The AFR begs the question

The AFR opinion pages (behind paywall) have two comments that refer to the changing shape of the Australian economy.

The editorial The future must let go of the past talks at length about the need to accept the changing nature of our industry, and not to try to retain existing industries.

Unfortunately the editorial is devoid of any commentary on what the future looks like, only that the past must be let go.

On the facing page the heading of the opinion piece How to pick the industries that suit us best initially ofers hope.  It doesn't however, tell us what those industries are, but it has a far more informed policy prescription than anything else.

The writer, Bill Carmichael, helpfully reminds us of the difference between what economists call productive efficiency and allocative efficiency. In management babble this is the difference between doing things right and doing the right things.

Carmichael points out that the real advances in our economy in the 80s and 90s came not from productive efficiency but from allocative efficiency. It is also instructive to note that in the 90s competition policy was embraced by all Australian business sectors, offering by criticising each other. Everyone complained about how lack of competition in banking, transport, energy and telecommunications was restricting their ability to perform. Today that same business community only talks about productive efficiency and in particular wages and employment costs.

He notes that the industries that are closing have realised that no level of improvement in their productivity would have made them competitive.

He concludes that "Unless policymakers acknowledge the dominant contribution improved allocative efficiency has made to the performance of the economy, they risk creating a large and growing constituency for unproductive reform." 

Against which I would note that the slowing of Australian productivity improvement coincided with the creation of the Productivity Commission.

Somewhere in this whole discussion one would hope that the importance of high speed broadband infrastructure might feature.  But that seems to be beyond the AFR.