Is 21 years of uninterrupted growth by Australia due to good economics

Is 21 years of uninterrupted growth by Australia due to good economics and can we continue that growth for the next decade?

Economics gets a bad press as it is known as the dismal science, prone to highlight the risks and dire consequences of alternate courses of action.  What may raise a customary laugh in introducing an expert in this field might well take the form of: please welcome .......... who has successfully predicted 14 of the last two recessions. But economics is a social science whose theories are routinely hijacked by non-rational markets and the vagaries of human behaviour. Economist’s reputations suffered a further blow since most failed to predict the global financial crisis.  There were some notable exceptions but invariably even from this elite group you will find that this correct prediction was just one from a long list of prior failures.

When I first studied economics in the mid-sixties Keynes and Samuelson dominated our textbooks, and there was a sense sound economics would guard against recessions. Keynes was one of the first philosophical economists who insisted economic theories must lead to fairer more ethical outcome for everyone. Keynes’ views were no doubt forged from his desire to avoid a repeat of the great depression where he held onto his shares and subsequently lost his fortune along with many others. His theories suggested the need for a strong regulatory regime to prudently effectively use both monetary (supply of money and interest rates) and fiscal policy (government spending and taxation) to help iron out the inevitable economic imbalances and his theories were largely adopted in Australia.

But the USA was to turn away from the Keynesian route in lieu of the monetarists who suggested you only need to vary the volume of money in circulation (money, bank deposits in demand and related interbank deposits with overnight liquidity) and vary interest rates to effectively control imbalances between supply and demand. This very much suited successive governments and business since it involved less regulatory resources. Consequently regulatory regimes were wound back with deregulation. These ideas inevitably filtered through to other countries so that we entered a prolonged period of global easy money and falling interest rates.  A number of warning bells were ignored such as was evident in the USA with the Savings and Loan fiasco and the Dotcom bubble.

In Europe the EU was formed without regulatory teeth or an effective central bank to coordinate monetary policy. Furthermore little thought was given to the risks of a single currency which prevents the stabilization afforded from currency devaluation by individual member countries whose trade cycles become weakened.

However fortuitously Australia was to benefit enormously from increased taxation revenue derived from a mining boom wisely squirreled away in reserves for a rainy day. These reserves were quickly absorbed in the subsequent stimulus packages embarked upon by the then Labour government in response to weaker business conditions emanating from the GFC. Australia has also benefited from her close ties to the expanding Asian region and from investing in a more effective regulatory regime.

The rather obvious conclusion is the application of Keynesian principles played a pivotal role in ensuring we have continued to enjoy uninterrupted growth for more two decades and even during the global financial crisis.
But now that the mining investment boom is coming to an end as we move into the production cycle we need to encourage reforms to reinvigorate the nation’s economy as the price of exports falls.

But any reform can gain momentum by encouraging more investment from the expanding opportunities within our Asian region, with resultant strong spin offs in improved productivity from joint ventures. Such an approach will ensure enhanced outcomes from a sharing of knowledge and business practices. But this will require a rethink on our trade policy to ensure our market is made foreign investment friendlier, to reduce the tax payable and to provide incentives for foreign investors.  Furthermore government thinking needs to change to a focus which encourages investment into industries that are not market price takers such as currently applies. It is now in the nation’s best interest to support moves into sectors that are market makers, to secure future growth, rather than spending money in propping up non-competitive traditional industries.

We need to encourage business to invest more in much needed innovation with resultant productivity improvements. There needs to be a particular emphasis to encourage business start-ups, with the provision of added incentive such as providing a tax holiday for their first year of profitability or for the period following the initial investment.

All the efforts of the human mind cannot exhaust the essence of a single fly.

IntroductionI remain mindful of the words of one of the great religious philosophers Thomas Aquinas who said ‘All the efforts of the human mind cannot exhaust the essence of a single fly'.

His quote is a reminder of our human limitations and the need to remain humble. His philosophical style was to argue the for’s and against before arriving at a well-constructed logical conclusion and to avoid the pitfalls of relying purely on religious texts. Instead, he recommended scientific or specific knowledge about a subject be studied beforehand to avoid making a fool of oneself and losing credibility.

