Balneus

Australian Lefty on Politics, Governance, Science and Info Management

Economic growth is obesity not muscle

Posted by Dave Bath on 2007-10-17


Howard and Costello boasts about economic growth are like parents’ boasts about the growth of an obese child by referring to weight, not strength and power.

The "prosperity" touted by the Libs is like measuring household spending rather than income, while ignoring that much of the spending comes from ever-increasing debt on the Visa card.

Sure, the Australian economy measured as GDP has grown at 3% to 4% per annum, but our current account deficit has been running at around 5% of GDP through the Howard years.  That’s a net loss.  Compound a 5% loss each year for a decade and you begin to see the problem.

No wonder the national debt is at it’s worst in history, not only in absolute terms but as a proportion of the size of the economy – the national debt has ballooned to well over 50% of the GDP.

What would happen to the chief executive and board of a company if they said "Every year, for the last 10 years, our turnover has increased by 4%, but every year we’ve run a loss equivalent to 5% of turnover?"

Quite simply, they would be ousted, along with all their policies and strategies.  Indeed, most shareholders would be baying for blood well before 10 years had gone by with the company being gutted every year.

Why isn’t the opposition pointing out this?  Are they also afraid of an economically literate and informed population?

Again, let’s compare Australia Inc with a company.  Shareholders of a company making perpetual losses would want to see proposals from the executives and board for investment in production through capital works, and business re-engineering that improves efficiency through better infrastructure and processes.  Unfortunately, we are hearing little of this from either party.

Instead, both parties dip their lid to the notion that Australians are wealthier – never mind that most of it is due merely to increasing the "book value" of existing assets.

Only a fool would think that the Liberals would do anything to improve things and turn our constant losses around.

While Kevin Rudd hit the nail on the head by saying we needed to be more than "China’s quarry and Japan’s beach", I’m yet to see a single concrete proposal from the ALP that would reverse our constant national losses through the Howard years.


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One Response to “Economic growth is obesity not muscle”

  1. […] "Economic growth is obesity not muscle" (2007-10-17). […]

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