Like what you've read?

On Line Opinion is the only Australian site where you get all sides of the story. We don't
charge, but we need your support. Here�s how you can help.

  • Advertise

    We have a monthly audience of 70,000 and advertising packages from $200 a month.

  • Volunteer

    We always need commissioning editors and sub-editors.

  • Contribute

    Got something to say? Submit an essay.


 The National Forum   Donate   Your Account   On Line Opinion   Forum   Blogs   Polling   About   
On Line Opinion logo ON LINE OPINION - Australia's e-journal of social and political debate

Subscribe!
Subscribe





On Line Opinion is a not-for-profit publication and relies on the generosity of its sponsors, editors and contributors. If you would like to help, contact us.
___________

Syndicate
RSS/XML


RSS 2.0

A new economic order: implications for Australia

By Ken McKay - posted Tuesday, 10 November 2009


So if they have to move away from US assets to avoid the hot money/deflation trap how will they achieve this without destroying their export markets?

Simple, they will create alternative export markets prior to pulling the plug on the United States.

To do this they need to create consumer markets equivalent to the United States. This will be achieved via the economic empowerment of the growing middle classes in India and Brazil. To achieve this we will see significant increases in joint ventures in both Brazil and India. We will see significant increases in foreign aid to Brazil to accelerate the poverty to middle class evolution, over the next decade this will be more like a revolution than evolution.

Advertisement

We will also see a staged wealth redistribution within China to enable a portion of export activity to be switched to meeting domestic demand.

The pace will be limited by concerns that domestic wealth redistribution will place pressure on the Chinese institutions to democratise themselves, nevertheless the policy changes will result in significant internal economic demand by increasing consumer spending rather than run the risk of hot money creating asset bubbles.

The major effort will be in accelerating the growth of the middle class in Brazil. For geopolitical reasons China will be loath to build economic power in India and Russia other than what is immediately necessary.

Brazil also offers the advantage of not being as affected by fluctuating surges in oil prices, which threatens consumer spending in the western economies. Its ability to utilise ethanol and hydro-electricity schemes to maintain its energy independence will make it a very attractive destination for China to funnel its hot money to create a consumer society. This will enable China to make a staged withdrawal from propping up the United States.

With the BRIC nations buying IMF bonds and the US capacity to prop up the IMF being diminished we will see the decision making power of the IMF shift from the United States and Western powers to the BRIC nations.

Australia needs to embark on a process of engagement with South America. First we need to look at developing a free trade zone encompassing the Pacific such as New Zealand, Papua New Guinea and the Pacific Island nations and South America.

Advertisement

Second, we need to look at developing an integrated ethanol industry, not just growing the source product, but changing the car manufacturing specifications so our car industry can move towards capturing export markets in the expanding middle classes created by China’s capital outflows.

Our education system needs to have a co-ordinated approach in developing Spanish and Portuguese in our schools. We need to establish South American Studies schools in our universities so our future graduates are familiar with the nations that will be shaping our future. Importantly we need to fund exchange programs for students to study in these South American nations and for their graduates to study in Australia.

Dynamic shifts in the word geopolitic landscape provide threats and challenges, but it also provides opportunities and as a nation we must plan to benefit from the opportunities and minimise the risks.

  1. Pages:
  2. 1
  3. Page 2
  4. All


Discuss in our Forums

See what other readers are saying about this article!

Click here to read & post comments.

4 posts so far.

Share this:
reddit this reddit thisbookmark with del.icio.us Del.icio.usdigg thisseed newsvineSeed NewsvineStumbleUpon StumbleUponsubmit to propellerkwoff it

About the Author

Ken McKay is a former Queensland Ministerial Policy Adviser now working in the Queensland Union movement. The views expressed in this article are his views and do not represent the views of past or current employers.

Other articles by this Author

All articles by Ken McKay

Creative Commons LicenseThis work is licensed under a Creative Commons License.

Photo of Ken McKay
Article Tools
Comment 4 comments
Print Printable version
Subscribe Subscribe
Email Email a friend
Advertisement

About Us Search Discuss Feedback Legals Privacy