You say two speed economy

I say multidirectional economy

As previously discussed, a sustained and unprecedented increase in our terms of trade is reshaping the structure of our economy. This is driving the AUD higher, which is good for importers and for Aussies travelling overseas but an absolute shocker for international educators, retailers and manufacturers. Mind you the decline of manufacturing has been a long time coming and, as I mentioned the other week, is probably unstoppable. In the 70s manufacturing accounted for 22% of the economy and today it’s around 11%. But I digress.

This all brings me to my point, which is all about the economy “stoopid”. Apparently we have a two-speeder – Wayne calls it “patchwork” because he reckons the differences aren’t just between sectors, states and industries but go even further to between individuals, households and even businesses on the same street. My point? Well it’s about the nomenclature (a posh way of saying how things are named). Calling it a multi-speed economy is not 100% correct. It should be called a multi-directional economy. By definition a multi-speed economy has different sectors travelling at different speeds but all in the same direction. However, as we have different sectors going in different directions I reckon multi-directional is more accurate. The most obvious examples would be mining going north and retail and manufacturing going south. I mean there’s more directions than a George Bernard Shaw play and it’s throwing the compass out with the bathwater.

Again this turmoil throws up my usual list of questions – what are we going to do when we hit the bottom of the quarry? Do we even need a manufacturing sector? and shouldn’t we have a sovereign wealth fund?

Hmmm, with questions like that who needs answers!

And in other news… by 2030 China’s share of global economic power will match America’s in the 1970s and Britain’s a century before. According to a book by Arvind Subramanian reviewed in The Economist, this will be dictated by three forces – demography, convergence and “gravity”. The “gravity” bit assumes that commerce between countries depends on their economic weight and the distance between them.

How’s ya Mandarin?