Updated: Mar 17, 2021
Today we wish to draw attention to global changes Henry and Mrs Thornton perceive. We believe that global economies are going through serious changes, not all of which are sensible.
This is a very sensible change. Four keen democracies met at the last weekend and for the first time the group was represented by the four leaders - Joe Biden, Narendra Modi, Yoshihide Suga and Scott Morrison. The group met by internet ‘as a first step in ramping up US influence in the region and better aligning the interests of member nations’. The USA, India, Japan are all large, and well-armed nations while Australia, smaller and less prepared for conflict, has drawn the bad temper of the fast-growing Chinese economy and its leader, Chairman for life Xi.
Issues discussed included passage through the South China Sea, COVID-19 matters and Climate change. As Geoff Chambers, Chief Political Correspondent of the Australian said: ‘has been The soft power agenda for the re-energised Quad Alliance has been has been extended beyond a security partnership’, but one assumes that ‘security’ will be a large item. Australia is in the throws of concern about fighter planes said to be better than Chinese and Russian planes and the madness of buying new submarines with diesel replacing nuclear motors and with no nuclear armament and which has not yet been signed off. Yet Australia has massive deposits of uranium being only used for making medicines in Sydney.
Greg Sheridan, also on the front page of the Oz, says; ‘Military conflict in the Pacific, which would certainly involve Australia, is becoming more likely’. As I have said many times, Australia should spend far more on defence to get world’s best fighting equipment and train many more war-fighters. Henry is just an elderly economist but feels sure the Australian government of either variety will eventually regret ignoring this advice.
Global warming and protectionism.
From everywhere there are signs of the end of free trade. Reimposition of tariffs is the most obvious sign of this retrograde step of countries but threats of more tariffs to be imposed for countries classed by Europeans as not doing enough to ensue zero global increases of temperature by 2050. For some silly idea, China gets more time, allowing contribution to zero temperature increases by 2060. One reason for China’s fast growth is building five coal fired power stations per annum. Is there a solid plan for China?
Australia is suspect because we sell coal to China, and still have coal fired power stations. But so far we have met every emission cuts agreed. Now that President Biden has rejoined the climate change brigade, I am confident Australia will develop a formal plan for our continued reduction of CO2 and Methane.
China’s aggression is becoming more overt and worrying. Treatment of the Uigurs, Tibetans, people of Hong Kong and regular threats to the sovereignty of Taiwan. Tariff policy is building everywhere will create poverty and protectionism.
Welfare and a fair go for poor people.
Everywhere as global incomes tend to rise deep income shortage is relieved. But simply looking at daily television includes areas where people are forced to flee fighting and great poverty ensues. Surely sensible nations, mainly democracies, can avoid great wars and poverty ensuing. And sensible democracies can find ways to prevent or mediate poverty driving events in countries beyond the laws of sensible living.
Even in rich, democratic nations people sleep on the streets and scrounge for food. One level up people with jobs struggle to provide accommodation and good food for their families. Surely there are ways to get rich folk in prosperous nations to help poor battlers provide for their families. Taxation is the conventional solution, but most rich people hate paying tax and get pretty good at avoiding taxes.
Fiscal and monetary policies
The maddest policies now involve central banks with near zero interest rates and governments spending like drunken sailors. Government spending and great welfare payments are creating massive budget spending everywhere. Conservative governments who buy into this policy – that is, all of them - will receive unpopularity and loss of government for their trouble. Governments who seek to rein in massive spending will presumably also be booted out and the safest approach will be to unleash central banks to create goods and services inflation.
Asset inflation, running madly for years, may take big hits and asset values will take deep dives. Great depression will be the biggest outcome.
Productivity to increase?
'Productivity Commission chair Michael Brennan has said the accelerated adoption of digital technologies by households and businesses through the coronavirus pandemic could be the “spark” that lifts the country out of its productivity slump.
'Mr Brennan, one of the Morrison government’s chief economic advisers, said on Friday that if the nation used “the disruption of COVID-19 to put ourselves on a different path — one of experimentation, risk-taking and ongoing technological adoption” — then that would be “2020’s great silver lining”.' (The Australian, p2, 16 March)
This is enough for today. Enjoy it while you can, gentle readers, save money and invest it wisely. You may survive the ‘reset’ the world is waiting for.