Our happy isle basks in the cargo cult economy

Melbourne Herald Sun, Friday December 31, 2010
It's a new year tomorrow, so how are things with the cargo cult economy?

You might remember from past New Year Marketeer columns that I recalled how the natives of New Guinea believed that the material goods brought to them by allied troops in WWII were gifts from the gods.

Food, machines, weapons, motor cars all appeared magically from the belly of cargo planes. After the war ended the gifts stopped. Then movements grew up to encourage the gods to restart their largesse - "cargo cults".

So they built air ports out of straw, planes of bamboo, radios from coconuts - to encourage the return of these magical goods. And even when repeatedly the cargo did not materialise, they blamed sorcerers and crooks, but continued to believe.

In much the same way, in the western world, for years investors believed stocks would always go up, wealth would always grow, goods would always flow, donated cheaply by the goodwill of China, and that economies never needed to balance.

Then two years ago the GFC blew down the straw airports and banana-leaf control towers leaving us all much poorer, sitting on a pile of straw.

So of course we have now learned our lesson and started building some substance, right? Developing new industries and infrastructure and manufacturing so that we will once again produce real products, instead of inflating share prices?

Well, er, no. You see the natives of this happy isle have indeed been blessed by the gods. We are being showered with cars, clothing, wide-screen TVs, flown in from overseas in cargo containers.

We can sit back in our deck chairs or our computer desks knowing that all these luxuries and goodies are being supplied by the world, and all they want in return is a few rocks from our gardens.

Well we have such big gardens and so many rocks that we will never have to worry about working again, will we?

I mean they are already paying us twice as much for our rocks than last year and even while the world was in crisis, our plane loads of cargo kept landing like clockwork.

Now some pessimists are calling out, what happens if the world doesn't want our rocks any more? Or how come the rest keep getting smarter and developing their science and industry, while we are re-arranging our stacks of straw?

For all the sarcasm we pour on the times, the 1950s and 60s wealth was used to give us the industries and infrastructure that allowed us to grow into a leading economy. Today we see any such initiatives maligned at both federal and state level.

A broadband network? "We can't afford it". But if we can't afford it now, when will we ever get up to world speed?

Desalination? "A waste of money". But what happens when the next ten-year drought hits our expanding cities?

"Universities should work on a user-pays system". This said by politicians who were themselves able to advance in life because of free education.

Investing our good fortune on the future, rather than buying yet more throw-away consumer goods, is not fanciful idealism, it's good sense.

We need to plan the use of all that money that's pouring in. Because sure as eggs, some day those cargo planes will stop landing, and so will those happy new years.