CSIRO looks at Australia's economic future

[qwerty123]

Science nerd Mr Hajkowicz laments declining productivity and asks what will happen when the commodity boom ends. He idealistically proposes that we could make a living by using our brains:


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CSIRO questions Aus economy after the boom ends
Friday, 8 June 2012 11:50am
By Ben Collins | In Investment

A CSIRO researcher has questioned where Australia's economic output will come from once the commodities boom ends.

"It could be in the future that the Australian mining industry sells more knowledge and know-how than it does rocks," he said.

"What's plan B when we don't have the commodities boom anymore?"

"Mining multi-factor productivity is declining, that means we're putting a lot more in and getting less out.

[...]

http://www.financialstandard.com.au/news/view/12967157/

[[PnP]dredd]

Not sure that this is really "science".

It's vital that Australia wisely uses the profits which come from selling dirt, sheep hair and grass seeds. We've gotta build infrastructure, and invest in education, and lots of other things, if we want to be able to compete globally.

The urbanisation of indo-china will definately change the world. There's going to be a gazzillion cities which are the size of Sydney and Melbourne. That means big markets, but enourmous competition.

We'd better work out what it is that we can do better than anyone else.

[stmok]

This isn't quite all science. (Well technically, some aspect of it involves science in terms of economic simulation and modeling).

"It could be in the future that the Australian mining industry sells more knowledge and know-how than it does rocks," he said.

This is the same nonsensical academic/theoretical thinking that will lead us into being the next UK.

A service/consulting industry based on knowledge and know-how will not protect us from the next financial crisis. This isn't "Doom and Gloom" talk, its fact. This kind of industry does not generate genuine prosperity.


In fact, have a good look at the UK...

They produce something like 210,000 engineering students a year. Very few end up in engineering jobs that actually design something physical, which can be made and exported. Why? Because the financial sector has bagged most of them with the lure of high pay. (Far higher than what you will get if you stick to engineering. You would be stupid not to accept!)...Finance sector loves engineering students because engineering degrees bring analysis and problem solving skills that you won't find in other degrees.

What happens?

This kills them in the long term as the bulk of UK exports are no longer manufactured goods that bring in the serious money for the country. They have become (for the most), nothing more than a major hub for financial services and a distribution gateway for Chinese-made products...Which means they don't make as much money as they use to. Look at UK company, Dyson. They specialise in vacuum products using their bag-less design and we see them here in Australia. Their boss knows they will eventually have to leave the UK as the little components that used to be made locally need to be acquired from outside the country! (They aren't totally made locally any more. Its largely designed and assembled in the UK.)

The UK's current economic model is prosperity based on the movement of money. Their Govt needs its people to continue consuming. The Govt keeps spending, growing, and borrowing. This creates a false sense of economic growth. (Its not genuine prosperity.) ...Everything falls apart when a financial crisis hits the country from the outside. The country falls into recession as it is buried in serious debt from years of constant spending and borrowing. ie: The spending party is OVER!

So what's the problem then?

It will take them years to recover. They need approx 3% or so growth to dig themselves out of the hole they're in. They can only grow at ~1% because of what they've become over time. It doesn't take a genius to see we have a problem here! (Back in April, they entered into a 2nd recession...Double-dip recessions are supposed to be rare in an economy like the UK's!)


One needs to bare in mind that recession comes and goes like a pendulum. There will always be one. Its a fact of life. One should prepare for the inevitable in order to minimise its impact upon its citizens. For that, we must have strong, focused political leadership with a purpose. (Which we currently don't from either major political party!)

"What's plan B when we don't have the commodities boom anymore?"

Quality production of Australian-made goods as the basis for our future. We grab ideas that have made Japan, Germany, and now South Korea successful. ie: Look at what works well for others. Learn and apply the fundamentals. Modify some aspects to fit the Australian culture.

The backbone of any country is its middle-class. We have an untapped manufacturing capacity here. Unfortunately, we have a Govt (ALP/Greens/Indep) in power that wants to maintain the status quo of them representing the Aussie battler like it was the early part of the Industrial Age. They intentionally use class warfare as part of their political toolkit. Their whole fundamental basis of existence is that they "steal from the rich and give to the poor". Their claim is that they look after the people and give everyone a "fair go".

