Royal weddings, republics & real problems

In Monarchy, republics & the royal wedding I discussed shifting support for the idea of an Australian republic. Last night's ABC Q&A program focused on the question of an Australian republic. It's not on line yet that I can see, but I will post the link when I find it for those who are interested.

The program began with a one hour historical perspective on the monarchy. This was quite interesting until towards the end it really became quite slanted. There was still some interesting material, but I became annoyed. I ended up watching a bit of the Q&A program, but then switched it off. I did watch the twitter feeds for a while, they were far more entertaining, although computer memory problems made this difficult.

Older Australians certainly do have a degree of nostalgia, of fondness, for the Queen in particular. I thought that Neil's post I haven’t been watching any of the Royal Wedding lead-up coverage captured this rather well. However, and this was a point I made in my post, with republican support most heavily concentrated in the 35 to 49 age group, it is changing attitudes among younger voters that will determine final outcomes.

In the meantime, while the Australian media focuses on the Royal Wedding and, to a lesser degree, the republic question, the Australian dollar has continued its rise against the US dollar. Instead of wondering  when the Aussie would reach parity, the focus now is on when it might reach a $1.15 US. The US dollar has fallen against other currencies as well, but the rise in the value of the Aussie has a disproportionate effect because so much of our trade is US dollar denominated.

In a post a few days ago, Musings on turning five, I looked back at some of my past writing.

In all this, I have also been concerned about balance in the Australian economy.

Mr Akaya's view was that Australia's weaknesses in manufacturing and services meant that Australia could not compete in a changing Asia. Like it or not, there is some truth in that view. There I said in part:

Once wool and other primary products dominated Australian exports. Today, mineral products and especially coal and iron ore are equally dominant. On my rough calculations, Australia's export base is less diversified than it was twenty years ago.

In the late 1980s and early 1990s, service exports were seen as the new game. I stand to be corrected, but outside education services that are now in trouble, I do not know of a single services sector that has established a really significant net export position.

I have tried to write on some of this, but I doubt that I have had any impact even at the margin.

Now none of this may matter. It may be that the current mining boom will carry us through to a golden future, I just doubt it because I have been through previous resources booms.

Extending this argument a little, to my mind Australia faces considerable potential problems along two dimensions. The first is strategic, including responding to the rise of China and now India. The second is economic.

Globally, the world is going though a period of economic rebalancing and change. Within this, Chinese economic restructuring is very important. Can China rebalance its economy? There has been a strong line of argument for some time that says no, or at least not in the short term and not without pain. As I have argued, I don't fully share that view, but I do think that there are troubled waters ahead.

I think that we can add two further things to the mix.

The first is peak oil, the point at which global oil production starts to decline. Ten years ago Peter Hill, one of my professional colleagues, argued that peak oil was far closer than anybody realised. There is now evidence that it may have arrived, meaning a growing gap between demand and supply, with the gap closed through price increases. The second is the possibility of climate change.

We could also add to the mix that global production of certain forms of fertiliser may have peaked.  

From a purely Australian and New Zealand domestic viewpoint, I think that we have to ask the question what if, maybe what when, we do when things go wrong. I am not a doomsday person, being by nature an optimist. However, I do think that there is a degree of naivety in current reporting and thinking.

Perhaps more later.