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SWF 2011

SWF 2011 REVIEW: The "annoying but convincing" economist Daniel Altman

Friday, May 20, 2011
It can't be usual for a moderator to introduce a speaker as "annoying" but that is how Sean Aylmer, editor-in-chief of BRW, introduced Daniel Altman at the Sydney Writers’ Festival’s Business Breakfast: Outrageous Fortunes; "Annoying but convincing".

Altman is an economist who was the youngest person ever appointed to The New York Times editorial board. He left journalism for academia and to write the provocative book, Outrageous Fortunes. The book challenges received wisdom on the world’s economies and their future over the next 30 years.

Steered by Aylmer, Daniel Altman took the audience on a world tour that began in China. That country’s growth, he argues, is unsustainable, driven as it is by rural migration and copying goods produced elsewhere. Those trends, he says, will “run out of gas”. By that time — perhaps twenty years from now — China will probably be the world’s biggest economy but, with slowed growth, it will be only a matter of time before the US overtakes it again.

Can China stay on top?
For China to stay on top, he told the audience, it would have to fundamentally reinvent its culture, which is hierarchical and stifles innovation and entrepreneurialism. Those are the factors that drive growth once a country can no longer power itself through urbanisation and copying others. (see video below)

The world tour veered off to the European Union, which Altman suggests cannot easily continue to integrate when its member economies are at such different stages and heading in divergent directions. His data shows that member states can be grouped into four quadrants according to their economic data. The quadrant turn out to exactly match their geographic locations, with the countries in Europe’s northwest having the most potential and the ones in the south having the least. To have one monetary system and fiscal policy in these circumstances doesn’t make sense, Altman says.

Altman on Australia
Of Australia, Altman says, we are good at producing wealth but we’re too small to produce enough goods and services to buy with that wealth, which is why living here is expensive. On a GDP per capita basis, what can be bought with $41,000 in the US costs $58,000 here.

Our opportunities are tied up in growing through immigration and exporting to the emerging economies on our doorstep. “Australia,” he says, “is a machine that produces productive Australians.” Labour is an input to that machine that, like all inputs, might cost a little upfront but it will pay off in the long run.

That is why, he says, we need to reward our politicians for taking a long view and not punishing them for costs incurred in the short term.

Climate change - it's not one or zero
When the session was thrown open to the floor, Altman was asked about climate change. Even if climate scientists are only 10 per cent right, Altman said, that’s enough danger that they should still be taken extremely seriously. Would you, Altman asked in return, cross the road if you were told the chances were as high as one in 10 of being hit by a car?

Climate change, he said, needs to stop being discussed as if it’s a one or zero event. It’s happening and it needs to acted on even if the least dire prediction is the correct one.

From the buzz of conversation after the session, it was clear that Altman had given a couple of hundred Sydneysiders more than breakfast as food for thought.

By Steven Lewis
Steven Lewis writes the Kindle Self-Publishing blog for writers interested in becoming self-published authors. His seminar Selling Your Ebook on Amazon runs again at the Sydney Writers’ Centre.

VIDEO: For our economist readers .. Daniel Altman on the future of China, speaking at the Carnegie Council earlier this year.


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