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General Economics

Dec 8, 2011

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Australian Exceptionalism”…. let that phrase roll off your tongue.

Now stop laughing for a moment if you can!

There’s something about that phrase that just doesn’t sit right with us. We’re not only unaccustomed to thinking about ourselves that way, but for many it’s a concept that is one part distasteful to three parts utterly ridiculous – try mentioning it in polite company sometime. Bring a helmet.

We’ll often laugh at the cognitive dissonance displayed by our American cousins when they start banging on about American Exceptionalism – waxing lyrical about  the assumed ascendancy of their national exploits while they’re forced to take out a second mortgage to pay for a run of the mill medical procedure. That talk of exceptionalism has become little more than an exceptional disregard for the truth of their own comparative circumstances.

But in truth, we both share that common ignorance  – we share a common state of denial about the hard realities of our own accomplishments compared to those of the rest of the world. While the Americans so often manifest it as a belief that they and they alone are the global benchmark for all human achievement,  we simply refuse to acknowledge our own affluence and privilege – denialists of own hard won triumphs, often hysterically so.

Never before has there been a nation so completely oblivious to not just their own successes, but the sheer enormity of them, than Australia today.

In some respects, we have a long standing cultural disposition towards playing down any national accomplishment not achieved on a sporting field – one of the more bizarre national psychopathologies in the global pantheon of odd cultural behaviours – but to such an extreme have we taken this, we are no longer capable of seeing an honest reflection of ourselves in the mirror.

We see instead a distorted, self absorbed cliché of ourselves bordering on parody – struggling victims of tough social and economic circumstances that are not just entirely fictional, but comically separated from the reality of the world around us.

So preoccupied have we become with our own imagined hardships, so oblivious are we to the reality of our privileged circumstances, that when households earning  over $150,000 a year complain about having government welfare payments scaled back, many of us treat it as a legitimate grievance.

Somewhere along the highway to prosperity – and an eight lane highway it has been – far too many of us somehow managed to confuse Cost Of Lifestyle with Cost Of Living. We managed to confuse government assistance as a means to enable the less well off to achieve a better standard of living and greater opportunity, with government assistance being a god given right to fund the self indulgences of an aspirational lifestyle choice beyond our income means. Too many of us have demanded our dreams be handed to us on a plate, and if our income couldn’t provide for them, we demanded that government should give us handouts to make up the difference.

So let us take a hard look at our economic reality.

Over the medium term, our broader economic performance has been nothing short of astonishing. Before the resources boom was even a twinkle in the eye of Chinese poverty alleviation, our performance was world beating – that is worth keeping in your thought orbit. Big Dirt has a bad habit of propagandising about their own contributions and the Australian public has a bad habit of believing them when it comes to our own national development of late.

Imagine if, in 1985, all OECD economies had exactly 100 units of GDP each. If we then tracked the growth of that GDP (using OECD data) over time with the actual growth rates achieved during that period (creating a basic index) – this is how economies changed (click to expand the charts)

Only Turkey, Israel, Ireland and Korea have experienced more growth – with Turkey and Korea pursuing the change from developing to developed status, Israel partially so as well and Ireland recovering from the economic lethargy of civil war, we are the highest growing country that can be remotely called a developed country with no unusual circumstances. Putting this into context, let’s trace that growth over the last 25 odd years with some of the countries we are often compared to.

It’s kind of mind blowing – we grew faster, significantly faster, than all of the countries we are usually compared to, including over the period before the resources boom. But you ain’t seen nothing yet.

What about the distribution of that growth”, I hear you ask. “The poor missed out” you might also be tempted to add.

Using data from the freshly minted OECD report on international comparisons of income distribution and inequality, where the average income growth per year was measured among countries between the mid 1980’s and the late 2000’s, what we find is that Australia left just about everyone else for dead. Not just at the average, or total household income level, but also with the size of the income growth among the poorest  10% of our households *and* the richest 10% of our households.

First up, total population income growth in blue, bottom decile income growth (the poorest 10% of households) in red and the top decile income growth (the wealthiest 10%) in green for all OECD countries.

       

 It’s interesting to note that the only countries where the poorest  10% of households experienced faster income growth than Australia was 4 of the five PIIGS countries – the current basket cases of Europe. Something might be said there about false growth and swings and roundabouts.

