MacroBusiness principal David Llewellyn-Smith has today published what is, in this blogger’s opinion, arguably the best article yet written about the way in which the Australian political and bureaucratic elite have pursued a deliberate policy of reshaping the economy.
A “must read”, and a “must share” article (excerpt below):
Just two days ago, Prime Minister Julia Gillard announced that:
“We can still be a country that manufactures things. But we’re going to have to do it differently”
She was spot on, if by differently she means we’ll make things without investing any capital. That will be very different indeed.
The truth is Australian manufacturing is not adapting, it’s being wiped out. It’s not restructuring, it’s flat out collapsing. Yesterday’s private capex survey was a bloodbath, sending manufacturing investment intentions back to levels last seen in the 2001 global recession, and first seen in 1989. And that’s in nominal dollars. Inflation adjusted is far worse. In the following chart of capex intentions, the arrow points to expected spending levels for the next year:
It was not always thus. It’s easy to forget, especially with a gorked media, that manufacturing’s proportion of capex matched that of mining until 2004:
But now it’s all about the dirt:
That’s fair enough. This post is not about bashing mining. What it is about is imbalances.
Australia’s economic elite – public and private – are engaged in a grand experiment. They have decided, in their wisdom, to delete Australia’s industrial base and replace it with mines.
And there is another argument worth considering. Without a manufacturing base, how does a country defend itself? Sure, production can always be ramped up if needed in a time of strife. But not if you no longer posses the human capital to do it. The death of manufacturing is the permanent loss of the skills and intellectual property that enables such a ramp up to occur. It will be a short meeting when our enemy’s generals sits down to plan which industrial targets to bomb.
The various imbalances created by the annihilation of Australian manufacturing are neither inevitable nor benign. Our elite are pursuing one of the great experiments in national self-sabotage.
Read the entire article at the link.