Sort of related, I was reading this piece (
https://theconversation.com/vital-signs-economically-australia-is-at-risk-of-becoming-germany-and-not-in-a-good-way-122217) - about how Australia is looking like Germany economically.
I'm not knowledgeable about Germany and there's a lot about Federal economics I don't really grasp, but there were some good explainers like this:
"That’s right: even for 30 years into the future, investors think its safer to lose money by parking funds with the German government than to try to make money by using them in other investments."
"Structurally balanced budgets are important, and thinking government debt doesn’t matter is deeply misguided.
But this is the situation we face:
private demand is chronically weak
our physical infrastructure has not kept pace with population growth and modern needs
our social infrastructure (including all levels of education) is not up to standard
interest rate cuts are running out of puff
the government can borrow in its own currency, long-term, for close to nothing"
However, the article concludes that:"Any government that won’t borrow and spend up big and smart in these circumstances is making a huge mistake – one for which we and our children will pay dearly."
What do you guys think? How is the economy doing? What are some of the weaknesses/gaps? What are some of the policy solutions?
Some other articles I've been reading (on the back of the Grattan Institute's report into Generational Wealth) have argued that:
- Younger people (<40) are paying more into social systems than people of the same age were in previous decades
- Older people (>45) are the net recipients of social systems, but are paying very little into them
- At the same time we're in a situation were an older person's net worth is 3-4x that of a younger person's AND there's been a demographic shift so that there are fewer young people to pay into systems to support old people
- There seems to be a consensus that taxing super @15%, increasing estate tax and ending negative gearing would be relevant shifts to rebalance things so that social systems remain healthy and support the old and the young