Aquinas’s philosophy was at a time when philosophers logical conclusions was based upon science, as it is only in more recent times as the volume of scientific knowledge expanded we choose to separate the two.

My intention is to examine the religious philosophical implications of modern day science and ascertain how they challenge or reinforce our traditional views, beginning with the basics of Einstein’s special theory of relativity and concluding with the quantum mystery.

An introduction to the special theory of relativity.

The theory can be very difficult to understand properly, mainly due to what seem to be counter intuitive consequences, which I will attempt to explain by way of simple examples adapted from these more comprehensive references as per below.

http://www.physicsoftheuniverse.com/topics_relativity.html

http://www.thebigview.com/spacetime/

Imagine you’re on a spacecraft and another spacecraft passes you. The difference between the speed of the higher speed spacecraft and your crafts speed will obviously be the relative differential speed.

But that is not be true in respect to a laser launched from a nearby space station as that laser flashes past you at the speed of light. What you will soon discover is that notwithstanding accelerating the speed of your spaceship you cannot make any impression whatsoever on the speed at which the laser pulls away from you at an indicated speed of light.

Puzzled you retry the experiment over and over again to soon realize the laser always disappears from view at the speed of light regardless of your spacecraft’s speed.

If you able to understand the reason for this then you can understand the special theory of relativity, but in case you’re still confused let me elaborate further with examples to enhance our understanding.
Einstein correctly concluded that since nothing can exceed the speed of light all of our motions through space will be relative to that absolute, so that any observations of the speed of light will be the same wherever you are. Hence the laser will always be observed at travelling at the speed of light, regardless of what speed you are travelling at or whether or not we accelerate or reduce our speed at the time of observation, .

Let us take another example of game of table tennis, noting it takes the same time for the ball to pass over the net when playing a game in a fast moving train as it does for a game played on the platform of the station when we are stationary. However for an observer on the train station looking into the fast moving train this is not the case since the trains speed plus the speed of the ball will equal the total speed of the ball as far he is concerned. Hence the actual speed of the ball is the same for all observers but it is relative to motion except for the absolute speed of light.
Hence all of the laws of science are the same to all observers regardless of their location in space after allowing for gravitational effects.

Einstein’ discovery paved the way for this conclusion (which however will be challenged later on) all our observations are relative to our motion through space except for the combination of space and time termed space-time. After discovering the special theory of relativity Einstein incorporated the gravitational field effects which cause time warping within his general theory of relativity.

A brief excursion into the slippery concept of time differences.

Brian Greene –in 'The Fabric of the Cosmos – Space, time, and the texture of reality').notes “The combined speed of any object’s motion through space and its motion through time is always precisely equal to the speed of light”

For further reading http://www.pbs.org/wgbh/nova/physics/special-relativity-nutshell.html 

Hence once one reaches the absolute speed of light time becomes frozen. E.g.
because time + motion through space = speed of light.
Therefore if motion is represented by the speed of light then time must equal zero.

This idea of course, in reality, is quite farcical since any object travelling through space at that speed ( the higher the speed the greater the mass) would develop such an unimaginative amount of mass as would be almost the equivalent of all matter already present in the entire universe.

Although relative difference apply to us every day dependent upon relative motion through space the miniscule differences on planet earth can effectively be ignored as we revert our out dated Newtonian view of time.

We can have no doubt as to the soundness of the theory since it is has been independently verified by extremely accurate atomic clocks stationed on board aircraft. Hence If you were to spend your entire life flying in planes you will be younger than your comparable walker( because of increased motion which reduces time ) but your time advantage is so small that on your death bed you would scarcely have the additional time to think about even saying a few ‘Hail Mary’s’.
However in the vast distances of space the effects can be calculated to show huge disparities.

