"Once upon a time in Westphalia," Voltaire begins his satirical novel Candide, "there lived a young boy on whom nature had bestowed the gentlest of dispositions." This young boy, Candide, had a tutor named Pangloss, who thought he could prove through reason alone that he lived in the finest of all castles, in the best of all possible worlds.
Reserve Bank of Australia governor Glenn Stevens was telling Australians this week that the economy was in good shape and that we still live in the lucky country. But you’re more likely to hear from people committed to the opposite view if you turn on the TV. And we’ve started to believe them: only about a third of Australians, when polled in May 2012, agreed that the state of our economy is currently good. We lament the decline of manufacturing, the great big new taxes, the pusillanimous politicians. None of this is particularly new. But while we’ve been whinging, Australia has quickly climbed the world ladder in wealth and living conditions.
Without wanting to sound Panglossian, Australians have good reasons for feeling cheery. In fact, most of us are already smiling.
In 2006 economists Andrew Leigh and Justin Wolfers found (pdf) that, after compiling the results of 13 separate international surveys on happiness or life satisfaction, Australia ranked second in the world only to Iceland (a country that’s subsequently been hit hard by the global financial crisis). And according to the United Nations’ Human Development Index for 2011, Australians have the second best living conditions in the world, with the Norwegians coming out on top.
Readers with a competitive streak will be glad to find out that at least one reputable international body has given us its golden gong. According to the 2011 OECD Better Life Index, Australia is the best country to live in among the world’s developed countries — a conclusion they reached after weighing data on performance in health, education, income, leisure time and more.
For many, the first response to hearing of these measures will be to reel off objections related to specific failings. No doubt some of them are correct. But some of the most popular criticisms are not.
Consider taxes. Many Australians will tell you that they’re high.
But by global standards, they’re actually quite modest. Among the 34 OECD countries, Australia has the 6th lowest amount of tax as a percentage of GDP. What do the following countries have in common: Estonia, Barbados, Portugal, Russia, and Brazil. Answer? They also, as economies, tax more highly than the Land Down Under.
Popular wisdom says this is only sustainable through huge levels of government debt. Fuelling this line has been a preoccupation of the current federal Opposition. One Shadow Minister’s website, for instance, prominently lampoons the current government’s record net debt, record new debt ceiling and massive deficit. But is it really that bad?
Prior to 2008 Australia was one of only a handful of developed countries that could boast about having no debt at all. It’s true that since then Australia has incurred a debt — a debt taken on to enable Keynesian fiscal stimulus measures in response to a global recession — but our debt remains low by world standards. According to the International Monetary Fund, Australia’s debt as a percentage of GDP in 2011 was around 23 per cent. In Germany and the United Kingdom it’s currently hovering around 82 per cent, in Greece it’s around 160 per cent, and Japan takes the cake with its whopping around 230 per cent of government debt as a percentage of GDP.
The good news is that Australia’s currently very strong economic growth means that we’re also well on our way to paying that debt back.
While our unemployment rate is currently around 5.2 per cent, in the European Union it’s almost twice as high (at 10.3 per cent according to Eurostat). The Global Financial Crisis has so far passed us by with minimal impact, and we’re the only country in the world to not have experienced a recession in the past 20 years.
The familiar phrase that Australia is the Lucky Country might need updating. Overall and on average, it seems we may in fact be the Luckiest.
But what if luck has little to do with it? In his book The Sweet Spot journalist Peter Hartcher shows how our current prosperity is actually the result of a large number of good policies and governmental decisions. For instance, the economic reforms of the 1980s under the Hawke and Keating governments, including the floating of the dollar and our move away from protectionist policies towards a freer market, set the stage for strong economic growth right through the 1990s.
As a country we’ve been pioneers in social policy. We were the first to introduce the eight hour working day, to introduce secret ballots for elections and to allow women to stand for parliament. We’ve sustained robust democratic institutions and low levels of corruption, and we’ve played a disproportionate role on the world stage for a country with such a modest population.
There’s one further rebuke made by Australian pessimists — that Australia’s success is wholly due to mining.
It’s true that the mining boom has recently provided an extra jolt of energy but our success as a country has never been dependent on mining. In 2011 the Reserve Bank estimated that the mining boom had added about 13 per cent to the national income in that year — but by then Australia was experiencing its fifth commodities boom in two centuries, and the other four have all ended.
Further, mining employs a very small number of people as an industry. As Hartcher writes, "No industry that employs just 1.5 per cent of the workforce could ever be responsible for national success." Mining is valuable to Australia but it’s not the only reason for our good times now.
That’s not to say that we should be complacent. There are a lot of things we do poorly as a country that need changing; poor living conditions for many Aboriginal Australians being one notable example, and our disastrously inequitable funding system for schools and lack of action on educational quality being another. But we should be upset for the right reasons instead of the wrong ones, and we need to give credit where it’s due. While Candide was stupidly optimistic in the face of strong evidence to the contrary, too many Australians are overly pessimistic about the current state and future of our country.
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