“It’s amazing how insulated Australia is from the climate in Europe. People are really hurting here, and very angry as well. The themes being discussed; totally different.”
So said a friend in an email discussing Monday’s article on the national ego and its link to attacks on welfare. Having moved from Melbourne to London about 18 months ago, she had been well positioned to witness both Australia’s seeming invulnerability to global economic catastrophe, as well as the British vestiges of the calamity that engulfed Europe beginning in 2008.
It has been reported on before – many, many times – but it seems to always bear repeating. Australia is miracle economy. As most of the developed world drags itself, bleeding and disoriented, off the canvas, we happily trot along, registering growth at a tick below the long-term trend, unemployment hanging around 5%-5.5% (when I studied economics, 5%-7% was considered the ‘natural’ rate of unemployment), inflation square in the RBA’s target range, low interest rates (but still with sufficient room for the bank to boost spending if needs be) and company profits solid as ever.
And consumer sentiment in the doldrums*.
The Australian voter/consumer/citizen has become so pampered by twenty years of basically uninterrupted prosperity that we literally have no idea how lucky we are.
Not only are Australians convinced that they are in the grips of some kind of economic malaise, but they appear to believe wholeheartedly that the only thing preventing us from turning into a zombie-strewn post-apocalyptic dystopia is the income from mining companies.
Never mind that over 80% of their profits go offshore, that one of the economy’s presently greatest challenges is a surging dollar caused by the mining boom, and that they invested millions in a transparent PR campaign expressly intended to decrease the amount of money they would pay for their use of public property. They were the National Saviours. We avoided recession because of them. But here’s where the human ability to simultaneously hold contradictory thoughts kicks in.
While they may not say it, Australians seem to feel that they have been through a recession.
Basically, the biggest mistake that the Labor government has made since its election is also its greatest success. It denied Australians a recession. A genuine recession – however you choose to define it – would have meant an unemployment rate that pushed double digits, a pronounced slowing in economic growth, a Reserve Bank desperately slashing rates but finding consumers unwilling to spend anyway. It would have seen a budget plunge into a far worse deficit than now as revenues crashed. And the public would barely have blamed its government.
Australians tend to have an innate sense that, when it comes to major international economic events such as the market crash in the US that triggered this whole years-long shemozzle, we are a global peon. Sure, there would be an expectation to work hard to pull us out, to provide a safety net and to make sure that the most vulnerable were not abandoned, but no one would genuinely accuse Kevin Rudd of causing the recession.
Instead, we sit in our miracle economy and wail to the heavens. We routinely tell pollsters that we consider an opposition with no coherent plan to do anything economically sensible is somehow the better ‘manager’. We think we’re Doing It Tough.
Australians need a recession. Without one, it’s hard to imagine our national persecution complex giving way to anything approaching sensibility. Perhaps we should start a Spanish exchange programme.
*Note: the latest Westpac Consumer Sentiment Index showed a two-year high, but we’ll sit back to see if that’s a trend or a blip
Ed Butler is a recovering economist and novelty blogger, of the never-lamented Things Bogans Like. On about step seven of the requisite 12, he now works in communications and environmental advocacy. His unfiltered ramblings are available @fakeedbutler.