Rudd and Rudd - brothers

Comments on Greg Rudd “Always expect the unexpected”, 30/12/2010, http://www.theaustralian.com.au/news/opinion/always-expect-the-unexpected/story-e6frg6zo-1225978219105

While I was amused when reading the first half about we Australians making jokes about our PMs, I have some questions about G Rudd's second half.

His argument about America and China in terms of unintended consequences, for example, may be only half correct. Clearly, access to large overseas markets like the America's has played a useful and possibly important role in China's rise over the past two decades, the seed of its rise was sod in the late 1970s. Further, the key elements of China's economic rise have lied in its political stability with its main focus on economic development as opposed to political campaigns that has characterised the Mao's era proceeding the reforms.

So, in my view, America to the most played a useful reservoir role to China's economic growth to adjust its uneven processes, and to accelerate its capital accumulation process. But that should not have been the deciding factor.

Another is his argument about 2011: "a leading global issue for 2011 is going to be workforce availability and cost of labour."

That will undoubtedly be true for Australia, possibly for some developing countries including possibly China (the emerging shortage of surplus rural labour supply), but it will be unlikely true for the US, Japan and most of Europe and they still have a lions share of the world economy. The latter' economies will still be struggling to rid of their recession or debt issues or austerity consequences like the UK.

The world has been multi speed economy! The global economic crisis, more more accurately, the North Atlantic financial and economic crisis, has made the differences in economic growth among the world economies much more contrasting and possibly more enduring!

However, for Australia, there is a question about the improvement or benefit for local "labour", of mining boom. Many business people argue that immigration should be used to ease the pressure of labour shortage, but they are for their own interests, that is, more immigration and increases in labour supply will depress labour wages and increase their profits at the expenses of local labour.

The government should consider the impact on local businesses and local labour of immigration, as compared to just taking a pro business approach and liberalise immigration. That is unjust to local labour both in terms of the direct effects on current wages and the indirect effect on their skills upgrading!

That is the essence of analysis of political economy!

More interesting time lies ahead to watch!