Living with the market cycle

All of these arrangements resulted in higher prices for the consumers and a great deal of it has been dismantled in the past few decades - a process for which both Labor and Conservative governments can take credit - although some parts remains, such as a form of price control on books. The one market system is even being extended, in part, to New Zealand.

On top of all that the Federal government has now largely abandoned attempts to wring certain results from the markets by offering subsidies and tax concessions. It was found that those efforts mostly did not work or had results quite different from those intended. Tax concessions for Australian films of some years back, for example, achieved little more than the creation of a host of forgotten films, and to permit the already very rich to avoid tax. Concessions for spending on research and development also did little more than generate tax savings for the rich. Again, anyone who wants to seriously advocate different arrangements for getting business done should study those failed efforts.

Further, most of these changes were affected with barely a backward glance or a sigh. The dairy industry grumbled over losing cosy marketing arrangements but adjusted; the retail industry accommodated to the sweeping changes in regulations on trading hours; most of industry switched to enterprise based agreements with considerable grumbling but the old arrangements are now almost forgotten; unions have long abandoned advocating high tariffs.

Australia has in fact shifted wholesale towards free markets, and all of that house cleaning, plus much more effective controls for companies and the financial markets put in place after the recession we had to have, seems to have stood us in very good stead. This economic downturn was not of our making, but it has usefully exposed some weaknesses. With those weaknesses tidied up there is every indication that our economy will brush aside this enormous external shock and keep marching on - albeit with a distinct pause this year - unlike many other Western nations.

One potential issue with the Australian economy is its apparently poor export performance, but perhaps this is much less serious than generally perceived. Look at the example of Japan cited above, and consider China. Poor export performance can be a sign of a successful economy - where success is defined as the economy being geared to the needs of its citizens - rather than a black mark. If the export and import markets are left to themselves they will find their own level. That is the beauty of markets.

After all those decades of labour stripping out all the weeds that were choking the Australian economy, the commentators who are seriously suggesting that we should do something different should make concrete suggestions backed by solid reasons. Better yet, they should get into a time machine and go back to the 1970s, where people might listen.