David Llewellyn-Smith is on a roll. The ABC picked up his great article from Macro Business and put on The Drum at the weekend, summarised thus:

“Australia’s business environment is unsustainable, and propping up dying companies like Qantas rather than improving competiveness will only make the problem worse, writes David Llewellyn-Smith.”

David’s two central points are these:

The first is that Australia is on the verge of an economic reckoning of a magnitude that few understand. … [We are at] the end of a series of booms that have left our economy so bloated, and our real exchange rate so high, that we are unable to compete successfully in just about anything that is not buried in the ground [mining] or concreted into it [housing].

The second point I’ve argued is that our economic mandarins of the day – Labor, Liberal, the executive and monetary authorities – would be serving the nation best by getting ahead of this adjustment. They should be preparing the nation for a generational belt-tightening; they should be talking down costs and talking up productivity; they should be enacting new policy settings ensuring that we preserve every potential dollar of export revenue available to the economy; they should have done whatever it took to lower the dollar; they should have innovated policy to ensure housing stayed in its box; they should have done what it took to ensure some diversity in our economic output; they should have given us all the reasons why it was needed, over and over again.

Says it all really … we have a seriously uncompetitive economy and our leaders don’t get it. The obvious consequence is that the voters don’t get it either. He goes on …

We have, in short, done absolutely nothing to prepare for what is coming. We have pretended it’s not happening in the hope that something will come along.

Something will come along alright … and it won’t be pleasant.

A community/society/polity often needs a great crisis to shock it into action, into a change of direction. Naomi Klein’s great book The Shock Doctrine talks about shocks at turning points in history.

In many ways, 2008 was was not a big enough crisis. … Maybe next time?

Anyway, read the whole piece here. It’s well worth five minutes.