Santa's coal, country protest and the patchwork economy

When Graham Young asked me to contribute to the December Christmas theme, my mind went instantly blank.

If Santa were handing out national punishments and awards, where would Australia rate indeed!?

Children have always been fascinated by the logistics involved in Santa's capacity to deliver presents. How, they wonder, can he and a few reindeer manage this feat? This has been the stuff of many movies.

There is a darker side to Santa that's not often recognized.

In some Christmas traditions, bad children may receive something instead of a present. And what do they get? A bag of coal!

Now here is the hidden answer to a question no-one asks. Where does Australia's coal really go?

Of course some goes to China, but a fair bit goes into the Santa distribution system. Here is the real answer to Australia's burgeoning mines! Perhaps it's time to return some of that coal to Australia, thus helping the Greens fulfills some of their most deeply held aspirations.

I was going to start by awarding a bag of coal to Julia Gillard's script writers. I say script writers advisedly, for she clearly does not have any speech writers. Then I thought, hang on a minute. Where would we all be without that mangled English? It's a key part of the reality television that marks current Australian politics. So perhaps I have to give a present instead.

In its place, I want to award a bag of coal to Australians as a whole for a degree of smug complacency.

Australian macroeconomic management has been reasonably good by global standards. However, I don't think that anybody would deny that we have been lucky because we have things to dig up, things that we can grow.

Of course, this isn't new.

Wool gave the Australian colonies their initial start because it was a high value product that could support transport costs from distant locations. Then we found gold and other minerals.

The wealth generated from wool and minerals allowed us to build things like railways that then allowed us to produce and export grain products. Technological advances such as refrigeration allowed us to export other products, including meat and dairy.

In 1964, Donald Horne coined the phrase "lucky country" to describe Australia. He meant this ironically. His point was that Australia did not create new things, but just rode on its resource base. To Horne's mind, and I quote from Wikipedia, Australia"showed less enterprise than almost any other prosperous industrial society."

This was not unique to Australia. New Zealand displayed similar cultural characteristics, as did Argentina.

To Horne's distress, his phrase came to be to be taken literally, for it was so self-evidently true. Yet in all this, in all the discussion over distribution of wealth, Australians had a degree of insecurity.

There was no assumption that "good economic management", the term economy in the way we use it today had not yet been invented, would of itself generate growth. We had to manage what we had, recognising the boom-bust cycle.

There was often, as there is today, a degree of complacency. That was central to Horne's point. And yet, Australians still recognised the sources of the nations wealth, still knew that bad times often followed good.

Now here, in passing, I want to award another bag of coal to the doughty warriors of left and right who in recent decades have applied imported intellectual constructs to the analysis of Australian performance and policy independent of domestic conditions.

I am not sure when or indeed why so many Australians became disconnected from the underlying realities of their country.

I suppose that I would say that the disconnect really became clear in the 1980s, that it was in part simply due to increased population.

As organisations or cities get bigger, interaction becomes internally dominated, the level of interaction with the external world drops. By the 1990s, the internal world of the cities, of groups within the cities, had become so intense that awareness of underlying realities and linkages had largely disappeared and could be ignored.

The smugness that resulted, the increased intolerance towards alternative views, manifested itself in a variety of ways. Here I want to award a bag of coal to those who coined the phrase middle power, who wish to see Australia (and I quote the PM) punching above its weight.

This is plain silly. Apart from anything else, if you fight above your weight, you risk getting your head kicked in!

Australiais a small country in population terms. In economic terms we are bigger, but still less than two per cent of the global economy. Our relative position will decline over the next twenty years.

If you look at the foreign affairs archives, you will see that past Australian Governments were very sensitive indeed to the views of other countries. The reasons were simple. We were insecure and knew it. Domestic political considerations were important, but tempered.

You can see this in the history of the White Australia Policy. This was an article of faith, a core domestic concern. Yet even at the height of the policy, international considerations were important in language and exception. Once the policy became a major international problem, it was simply swept away.

The position with the Howard, Rudd and Gillard Governments was very different. For the first time, purely domestic considerations came to dominate on particular issues in a way not seen before. The blind insensitivity in some policy and in reporting and commentary to external reactions was quite remarkable and at variance with Australia's real global position.

I want to finish this post by awarding a Christmas present to the various country protest movements. I may not agree with you on particular issues, but I applaud you.

I accept that this reflects my biases and make no apology for it.

From the 1980s, structural and social change swept the country. At national level and indeed for those not affected, change was relatively gradual. At local and regional level, to those directly affected, change was profound.

I have been writing on these changes for some time from a variety of perspectives. For a long time, my focus on change, regional issues, on New England as a particular case, on the need for new policy approaches, seemed quite quaint to many. I was a relic of the past and indeed felt that way. Now things have changed.

I find the degree to which the latest changes blindsided the Eastern States metro dominated main stream media and indeed policy makers quite interesting. It's not just their failure to see the changes coming, but also their inability to properly interpret fundamental change that is now affecting them and the groups that they are drawn from and represent.

Take, as a simple example, the latest patchwork economy buzz phrase.

Australiahas always had a patchwork economy. Further, the types of issues now in prominent discussion flowing from the mining boom are not new. I remember Alan Moran and me trying to explain the so-called Dutch Disease to Sir Phillip Lynch back in 1980.

What is new is that the changes are affecting the relative power and position of groups that were dominant. We have a patchwork economy now not because a patchwork economy itself is new, but because the patches are in different places.

I find that interesting.