Economic philosophy fails Australian agriculture

Engel's Law states that as incomes rise in a mature economy the percentage spent on food declines proportionally. Applied economic policy based upon Say's Law of Markets assumes that rising supply will always find a market and return a normal profit. These two important laws describe behaviour from different sides of the market with opposite conclusions. Both cannot be true in the real world.

Confirmation of Engles' Law in Australia have been provided in previous writings which can be found at http://www.benrees.com.au/

6. Conclusions:

This discussion has shown that assumptions underwriting contemporary orthodox economics are defective relative to the real world. The current low farm income and debt crisis becomes long term perverse policy outcomes of an agricultural policy reliant upon assumptions that do not reflect the real world of agriculture.Consequently, the philosophical underpinning of agricultural policy pursued since the 1970's lies at the centre of this rural crisis of low farm income, low profitability and unmanageable debt levels.

In the new Federal Parliament, a Minister for Agriculture has been appointed who has a farm upbringing combined with professional training in banking and accountancy. it is hoped that this new Minister will not blindly accept policy advice from elegant mathematical models of a failed economic philosophy. The new Minister could begin the hard task of returning agriculture to profitability by asking the public service and industry leaders and advisors to defend their long term support for failed policy in terms of economic philosophy and underlying assumptions.