Saturday, February 05, 2011

The patchwork economy

In an article in the Australian, Dennis Shanahan wrote:

THERE has been a radical change in the economic lexicon of the Gillard government, the economy is no longer a "two-speed economy" but a "patchwork economy". This alteration in political imagery and language marks a dramatic shift in Labor's approach to economic management and reform.

It is not a superficial or accidental change of language but reflects a fundamental change in emphasis in economic policy which has come from the turmoil of the past 18 months, which cost Kevin Rudd his job as prime minister.

I was interested in this comment because it bears upon something that I have been writing about for a number of years, something that is also relevant to my discussion on un and under employment.

By its very nature, the concept of the Australian economy is a statistical abstract, as are those of the  various state economies. Just because there is a political boundary, just because we collect statistics based on those boundaries, does not of itself say anything about the validity - the meaning - of the resulting statistical constructs.

In the case of Australia, I have long argued that the way statistics are used acts to conceal variety to the sometimes detriment of policy making. In the case of NSW, I have gone further and argued that the progressive fragmentation of the state means that the very concept of a NSW economy has lost meaning. It now exists only in a statistical sense.

   I think that it is quite clear that Australia is indeed a patchwork economy. The problem to my mind lies in properly understanding the implications of a "patchwork economy". Assuming that the concept is sound, what does it actually mean for public and especially economic policy? To what degree does it mandate changes in approach?

I think that the answers to these questions are unclear. However, at the very least, it is a useful reminder of the need to take variation into account, of the way that general policies play out in quite differential ways in different parts of the country depending upon on-ground conditions.


Anonymous said...


I'm still waiting to see where you are going on your present series of posts before commenting, but I just wanted to note in agreement that you have consistently highlighted the differences in "specific application" as opposed to "trends" thrown up on various issues.

How to resolve this is the question I'm waiting commentary on. Maybe governments can only effectively legislate on desired trends, with a totally separate public service entrusted with practical application of policy on the ground - specific to area and need?

Off topic, but thoughts on Qld troubles. Why can't we send the TAFE students (plumbers, electricians, builders, etc.) to Qld for six months' "prac" on rebuilding the homes and towns affected? I bet six months up there would be worth twelve months dry, classroom learning hands down.


rummuser said...

Aren't all economies 'patch work'? Let us take India. The total statistics for the country hides significant micro level imbalances. In a Federal set up, this is unavoidable. The same can be said about the USA, UK, China, etc.

Jim Belshaw said...

I am not quite sure where I am going to end up in my current series, KVD. I am clearing ground at the moment in my own mind.

My rough mudmap says look first at the problems that the PM faces in achieving her objectives, then look at solutions.

Jim Belshaw said...

That's very true, Ramana, and not just in Federations. Some of the posts you have put up on India draw this out clearly; then we have current Chinese example; and the rise and fall of US cities or regions.

The problem I think that we have had in Australia lies in an inability to properly recognise and to accommodate those variations.