Productivity: Market economy critics don’t have a better way to lift incomes

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Australia’s mix of a market-based economy with a social safety net has served people well.

Compared to the European welfare state of higher taxes and more regulations, Australia typically has better outcomes on employment, incomes and productivity.Australians are on average a bit less rich than Americans. But Australia is more equitable and locals are more likely than Americans to improve their economic status relative to their parents .To be sure, they are not always perfect.

“Australian governments should follow the lead of the United Kingdom and the United States where pharmacy colocation – for example, pharmacies located in supermarkets – is allowed,” the commission says.Similarly, state and local governments have the power to streamline zoning and planning red tape for foreign supermarkets such as Aldi, to compete against Coles and Woolworths, which are expert at navigating the system and snapping up the best store locations.

In the US, President Joe Biden is spending hundreds of billions of dollars on subsidies for renewable energy and semiconductors. It’s a slippery slope when politicians in Washington and Canberra think they can see the future and pick the winning industries, businesses and technologies. In an inflationary economy running beyond full capacity, choosing winners in special sectors means other industries must shrink.

Treasury appears to have drifted from its old hard-headed economic rationalist approach that helped deliver prosperity.Undoubtedly, there is a public mood out there for an alternative, especially among the less experienced and purpose-driven younger generation. Politicians have detected this in their focus groups and polling.

 

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