March 2, 2006

The Howard Decade in Australia Has Been Reaganesque, with Similar Results

Filed under: Economy,Taxes & Government — Tom @ 4:09 pm

The Wall Street Journal had a great editorial yesterday (subscription required; March 5 updateHere’s a free link) lauding the Australia’s decade of accomplishment under Prime Minister John Howard:

Howard’s Record
March 1, 2006

John Howard will celebrate a decade in office as Australia’s prime minister tomorrow. Somewhere, Ronald Reagan is smiling.

Like the Gipper in the U.S., Mr. Howard has fundamentally reshaped Australian society through economic reform. When elected in March 1996, he pledged lower taxes, privatization initiatives and labor market change. His government wouldn’t “be a pale imitation” of the Labor leadership it replaced, the plain-talking Aussie vowed. What an understatement. To date, he’s followed through on every one of those promises.

As a result, the Lucky Country is, well, luckier today than it’s ever been in its history. Over Mr. Howard’s tenure, Australia experienced an enormously stable and robust economic boom. The Sydney stock market’s capitalization has swung skywards. The central bank was granted independence and promptly brought average inflation down to around 2.5% over the last 10 years. Employment picked up mightily. Australians now feel a renewed confidence in their nation that strongly echoes that of America’s vibes under Mr. Reagan.

All of this wealth creation has come from common sense observations: if you give businesses the freedom to make decisions about wages, prices and employment, they’ll respond rationally. If you encourage healthy competition among firms, only the best will prosper. If you make your citizens shareholders, they’ll have a personal stake in companies’ success, and productivity will soar. Consider: More Australians today own stock than are members of labor unions, thanks to Mr. Howard’s reforms. That’s what we’d call an ownership society, and that’s why Australia’s economic success isn’t a passing fad: It’s entrenched, and is likely to continue after Mr. Howard has left office.

….. (the previous) Labor government leaders didn’t have the long-term vision or the nimbleness of Mr. Howard, who, in his tenth year, still commands enough political influence to pass significant new reforms. Just consider the labor market laws passed last December, which established one national system of industrial relations laws and new, market-oriented arrangements for setting the minimum wage, among other things. Not even the U.K.’s Tony Blair, still steaming ahead after nine years in power and without a credible opposition candidate in sight, has the clout to push through such a radical move.

On the fiscal front, Mr. Howard has also pushed forward, balancing the national books, wiping out government debt, introducing a goods and services tax to spread the tax burden and cutting marginal income tax burdens several years running.

….. (like US President) Reagan, the Prime Minister has also forged a solid, realist internationalist foreign policy, built on the country’s long-time alliance with free nations like the U.K. and the U.S. He’s also — importantly — forged new friendships in Asia, as evidenced by free trade agreements his administration has inked, and Australia’s participation in regional political and economic forums.

That’s not a significant change from prior Australian administrations, all of whom proved solid allies of free nations. But what Australia has witnessed under Mr. Howard is an escape from its Vietnam-era hang-ups. Consider how Australia led the 1999 peacekeeping effort in East Timor, or its involvement in securing Afghanistan and Iraq. The 2002 Bali bombings, where 88 Australians perished, surely helped secure public support for Mr. Howard’s efforts, but so, too, did the Prime Minister’s resolve.

Countries can make their own luck, as the Lucky Country under John Howard’s stewardship has demonstrated.

What makes an economy grow and prosper has worked so often, and in so many places, that it’s amazing to hear people say “It won’t work” every time it is proposed elsewhere.


No Comments

No comments yet.

RSS feed for comments on this post.

Sorry, the comment form is closed at this time.