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Trust old values over new myths
Peter Robinson

WHEN politicians and the sharemarket both get obsessed with the jargon of a new economic fad, you can be pretty sure it's getting out of control.

The political and sharemarket talk of the moment is all about the "new economy" and the "old economy".

The "new economy", of course, is electronic - the Internet and all its ramifications, the telecommunications revolution and the idea that the nation's future lies in something that is actually still quite intangible.

The "old economy" is dreary manufacturing, the digging of minerals from the ground and the growing of things on the farm.

Australia, we are increasingly told, is definitely in the "old economy" class: definitely a fuddy-duddy when compared with the surging drive towards a new era of America, Singapore, Hong Kong and so on.

According to this mythology, this is why the Aussie dollar is sagging and why some of our biggest companies (such as BHP) are looking a bit sickly in sharemarket terms, while razzle-dazzlers (such as News Corporation) are soaring, despite an indifferent record and penchant for risk-taking.

"News becomes the new BHP" said a front-page headline in one Friday paper.

But to be gripped by the idea that the sharemarket gives us an accurate vision of what our future is, or should be, is politically perilous and ultimately a very dangerous thing for all Australians.

Sharemarkets are historically very poor forecasters of the future. They are driven by innumerable cross-currents of ramping, self-interest and greed, all of which are served by superficially plausible hopes, predictions and fears.

Of course, no-one but a fool would deny that the world is in the midst of an electronic upheaval which has no historical precedent, has already changed the way we do many things and will have an even greater effect as it really gets into its stride.

On the whole, Australia is far from backward in embracing these changes. It is usually quick to seize on useful technology.

But it is a big leap from that situation to suggest that the so-called "old economy" should be relegated to the rubbish bins of history.

As far as I am aware, the economic law of comparative advantage - that you use and enhance what nature and culture has given you - has not been repealed.

Australia, relative to its population, is still a great repository of mineral wealth and the possessor of tremendous areas of that most precious resource: land.

Its natural ingenuity and its human skills have made non-productive acreage a rich source of grain and fibre and stubbornly complex ore bodies yielders of incredible riches.

So this is an "old economy"? What balderdash! Only greedy yuppies eager to make a quick buck out of gullible investors would promote that line.

In short, the present Australian economy - new/old, whatever you please - has a foundation of real resources and real wealth. Our ingenuity has not suddenly evaporated.

Nor is the world suddenly going to cease needing what we can produce.

The so-called "new economy" is all very well for places like Singapore or Japan, which have no natural resources other than people.

But Australia's future genius lies in applying the appropriate skills of the emerging electronic world to a vast and sustained enhancement of our natural advantages in a creative melding of "old" and "new" economies.

As the fabulous share prices, paper fortunes and feverish hype surrounding much of the "new economy" collapse, as they inevitably will, a more rational assessment of the future will occur.

If Australia is a really clever country - a true "new economy" - it will be in an incomparable position to turn this situation to its own advantage.

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Comment:
In rural Australia the news about dot.com pots of money seem alien and far away. For some it's closer due to the market affecting the cropping cycle, but mostly it distant. However we're all very aware that these things, these global things, are taking our banks and services. The changes are happening so quickly that adjustments are often forced before we can accept them. It's very dazzling out there and we wonder at its falseness. Best to trust the way we know I think. That's why the preparing crowd got my vote and these forums were invaluable.

Regards from OZ

-- Pieter (zaadz@icisp.net.au), March 05, 2000