I know it’s boring but it’s kind of funny too, Adam Carr at Dad’s Army:
Reading the paper of late, it really is striking that we spend so much time talking about countries like Greece — a small economy with a population of about 11 million — and very little time talking about say Vietnam (90m people), Indonesia (250m people) or Thailand (70m people).
…This is the real story for Australia. And yet what are we obsessed with: China’s $16 trillion dollar economy (PPP basis) collapsing to a growth rate of ‘only’ 7 per cent and the sharp slump in the terms of trade — as if it were somehow relative trade prices that drove long-term economic growth. They don’t – they can’t!
It’s becoming increasing obvious that the national psyche — or that of our policy makers — is completely detached from reality.
He’s right that that is where Australia ought to be looking for growth, with a flourishing outward-looking culture that is invested heavily in Asia expansion strategies across our world-leading services sectors…
Woops, for a minute there I detached from the reality, which is that we are an inward looking dirt-exporter that has woeful interconnectivity with Asian services and supply chains, though it has certainly picked-off and integrated its chosen assets here.
Alas, in terms of dirt, China is so much larger than all of ASEAN put together.
As for relative prices, they are the single-most important determinant of growth in every economy on earth. That’s why the world is gripped by currency war.