Returning to our spacecraft try imagining in the future we have discovered a way to travel at close to the speed of light, which would result in remarkable consequences. Any such motion at close to the speed of light drastically reduces our time in space so that any prolonged space journey lasting a number of years will require us to wind forward our clocks hundreds of thousands of years on re entry into planet earth.
But our stay at home earthlings have long since perished as those who welcome us home are thousands of generations later than those present when we left. That is because time has not slowed for them as it has for the space travellers.

Note the biological aging is no different for either group. To illustrate what I mean let me demonstrate this reality with some arbitrary rounded numbers to make it easier to understand. :

Spacecraft intrepid travellers time .10 + motion at 99.9=100.
Stay at home earthlings earth time is 99.9 +motion.10=100

For further examples from Brian Greene http://www.pbs.org/wgbh/nova/physics/special-relativity-nutshell.html 

Can we draw any religious philosophical conclusions?Since the universe is subject to unique laws which unfolded miraculously in exact sequences to allow life to form one can posit that we are the product of a creation in an evolving mystery to leave us in state of wonderment.
By virtue of the laws of science we can also say we live in the most probable of many possible universes which leads us to reasonably suggest within those predestined routes there only exists causality for freedom of thought or actions or choice. That causality is an evolved creation gift which gives us the sense of freedom or free will within the determinism arising from constraints of those predetermined laws.

Although we can measure time we cannot say what it is and can only understand time by combining time with space for the absolute concept of space-time. Accepting for the moment a creator then past present or future becomes irrelevant as we remain trapped within what seems to be to us our enclosed universe where time does seem to be indicative of an arrow usually always moving forward except for possibilities inherent in extreme warping effects of gravity.
But so far we have only barely scratched the surface to already reveal our rather tenuous grip on reality and of time.

Understanding classical physics through the application of the quantumSo far we have viewed the universe through the prism of classical physics which can confidently predict planetary movements and space travel to such a degree that we can have confidence in these evidence based outcomes. But if we attempt to understand classical physics through the applications of the quantum (the subatomic level of particles present in the universe) you expose those universal laws to some doubt. Indeed the general theory of relativity which has been demonstrated to be proven correct over time is only valid as it applies to large physical objects but only barely clings on to its integrity when you begin to contemplate the bizarre behaviors of the smallest of those fragile tiny particles known within our universe.

Einstein’s explanation for quantum mechanics ( the probabilities and uncertainties of sub atomic particles known as quantum laws ) where particles split into respective waves or particles to mimic behaviours as if they were still one, regardless of their distances apart, was to say those correlations were due to the underlying properties already inherent in both prior and after disentanglement. In other words these 'spin characteristics ' were integral to the separated particle and its wave function before and after they became separated.

Once again Einstein’s elegant theory seemed plausible enough but other physicists were doubtful. The matter was settled once and for all when Einstein and other brilliant physicists that followed him were all proven to be wrong half a century later. There is now overwhelming evidence for this so called quantum entanglement. (See Brian Greene – 'The Fabric of the Cosmos – Space, time, and the texture of reality').

ConclusionThe search for answers goes on with scientists now entertaining the idea of different dimensions and hidden properties within those minute particles that might provide solutions to the seemingly intractable mysteries. If you believe knowledge is reality (which can’t be proven or disproven) it could be we simply do not have sufficient knowledge about the particles since that knowledge is hidden within another dimension upon which we are not privy. Suffice to say that space may be not as we thought it was but possibly is made up of many more dimensions.
Should any of these extra dimensional theories turn out to be correct it will confirm that at the most fundamental level we do not experience the reality that underpins the universe.
In that sense we can return finally to a religious philosophical view and conclude that hardnosed materialistic evidence based science is now leading us to the view there is a reality beyond all human experience and understanding which may well always be the case. So that trust which is so important in our relationships with others, but so often can be misplaced, is also analogous to the universe, since human experience is not always a good barometer in understanding her rich fabric, bearing in mind - ‘ All the efforts of the human mind cannot exhaust the essence of a single fly.’
So that all we can do is to have trust in the human spirit and for those who have a religious leaning, an ultimate trust - we need not fear our morality for in death we return home from whence we came.