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  • Henry Thiornton

Saturday Sanity Break, 2 December 2017 - Why is Australia Prosperous?

Australia is prosperous because ..... (fill in here.) John Carroll's new book, reviewed in the latest edition of Quadrant, has an interesting answer. It's about Australia's 'Golden Cities'. This is a summary of a review by Peter Murphy.

'Land of the Golden Cities is reminiscent of the last great period of national self-examination that produced Russel Ward’s The Australian Legend (1958), Robin Boyd’s The Australian Ugliness (1960) and Donald Horne’s The Lucky Country (1964). Carroll’s book is more economically literate and sociologically realistic than these. His insights are also more deeply anchored in cultural, mythological, psychological and historical profundities.'

Australian exceptionalism is proven by the long boom from 1991 to 2009 with no downturn of GDP per capita. It is a quibble, but 1990/91 saw a severe recession and since 2009 income per capita has declined. This initial recession perhaps explains the long boom. My friends in Treasury always said Australia benefitted from an occasional really good recession. And since 2009 in the aftermath of the global crisis Australia's GDP per capita has declined. But it was less than the fall in other countries, that supports Carroll's 'well done Australia' performance.

My position is that with better policies Australia could have done far more to make its citizens more prosperous. I shall park this idea for a future column.

Back to John Carroll's Golden Cities. ...

'The world’s major wealth creators are thalassic or riverine cities or often both. Hong Kong, Shanghai and Singapore in East Asia are good examples. Not all cities, though, are equal in their capacity to create prosperity. A handful do better than most. In the past three decades Australia has done better than even that handful.'

'Australia’s big cities are golden. This means they work splendidly. They generate high levels of satisfaction, liveability, wealth, real incomes, employment and cultural enjoyment. What got them to this point? Carroll provides vivid pen-portraits of Melbourne and Sydney. Both residents and visitors to these cities will readily recognise the two cities. Carroll’s depictions are like a tapestry. They are rich in detail but tell an over-arching story. The point of the story is to explain what has made these cities so successful.'

' Carroll observes that prosperity is the last great social science mystery. This is astute. Adam Smith offered the first great explanation of prosperity in The Wealth of Nations (1776) six years after James Cook mapped the east coast of Australia. It is surprising that, since Smith, there have been remarkably few systematic accounts of prosperity.' ...

(I will if I may point to one of the towering counter-example, Ian McLean's Why Australia Prospered, reviewed in this magazine.)

Murphy continues ... 'As Carroll notes, we know a lot about modernisation, industrialisation, secularisation and rationalisation. Yet prosperity largely remains a puzzle. The modern economics profession doesn’t help. It long ago lost interest in explaining big-picture social phenomena. Yet prosperity is anchored in large-scale social mechanics. It is a function of one or more or all of the following: markets, industries, cities and publics. How these work, and in what combination, and animated by what kinds of social and cultural forces, remains unclear.'

' In the case of Melbourne, Carroll suggests the following factors. By OECD standards Australia is a low-regulation, low-tax economy. In addition Melbourne has a diversified economy. When one industry declines, another expands. Melbourne has also benefited from immigration. It has attracted large numbers of ambitious, hard-working newcomers, who have complemented established generations of Anglo-Australians. This kind of complementarity is also echoed in the city’s topography and its meld of inner-city and suburban life.

'Sydney is Australia’s panoramic harbour city. It has aspects that Melbourne, pivotally a river city, does not have. Sydney is an iconic city. The Harbour Bridge, the Opera House, and the beautiful Circular Quay–Harbour–Manly–Bondi Beach ensemble are instantly recognisable around the world. As Carroll remarks, Sydney is Australia’s only global city. It is pre-eminent in attracting international tourists and corporate headquarters. Melbourne is Australia’s design capital, Sydney is its media capital.

'Sydney is also Australia’s most political city, mainly because it is geographically close to Canberra. That raises an interesting question, though. How much does the power of governments or big organisations affect the workings of cities? Carroll is ambivalent on this point. He admires good civic leadership. Jeff Kennett’s Victorian government in the 1990s is a prime example. It set a tone that helped revitalise what had become a stodgy, lifeless CBD in Melbourne. Yet while power plays a role in cities it is not decisive. Another factor counts for more. Let’s call this X-factor self-organisation. That’s a fancy sociological term for DIY, doing-it-yourself'.

Read the full article here. (If you have not subscribed to Quadrant Online you will be invited to do so. Your reward will be hours of reading fun each month.)


If Sydney is the political city, as John Carroll says, it is a pity it is currently off the rails. 'Turnbull is finished' say the pundits, but there is no alternative. Bringing back Tony Abbott, either to the cabinet or as PM might save the furniture. But short of some very bold move indeed, such as bringing back John Howard to Bennelong the cleanest solution might be a general election and let the chips fall as they will.

We wish Barnaby Joyce well in his bid for reelection today. In my view, Barnaby would make a damn fine PM, provided only that he found a top economic advisor. One immune from the entrenched ideas of the sheltered workshop that is Canberra


Fiona Prior visits Rembrandt and the Dutch golden age: Masterpieces from the Rijksmuseum. More here.

The Sporting Life

Rugby League World cup final looms against the PPs tonight, and Henry will be watching.More later in the weekend

Second test begins today is Adelaide where the pitch may play games. The PPs (Pestiferous Poms) are complaining about sledging by the Aussies, and even the laughter of Steve smith's response to newbie Bancroft's joke about his meeting of Johnny Bairstow.

Gimmie a break, Mr Root.

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