Last week, I had been very lucky to be invited by UQ to attend the presentation of a book written by my former Economics teacher at Customs House in Brisbane City Center.
The book was presented by the Honourable Paul Keating, who was Prime Minister for Australia when I first arrived in Australia, by choice, as a migrant. Thanks to the foundation work under his strong leadership ('I did not waste one minute to push the necessary changes while I was in government,' he said) under his mandate, Australia was not hit as badly as other advanced economies during the GFC (Global Financial Crisis) of 2008.
Despite his advanced age now, he is still remarkably passionate about Australia's economic future, neither has he lost one ounce of his distinctive larrikin humour; more importantly, he has not given up on the famous Australian 'fair go' outlook, has warned of serious challenges but is still hopeful for the future of Australia, a breath of fresh air!
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| 'Without imagination, you can't know your destination' (P. Keating) |
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| Stephen Bell, my former, level-headed, revered and brilliant teacher |
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| I loved this chandelier, I suspect it comes from a familiar Byron Bay artist (?) |
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| Co-authored with M. Keating, no relation with PM |
(*my additions as way of explanations)
'Capitalism relies on a perception that the inequalities that accompany it essentially reflect merit and effort, rather than kinship, privilege or power and political rents. It is only in this way that capitalism can be reconciled with capitalistic values. But these assumptions about merit and effort are increasingly coming under question in many advanced economies. First, there is huge increases of wealth (through increased productivity) that are now concentrated among those at the very top of the income distribution. Second, there is spatial inequality: access to affordable housing, quality education and jobs depends on a family income and where one lives ... these relations risk becoming more patrimonial, which would undermine the ethical foundations of capitalism. At some point, people will lose trust in capitalism, and the (*theoretically free) markets on which it is based. The election of populist leaders such as Trump (*and the rise of extremism in Europe) is already signalling this as a real possibility'.
In order to save capitalism, adjustments are needed, and the authors come up with a number of policy recommendations
'Propositions:
- more active use of macroeconomic policy, focusing more on (*aggregated) demand, not only on supply, which means less reliance on debt
- flexible fiscal policies in order to respond to any shortfall in demand
- Better provision of education and training in order to maintain equality of opportunity and reduce inequality, especially for those at risk of structural readjustment, who need more adaptable skills (VET)
- Encourage innovation and technological progress (*R&D), not just 'pick the winners'. Focus on generic technologies, not just individual businesses and technologies (eg set a price on carbon).
- housing: reduce subsidies to investor by not allowing mortgage interest on loans to be deducted from labour incomes, reduce rate of capital gain discount, increase housing supply and high density living
- higher degree of income redistribution to help spur demand (*Keynes) through rental assistance, social housing to restrain rent increases for low income earners
- increase in fiscal revenue of 3% of GDP, which would still leave Australia with a low rate of taxation relative to all similar advances economies'.
May they be heard.
