Wednesday, March 02, 2005

Foreign Debt

MelbournePhilosopher

Well, at one level, the situation simply cannot continue. The exchange rate, interest rates and inflation are a balanced equation. If we don't rectify the situation, import costs will simply rise until there is parity between what people can afford and what they buy. The problem lies in the effects of this on people's lives in the meantime. The effects will be mostly negative.

It's a sad thing that we didn't see
this article by Tim Colebatch just before the election. One wonders whether the newspapers are just waking up to the fact that even more than a priveleged position, it is important that your customers have enough money to buy your product.

The outside world only wants our minerals. I have heard this point before, and don't believe it's the whole story. The counterpoint is that all Australians want to import is technology. As soon as it becomes cheaper to make technology locally, someone should start doing it. It's just comparative advantage at work. Additionally, the quality of our non-resource exports is at question. If we made better products that were cheaper than the competition, then the world would buy them. Part of the _reason_ that the world doesn't want our other offerings is because we are bad at them. And part of the reason for that is that our government doesn't rewards the technology industries, so nobody does high-quality R&D. Sure, there might be the occasional group doing export-quality research, but it's an exception, and mostly occurs in Universities and funded institutions rather than in private industry. A suitable set of industrial policies could easily redress this balance, without greatly affecting the rest of the market. The only reason I can think of that thoe government doesn't do this is a failure to understand what technologists *do*.

Cheers,
-MP

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