Looking at how our growth here compared to the usual suspects:

And for direct comparison:

It is true that the income of the wealthiest 10% of households in Australia grew faster than the income of the poorest 10% of households – the income of Australia’s wealthiest 10% of households grew faster than any other cohort in the OECD. But it’s also true that our poorest 10% of households experienced faster income growth than any country other than Spain and Ireland (who are now quickly reversing that growth with their economic woes) , and faster income growth than the top 10% of wealthiest households in *every other country*.

The income of our poor grew faster than the income of everyone else’s rich. Just chew on that reality for a bit. Let it roll around in your head.

While you’re chewing on that, let’s take a quick squiz at minimum wages. Again, using OECD data, if we turn hourly minimum wages into US dollar equivalents using purchasing power parity adjustments (so we can compare like with like), we can see how the real hourly minimum wage has operated in Australia compared to the nations we’re usually put in the same bucket with.

We have the highest minimum wages in the OECD.  Worth noting too that despite the incessant whinging from the usual business lobbies in Australia, it hasn’t done our economic activity any harm. Now if we compare the ratio of these minimum wages to the average wage for each country, giving us a simple glance at the distribution of wages for each country (which the OECD also fortuitously provides, saving us time), what we find is that Australia, again, sits on top.

Our minimum wage is a lot closer to our average wage than comparable nations.

So our economy has grown faster than nearly all others, our household income has grown faster than nearly all others (including our poor having income growth higher than everyone else’s rich) and we have the highest minimum wages in the world. But wait, there’s more!

It’s unsustainable” I hear the skeptics say – “it’s fuelled by debt!

Well, let’s have a quick look at government debt as a percentage of GDP. Here’s all OECD countries – I’ve thoughtfully pointed out Australia in the chart because it’s easy to miss:

And again, let’s look at the comparison with the usual suspects over time:

OK – So our economy has grown faster than nearly all others (certainly faster than all developed countries), our household income has grown faster than nearly all others (including our poor having income growth higher than everyone else’s rich), we have the highest minimum wages in the world and the third lowest debt in the OECD.

But “what about the taxes” I hear the skeptics say. “We have great big new taxes on everything!

Well let’s have a look at tax as a percentage of GDP for OECD nations: And again, let’s look at the comparison with the usual suspects over time:

We are pretty much the definition of a low tax country.

So our economy has grown faster than nearly all others (certainly faster than all developed countries), our household income has grown faster than nearly all others (including our poor having income growth higher than everyone else’s rich), we have the highest minimum wages in the world, the third lowest debt and the 6th lowest taxes in the OECD.

Now let’s talk about wealth – not income, which we’ve mostly looked at so far, but wealth – the value of our accumulated assets – housing, super, savings etc etc. Here, we’re going to use the The Credit Suisse 2011 Global Wealth Report.

Not only did this find that Australia has the second highest average wealth in the world at $397,000 US dollars per adult (with Switzerland ranked first), but we have the highest median wealth in the world – the wealth of the middleth adult in Australia – coming in at $222,000 US dollars.

The report also gives a number of stats among selected countries which is worth taking a good, long look at.

First up, mean and median wealth per adult:

 

Next up, GDP per adult in US dollars:

Getting the picture?

Now let’s look at the proportion of the adult population worth over $100,000 US dollars:

Finally from Credit Suisse, for some real global context, let’s look at the proportion of the adult population that is in the top 10% of *ALL* global wealth holders.

A full 75.5% of all Australian adults are in the world’s wealthiest 10% of total population.

And to throw a cherry on top in terms of just how our enormous economic growth, income growth and wealth accumulation has flowed through to our human development in a low taxing, low debt country – here’s the latest United Nations Human Development Index for the usual suspects:

We’re second, behind Norway, who knocked us off from our number 1 spot at the beginning of the 21st Century.

So this is our economic reality – we are the wealthiest nation in the world with 75.5% of our adult population making it into the global top 10%, our economy has grown faster than nearly all others (certainly faster than all other developed countries), our household income growth has been one of the fastest in the world (including our poor having income growth larger than everyone else’s rich!), we have the highest minimum wages in the world, the third lowest debt and the 6th lowest taxes in the OECD and are ranked 2nd on the United Nations Human Development Index.

And this didn’t happen by accident.

This happened by design.

