THE AMERICAN WAY:

Punching Above Our Weight: Paul Kelly, Winter 2004, Policy)

‘[H]ard power' assets are important and ... Australia's future influence will be determined, in part, by these assets—GDP, population size and technological sophistication.

Our improved relative economic performance since 1983 has been a trigger for favourable global re-assessments of Australia . Globalisation while constituting a challenge for Australia is also a distinct opportunity. Australia has been more successful in adapting to globalisation than many other nations. This is a function of our ability to embrace economic reform and a more flexible economy, the quality of our institutions and governance and our capacity to maintain a skilled workforce. However despite this success there is a deep uncertainty about the place of Australia in the global economy and the political left and right seek to repudiate the framework of the past generation.

The logic of Australia 's position is to convert the non-availability of any political or economic union into a plus—that means becoming a state-of-the-art exemplar of the globalisation model. It requires becoming one of the most open and competitive economies in the world exposed to global markets and the disciplines they demand. This is the direction in which Australia has been heading since 1983, however there is a reluctance among political leaders to articulate this goal as a national strategy. [...]

The second strategic response to advance our ‘hard power' is the renewal of Australia 's tradition as an immigration destination. Australia should decide to remain a country of population growth into the 21st century by relying upon immigration and seeking to stabilise the fall in its fertility rate. The ANU's Professor Ross Garnaut argues that the success over the next half century of today's rich countries will be heavily dependent on demography. The rich countries will divide into two camps—most with declining and ageing populations facing the risk of economic stagnation and a small group of rich nations led by the US that take the path of population growth and immigration. This will be one of Australia 's vital choices. Garnaut sees a large gap in economic performance opening between nations of immigration and other rich nations. For Australia it is the choice between a strategy to stay relatively young or submitting to the European twilight of decline.

A decision by Australia to commit to a growth strategy that involves both fertility and immigration would be a sensible response in the national interest. There are political and policy hurdles to such a decision. The political hurdles would arise from being so forthright about population growth. The main policy concerns arise from the contentious debate about whether public policy can influence fertility. The evidence is mixed but that is no reason why the Australian Government should not make its own assessment of this matter in the cause of trying to stabilise fertility decline. Is this not a desirable outcome?

In Australia there is a tendency to denigrate the link in developed nations between population and national power. This is not the case in the US . For example, in his book The Paradox of American Power , Joseph S. Nye Jr . from Harvard University 's Kennedy School of Government, strongly asserts this link. Nye says: ‘Population is one of the sources of power and most developed countries will experience a shortage of people as the century progresses. Today the US is the third largest country; 50 years from now it is still likely to be third (after only China and India ). In its effects on population and the economy, immigration bolsters America 's hard power.' The same argument applies to Australia .

It seems to be an embarrassment in Australia to state this truth. However it was made explicit last year by one of our leading economists, Professor Max Corden , who pointed out that any form of defence ‘costs money and the need is unlikely to increase with population but the capacity to pay for it will'. Corden said: ‘I have no doubt that Australia's influence, whether in the region or the world, would increase if it were a substantially larger economy able to provide more funds in aid, in contributions to international organisations or in joint international action.' He went on to say that ‘there are many ways in which other countries can benefit or harm us, and also many ways in which we can do some good in the world—if that is our desire'.

The difference between having a population growth strategy and not having a population growth strategy could be significant. The successful combination of two policies—strong economic growth and strong population growth—would exert a significant impact on Australia 's GDP rating by 2050. For example, in his recent BCA paper Glenn Withers argues such a trajectory would take Australia by mid-century towards the GDP of middle ranking European nations and keep us around the GDP of middle ranking Asian nations—as opposed to the low growth path that reduces Australia to a third order of economic weight. It is fatuous to think the latter option would not erode our standing, respect and influence within the region. It would also, eventually, undermine our national self-esteem and encourage the multiple social and equity problems that come with low economic growth and population decline.

The missing element here though is reChristianization.

Posted by Orrin Judd at July 11, 2004 8:28 AM