Three economic challenges for Australia

Australia is in a curious economic situation. On the one hand, a BBC journalist has called Australia the "democratic coup capital of the western world" because of all the changes in prime minister. On the other hand, the magazine The Economist has called Australia "the wonder Downunder" because Australia has clocked up the longest consecutive period (27 years) of economic growth in western history.

The time of greatest danger comes at the time of greatest success. Just when everything seems to be going so well, we let down our guard.

I fear that Australia is at risk of being too complacent. We could be blind-sided by change. Here are three economic challenges for Australia.

First, there is a need for a new narrative. From 1901 to the late 1970s, the prevailing view was that government should have a dominant role in the economy.

Then with the growth of "new right economic rationalism" a new narrative emerged. The Australian dollar was floated, banks were deregulated, government corporations (such as QANTAS) were privatized, protectionism was phased out, and Australia embraced globalization.

These developments transformed the economy. But they are not enough to cope with the new economic era that is emerging.

The second challenge arises from the new information technology economy. Examples include: the "sharing economy" (for example) Uber; the "new service economy (for example delivering education online, such as Phoenix University and Khan Academy; the "gig" economy may require "gig" learning and not a standard degree programme); the "3D economy/ maker economy (for example, make your own products at home) and the "digital asset economy": assets are no longer just physical (bricks and mortar); anything that is digital can be monetized, for example data, images, sounds, documents.

These developments in turn mean a movement away from the Monday to Friday 9-5 economy invented to cope with the 1750 Industrial Revolution. We are seeing the rise of the "gig economy".

There is plenty of "work" to do but not "jobs". "Jobs" were invented in 1750 for the Industrial Revolution and are being replaced by "gigs". This is self-organized self-employment, working on-demand, with every worker as a "manager" running their own business.

Of course, if we are not careful, this could be a race to the bottom with workers living on piece-work (as in England before the 1750 Industrial Revolution): little certainty, little opportunity to accumulate assets, increased tension, and social unrest. Perhaps the next generation will not live as long as predicted?

The third challenge is to create a new narrative to make the most of the new era of work. Here are two suggestions.

First schools need to be reorganized. The 1750 factory-based era for which schools were designed is now over and the "industrial model" of education is now out of date. Educational institutions need to be viewed in the larger social and economic context: that context is changing and so we must expect that change to flow into educational institutions.

Schools should be about preparing children for the new world of work. Skills to be taught include: how to run your own business, time management, conflict resolution, and how to understand contracts. Perhaps each school itself should be seen as a business, with principals as entrepreneurs. The entrepreneurial mindset needs to be acquired early on.

Second, given the problem of widespread unemployment that will be caused by information technology we need to put some money in circulation to stimulate effective consumer demand.

Computers work 24/7, never go on strike and have no personality squabbles. But they don't consume very much either. We need to keep money circulating.

This could be done via a Universal Basic Income (UBI), for all Australians once they turn 18. All adults would receive this flat sum of money from the government (which would replace the complicated set of welfare benefits).

The sum would provide a bare minimum on which to survive; doubtless many people would also continue to work for much more money (and so via their tax repay the UBI).

A slogan from the (unsuccessful) June 2016 Swiss UBI referendum asked: "what would you do if your income were taken care of?" In other words, in the emerging new economy it is important to give people a financial foundation so that they can then turn their minds to being inventive and entrepreneurial. Finland, some parts of Canada and The Netherlands are continuing with their UBI experiments

Australia is heading into a new economic era. We need some bold thinking to make the most of all the new opportunities.