This happened because of 30 years of hard, tedious, extraordinarily difficult policy work that far, far too many of us now either take completely for granted, or have simply forgotten about.  We have, without  even realising it, created the most successful and unique economic and policy arrangement of the late 20th and early 21st century – the proof is in the pudding. A low tax nation with high quality, public funded institutions. A low debt nation with world leading human development and infrastructure. The wealthiest nation in the world where even though our rich get richer, our poor have income growth so extraordinary that it increases at a faster rate than the rich expect to experience anywhere else in the world but Australia. A nation where we enjoy the highest minimum wages in the world.

But so many of us simply deny it – the conservatives deny it because it’s more convenient to whip up hysteria about their political enemies. Filling the heads of Australians with complete lies for partisan advantage and not giving a pinch of the proverbial about the human damage that would be wrought if they ever succeeded in getting us to talk ourselves into a recession of our own making . That’s not to mention many of their ideologues – denial is an absolute must when any acknowledgement of our actual economic and social reality would be to admit that their extreme policy fetishes are just pissing in the wind.

The broad left in Australia deny it, because to admit our economic and social reality is to admit that we’ve actually solved most of the big problems that other nations are still grappling with, and they had little to do with it. The problems we have left in Australia are difficult and sophisticated, requiring  a level of thoughtful engagement far beyond the scope of occupying Fuck Knows Where in tents. If the US government responded to the Occupy Wall Street movement by implementing a large policy program that Australia already has – Occupy Wall Street would declare victory and go to the pub!

Then we have the ordinary Australian – who appears to be getting more ordinary with every passing day.

It might be time that Australia grew its reality based community – perhaps acknowledging maybe not Australian Exceptionalism, but certainly our exceptional results and what has actually caused them.  Maybe a little pride in our achievements, a recognition of our triumphs, a grasp of where we indeed sit in a global context – if for no other reason than to crystalise out exactly what it is that we need to solve next, free from the noise of the drum bangers and their oxygen thieving ways when it comes to what passes for our national public debate.

Maybe just a little less unhinging.

 

Possum Comitatus — Editor of Pollytics

Possum Comitatus

Editor of Pollytics

Political Commentator and Blogger

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135 comments

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135 thoughts on “Australian Exceptionalism

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    […] Australian Exceptionalism | Pollytics – This data gives the lie to a number of furphies: that our economy is struggling, that labour needs to get cheaper for growth and profit, that this is the "worst government in Australian history" … It also goes some way to explaining why the “Occupy” movements didn't get so much traction here. It also gives a hint that if we follow too closely in the US' footsteps to austerity and neo-conservatism that won't always be the case. Signs already exist that the gap between richest and poorest Australians is widening. Share this:LinkedInGoogle +1TwitterFacebookTumblrEmail This entry was posted in News and Admin and tagged Australia, change, creativity, economy, failure, luckycountry, networks, newsletter, organization, politics, presentation, reflection, security, society, terrorism on December 15, 2011 by Ric. […]

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  10. Venise Alstergren

    NOLAN DERMOT: Excellent example. Well said.

  11. kerneels

    Possum,
    I have read this at least four times now, and is still amazed and highly impressed. I come from South Africa, lived for some time in the UK and now live in Australia as pensioner, with adult children still in the UK. As you can imagine, as a pensioner, my finances are affected by all three countries, with Australia the prime influence, followed by the UK. In my view, the difference in living standards (with Australia far ahead), and the public amenities available to all (with the UK far ahead, just consider the art galleries!), together with the wide open spaces and the experience of different cultures of South Africa (an eye opener, but not tending to a luxurious life style) make comparisons quite difficult. I must say, as long as I avoid comparisons with the well-off in the Australian capitals, the standard of life in Australia as a pensioner with a fixed income is amazingly good, well above my expectations.

  12. Cuppa

    If there were no whingeing the media would be out of business and their political party, the Coalition, likewise. So, for the sake of having political plurality I guess we’ve got to accept the whingeing, even though it’s fully illogical and trumped up for partisan agenda.

  13. nolan dermot

    The Spanish enrichment from American resource wealth in the 16th Century, is a good lesson; hyperinflation, coupled with a lack of investment in homegrown production of goods and services, led to to eventual economic ruin.

  14. nolan dermot

    Never before have so few, taken so much, so quickly. It’s a resource boom. See it for what it is and manage it wisely.

