This is a copy of speech Ron made at the Mannkal Scholars and Friends Cocktail Party, held at the University of Western Australia in April 2013.
Let me open my remarks tonight by acknowledging all those settlers who came to Australia, from so many countries—many under adverse conditions. They brought with them the ingredients of civilization that we still enjoy today. We often forget that Australia was an extremely inhospitable country, so inhospitable in fact that the early Dutch explorers could not get out of here fast enough! The success of civilizations can be measured by the number of people who flee from defective civilizations to good civilizations. Australia ranks well on this scale, despite what the pessimists might tell you.
Our remarkable civilization is, indeed, largely an unforeseen and unintended outcome of us submitting ourselves to moral and legal rules which were never ‘invented’ with such a result in mind. Rather, those customary and legal rules grew because those societies which developed them, piecemeal, prevailed over other groups which followed different rules, rules that were less conducive to growth.
The notion of ‘spontaneous order’ arising where none was intended has not been lost on some of our greatest thinkers. ‘Fatal conceit’ was a term that one of our favorite economists, FA Hayek, used to describe the optimistic delusion that central planners can manage economic growth by substituting their own ‘expertise’ for the information generated by the billions of daily interactions that occur in a complex free-market society. Translating ideas like this, into our business and personal lives, is a worthy challenge; that of repairing our uninspiring political landscape which, in my view, is completely broken.
I remember economist Milton Friedman once saying when describing the battle of ideas that:
“The important thing is to establish a political climate of opinion, which will make it politically profitable for the wrong people to do the right thing.”
That was Friedman’s way of steering politicians towards positive policies and away from their re-election priorities.
Another thing that keeps us well-occupied at Mannkal is the pressing need to combat the level of economic illiteracy that exists in Australia right now as we (collectively) try to borrow ourselves to prosperity. Our Federal Government is borrowing at the rate of $100m per day, $37m of which is to pay interest on our current borrowings. So, Australia is in the same position as a household paying its mortgage on its credit card or a business borrowing money to pay its taxes. Both are desperately in need of a ‘reality injection’. In Australia, that painful injection will almost certainly be inflicted on our politicians by our next generation, as it is they who will bear the brunt of the current generation’s profligacy. No wonder young people are alarmed!
I saw similar situations when I visited four cities in Greece, last year. If you don’t think there are similarities, let us compare Australia’s household debt to net disposable income (amongst the highest in the world) at 206 per cent, with Greek household debt to net disposable income at ‘only’ 115 per cent.
On that measure, Australia is about twice as bad as Greece. Now there’s a sobering thought!