GOOD TIMES DOWN UNDER
August 18, 2005
Now in its 14th year of uninterrupted growth, Australia is experiencing its lowest rate of unemployment in 28 years (5.1 percent), a relatively low inflation rate (between 2 to 3 percent) and a stock market that is hitting record-breaking levels, says American Enterprise contributor Tom Switzer.
Why then has Australia been so exceptional? Thank a smart mix of free-market reforms and prudent monetary and fiscal policies, says Switzer:
- In the late 1970s, the free-market position was adopted by conservatives like future prime minister John Howard; then the traditionally socialist Labor government ditched its old shibboleths in the mid 1980s and implemented a reform agenda.
- Prime ministers Bob Hawke (1983-91) and Paul Keating (1991-96) converted the nation's protectionist mentality to the idea that living standards depend on Australians' ability to compete in the global marketplace.
- From this idea flowed the agenda of tariff cuts, lower taxes, reduced union power, budget discipline, low inflation, financial and exchange-rate deregulation, privatization of government owned businesses, increasing Asian engagement, and more independent monetary policy.
- Prime Minister John Howard has sustained and extended these reforms since his election in 1996; the benefits have included a surge in productivity, lower interest rates, and a wider choice of goods and services at lower prices.
Australian society now offers unparalleled opportunities. Far from producing Dickensian sweatshops, as predicted by the unions, the workplace changes have produced steady and low-inflation wage growth. Trade unions have dramatically declined while the number of small business owners and shareholders are on the rise. Moreover, a recent study shows that the economic rewards have been evenly spread across poorer, middle and richer regions, says Switzer.
Source: Tom Switzer, "Australia Booms With Economic Freedom," American Enterprise, July/August 2005.
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