  15. Mad Dog

    I see that the Newspoll quarterly figures are out. Pollytrend time?

  16. gusface

    Happy New Year

    poss u iz the man

    🙂

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  19. Golf Man

    Yeah, yeah, such excellent economic management and policy reforms… but let’s not forget all that dirt.

    A great big country with a tiny population and all that dirt where hardly anyone lives. If you dig up the dirt and put in on a train then transport it to a port and fill up large ships with it then countries like China, Japan and India will pay you billions for that dirt. That’s Australia’s success story – right there, PERIOD! But don’t let us dig up the dirt, just sell the land off to Chinese companies for $100/acre and let them organize the dirt digging – what could be easier!

    That article pleads acceptance for ignorance of the term ‘two speed economy’. Turned on a radio or read a newspaper in the last 12 months?

  20. SoulmanZ

    Come on socrates, if Abbott said that about global warming you would be all over him like a rash (“well, if you think it is bad here, look over there”).

    The problems in Europe are caused by and large by corruption and greed, on the part of politicians and banks. Nothing about the problems there have any relation to the successes of Europe and the failures of Australia. Europe is in a meltdown. It is like saying “lets compare death rates between modern Australia and World War 2 Germany. Oh wow! We are doing so good!”

    And we have youth unemployment at near 50% in many regions anyway.

  21. Segrave Andrew

    Wakey wakey hand off snakey!
    22 million people live in Australia with a population density that is surpassed by almost every country in the world, except maybe Mongolia.
    You are comparing this with countries like India, Brazil, China, and Turkey that even have cities, like Mumbai, Sao Paulo, Shanghai and Istanbul, comprising more people than our entire country.
    So a negligible number of people (Australians) have spent the last few decades selling or exploiting the exceptional natural resources of a vast continent.
    The exceptional part is that this short-term, destructive, growth has been accepted by what must be an exceptionally apathetic or self-interested public.
    Australians are exceptionally individualistic: http://www.clearlycultural.com/geert-hofstede-cultural-dimensions/individualism/.
    More than half of our nation’s exports are from the mining and agriculture sectors that are simply draining our natural resources at an exceptional rate.
    Australia is one of the top 2 exporters of iron ore worldwide, in the top 3 for uranium and gold, and one of the top 4 exporters of coal. Now that’s exceptional!
    And sometimes we don’t even bother to do the mining and just sell the land itself to Chinese mining giants like Shenhua Watermark Coal. What an exceptionally strange idea!
    We have a deforestation rate of -0.2 and have completely ruined our hydrological system, drained our rivers, and caused irreversible salinity. Australia has experienced the largest documented decline in biodiversity of any continent over the past 200 years. How exceptional!
    We manufacture next to nothing.
    We are just selling our natural resources to Japan, China, and Korea at an exceptionally unsustainable rate to fuel short-term economic growth.
    This is made only more exceptional by the massive current account deficit we manage to retain while giving our country away for peanuts.
    On top of this we buy in bulk cheap clothing and goods from Asian sweatshops where people struggle to live in awful conditions.
    We few Australians have, in part, become exceptionally wealthy by exporting poor livelihoods to the masses.
    The number of asylum-seekers we host is exceptionally low: Australia ranks 68th on a per capita basis and 91st relative to national wealth.
    Carbon dioxide emissions per capita are, on the other hand, exceptionally high: we are in the top 10 worldwide!
    So we are not only compromising the livelihoods of people in other countries but also those of future generations.
    Take a look outside our giant island and consider a little more than these outdated economic indicators….please.
    The vainglorious rant makes me vomit.

  22. Socrates

    Those arguing the toss with Poss would do well to listen to this piece on the ABC about unemployment, particularly youth unemployment, in UK and Europe. It is grim. See
    http://www.abc.net.au/news/2011-12-15/uk-unemployment-rate-skyrockets/3732964

    Poss’s piece didn’t even touch on these other issues, only looking at how things were for those with incomes. When you add in the latter groups as well, life here is much better for almost everyone. Those who argue otherwise should take a trip to Europe and try to
    find a job. Then see what life is like for the 20+ million young Europeans who don’t have one either.

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  24. OzPol Tragic

    Possum. Congratulations on a great analysis. Congratulations on its use by other blogs. Congratulations on the Drum Posting. Congratulations on the well-deserved recognition and Brownie Points.