In reality, they're driving away foreign investment with their policies and taxes in order to satisfy their union masters and flawed ideology, while at the same time paying off foreign-owned major industries to remain. (See our auto-industry). To put a cherry on top, they come up with policies to dictate how we should live out lives! (Cigarette packaging, poker machine reform, etc.)

What's worse is the unions are becoming corrupt with unaccountable power. I'm still wondering why public sector workers need to pay an annual membership fee to a union if they work in a critical industry like police, nursing, etc; They can organise protests themselves as their jobs offer them the leverage they need. For example, health services union is something like $600 a year for membership fees!

...The current Govt are too busy playing politics and concerned with "spreading the wealth" in the form of hand-outs when they should be using that very money to build a new Aussie paradigm and manufacturing base for our future. Don't be surprised by the upcoming "Economic Forum" being nothing more than a superficial gesture and self pat on the back. You won't see anything productive come out of it in relation to its citizens.

(The current Coalition is no better as their leadership doesn't really have a long term, strategic plan for this nation! Just observe Abbott or Hockey when they are under the gun on a critical issue...So yes, both major political parties suck!)


The 21st century global competitiveness arena requires a whole different paradigm...

* Businesses and workers need to work closer together by adopting processes that require pro-active leadership from management and pro-active monitoring of processes by workers. Its a unified approach for quality production. Get rid of the union middle men. Management adopts a policy of not firing anyone unless they break the law. Mistakes are learning lessons for all. Not a witch-hunt for blame. Workers are not a resource. They are an investment, and one looks after their investments! (The current "restructuring" nonsense of firing people off in a careless manner is nothing more than an ivory tower approach of convenience...It leads to an eventual downward "spiral to death".)

* Smaller Govt that only steps in when rules are broken. They stay out of the way so that local companies can grow with innovation and quality. Regulation needs to be balanced. (Too harsh, it kills innovation and drives investment away. Too little, and it results in economic chaos.)

* Promotion of self sufficiency/reliance instead of depending on the Govt to save us in tough times. Strong, responsible, pro-active people means a strong community that can withstand issues. Strong communities make a great country. Govt handouts do nothing more than promote mediocrity and entitlement from its citizens. (This is not how you lead a country to prosperity. This is how you make spoiled children with endless demands of "Gimme more! Gimme more! Gimme Gimme more! Or I won't for you!")


...The above paradigm won't be accepted because certain organisations in this country will be made useless. Their existence will be questioned if things were to change. They have vested interest in keeping things the way they are. Even at the cost of the nation's future.


What we end up producing for export is entirely up to us. I maybe making some high tech widget. Another OCAU member maybe working on a completely different field. It could be something like growing vegetables by hydroponics (replacing traditional farming methods that have a higher environmental impact) ... Whatever it is, it must be of the finest bloody quality by global standards. Quality is the key! The objective is to establish a global character and reputation of the Australian Made brand. It must mean something tangible and genuine. Not empty, superficial national pride!


Our future doesn't need scientists, academics, and politicians to muddle things up with their theories, assumptions, and ideologies. (Which often have little or no relation to the real world we live in). What is needed is common sense, some changes in fundamental thinking, and good old fashion Aussie hard yakker...It's about securing our future and leaving a good legacy for the next generation.

If one needs motivation, just look at how messed up Greece, Italy, Spain, UK, etc are economically. Do we want to end up like that? Leave a mess for the future generation to clean up? No thanks!

[MR CHILLED]

Apparently the brain drain has been going OS, so that's not exactly going to help us. Keep more here is a start.

[lithos]

Originally Posted by MR CHILLED

Apparently the brain drain has been going OS, so that's not exactly going to help us. Keep more here is a start.

Partly that's cultural cringe, partly that's HECS debt...

[MR CHILLED]

Originally Posted by lithos

Partly that's cultural cringe, partly that's HECS debt...

Yep. Well I think we have a good enough system as it is with HECS, in that you are able to pay it later as a basically interest free loan out of your income.....so not sure how we can do that any better other than going back to free education.