to Hong Kong but do need one to go into China unless flying through and stopping at certain locations for less than 72 hours.  Getting a visa requires a visit to the Chinese consulate at home or sitting around in a reception room on the Hong Kong side of the border, for about an hour in a ticket-queue, waiting for a (less expensive) temporary visa to be issued.

With documents in hand it's no more difficult than walking from one metro platform to the next, a five minute walk, interrupted in this case by queues at the immigration desks.  Both metros are world class and very similar, with the metro on the Chinese side a little more modern. It's also considerably less expensive. From here you can also take a very fast train to Guangzhou (see our recent visit there on this website) and from there to other major cities in China. 

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Fiction, Recollections & News

On Point Counter Point

 

 

 

 

Recently I've been re-reading Point Counter Point by Aldus Huxley. 

Many commentators call it his masterpiece. Modern Library lists it as number 44 on its list of the 100 best 20th century novels in English yet there it ranks well below Brave New World (that's 5th), also by  Aldus Huxley. 

The book was an experimental novel and consists of a series of conversations, some internal to a character, the character's thoughts, in which a proposition is put and then a counterargument is presented, reflecting a musical contrapuntal motif.

Among his opposed characters are nihilists, communists, rationalists, social butterflies, transcendentalists, and the leader of the British Freemen (fascists cum Brexiteers, as we would now describe them).

Taken as a whole, it's an extended debate on 'the meaning of life'. And at one point, in my young-adult life, Point Counter Point was very influential.

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Opinions and Philosophy

The Meaning of Life

 

 

 

This essay is most of all about understanding; what we can know and what we think we do know. It is an outline originally written for my children and I have tried to avoid jargon or to assume the reader's in-depth familiarity with any of the subjects I touch on. I began it in 1997 when my youngest was still a small child and parts are still written in language I used with her then. I hope this makes it clear and easy to understand for my children and anyone else. 

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