    You are a splendid marsupial, and I salute you! I’ve enjoyed your work since I started reading 2007! May many many more well-deserved kudos come your way, especially in Class A journals/ conferences 😉

    You don’t suppose Shanners will give you a pat on the back, though; but then you’d worry if he did, eh! 👿

  25. drsmithy

    The Credit Suisse wealth data actually accounted for private debt, as their “wealth” measure was “Net Wealth” – the value of assets minus the value of debt.

    That’s still going to be inaccurate if the value of the assets is distorted by a massive asset bubble, like the one Australian housing is currently in.

    The private debt problem is large, and is going to become huge as housing prices deflate and unemployment rises (due to the rest of the world being in a recession) over the coming years.

    Private debt in Australia is largely driven by our incredibly overpriced housing (ref: Demographia linked in post #90).

    Housing affordability (and the bubble) is, in turn, almost completely related to a) incredibly restrictive land release and use policies, b) easy availability of credit (an aspect of poor lending standards – you may think they’re better than the rest of the world, but that doesn’t make them good) and c) negative gearing driving real estate speculation.

    These factors are absolutely the domain of public policy, so the assertion that the private debt problem is not something the Government can (/could have) affect doesn’t carry a lot of weight.

  26. Possum Comitatus

    The private debt issue seems to be popping up a lot. The Credit Suisse wealth data actually accounted for private debt, as their “wealth” measure was “Net Wealth” – the value of assets minus the value of debt. Here’s Australia’s wealth composition breakdown from that report

    http://yfrog.com/h2k2efp

  27. Innocent Until

    Thanks for the good news. Perhaps the younger generation (that’s you, Possum) will be the one to lay off the constant putting down of ourselves that became tedious long ago.

  28. Ayesha Lawrence

    Yes, yes. Less bleating on about how hard done by we are and enough with the deluded declarations of solidarity with urban and rural poor abroad – as if our reality’s the same. But still no cause for rejoicing in Aussie foresight and brilliance. The goddess of Fortune had more to do with this than any generously superannuated pen pushing policy makers or scribbling econonomists.

  29. Hoff

    Yeah, gonna have to pull you up on the debt part, champ. Our public debt is negligible, yes, but our private debt? Have a look: http://i.imgur.com/ByGRN.jpg

  30. Possum Comitatus

    Sure is Tom – the OECD doesn’t have Norway minimum wage stats as Norway doesn’t have an official minimum wage

  31. tom jones

    Is there a reason the graph of minimum wage purchasing power does not include Norway? I don’t know the statistics, but I have lived on minimum wage in both countries and the money certainly seemed to go further over there…

  32. Oz Oracle – Possum Comitatus | polliepomes

    […] They saved the future of the nation; Yes, added to its reputation, With news that is indeed sensational. Oz well-being is tops, exceptional. […]

  33. Godfrey Moase

    Well Mr Comitatus – I’ve been mulling over your post for a few days now. It’s been troubling me. On one level you’re right. But on another you’re wrong. Here’s my response – http://wp.me/pb4Hp-63

  34. Venise Alstergren

    POSSUM: A sensational hypothesis and a devastating fact “”Then we have the ordinary Australian – who appears to be getting more ordinary with every passing day.””

    And whose religion is footy-all fostered by the MSM-who seem to have a vested interest in keeping Australians stupid, together with our refusal to become a Republic which will undo us. Certainly sport seems to have taken the place of what should have been our chance of breaking away from Britain at the Eureka uprising. Hence the unnatural joy of beating the English at sport. As if it was a life and death occupation? What a futile aim!

    Following the death of QEII the bat-eared, easily led, chinless believer in false philosophies, son Charles will ascend to that extraordinarily twelfth century anachronism, the throne. Talking to flowers Charles? He’s not going to retain his position of defender of the Anglican faith, but desires to defend the faith of the Zoroastrians, Muslims, Hindus and sundry fundamentalists of all persuasions.

    Local politicians, state politicians and Tony Abbott-and fellow fundamentalist Catholics will be dying to meet him, and his ordinary wife. It won’t happen overnight but they will create a ‘them’ and ‘us’ society. It will see Australians set back to the 1940s-1950s. A fate absolutely worse than death.

    The greatest divides/wars in history are between two lots of people who are culturally remarkably similar.

    I digress. It is a superb article. Written, if I may say so, beautifully.

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