The previous post began to examine the idea that a developed nation, such as Australia, ought to strive for an economy with some depth. That is to say, the broader the economy's base, the more robust sectors it has, the less a crash in one sector will affect the whole.
This isn't my idea. A large Australian delegation, including both Opposition and Government leaders, visited the US in July to conduct numerous meetings and exchanges. One of the discussions was with former U.S. Trade Representative Robert Zoellick. He made the very pointed comment, "I would warn Australia about over-reliance on commodities." By which he meant mining.
Mining is the leading revenue source in Australia. It is currently in a slump, tightly linked to the Chinese economy. Miners are looking for relief from the Government , but this is a Government committed to social programs for which tax income is essential. This is a debate at the most fundamental level: how much can government tax the leading industry of an economy, without killing the goose that lays the golden eggs? The latest stab at the goose is called the Mineral Resources Rent Tax.
Some people think that stimulating the Australian economy is a matter of financial policy . I know very little about economics. Instead, let's talk about people, about the highly skilled technologists needed for success in today's world. My technical experience is in areas such as spacecraft, robotics and ocean exploration. Australia's presence in these areas is nearly non-existent. Students and PhD's come to me to ask, "What's available in the US?" And my answer is always, "Plenty."
My naive view is that US government policy has had little to do with its economic success. Rather, the US apparently has a climate that encourages innovation, and a history of it. As a result, it's like a "brain magnet" that draws talented people from around the world into its innovation machine. US corporate taxes are actually quite high when compared to other nations (remember that in the US, state taxes add to federal burdens). But the other benefits of the broad US economy, including its fantastic education sector, make it a winner. That shining city on a hill is going to cause a brain drain in Australia.
If you have a technical background in Australia, you are in high demand in the mining industry. In some cases you can earn three times what other industries will pay. What impact does this have on other sectors of Australia? Well, for example, its Navy cannot get underway. There aren't the engineers to repair and maintain the ships. And what if mining doesn't provide you with the intellectual challenge you're looking for? My guess: you'll go abroad.
Australia needs to broaden its economy. It needs to invest in the growth sectors of technology. (Truth in advertising: I work in some of these sectors.) This can't be just a Government initiative, because governments are always inefficient at determining economic priorities. The miners have to pitch in. I believe that smart, wealthy miners can understand that they too need to invest in high-tech growth, even outside their own industry. Because they need bright people, and more of them. For instance, to design, manufacture, operate and repair their robotic mining systems.
With a broad technology base, bright people can go back and forth between sectors--space, telecommunications, robotics, semiconductors, marine engineering--which have many common skills. Does this really work? Well, Elon Musk started by developing PayPal. Then he created SpaceX and built rockets. Then he founded Tesla Motors and built electric cars. These were all fertile fields that he could farm.
Australia needs a broader range of fertile fields for its technical people. Does anyone here get this?
No comments:
Post a Comment