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Saturday 19 Aug 2017 | 17:51 | SYDNEY
Saturday 19 Aug 2017 | 17:51 | SYDNEY

Men of silver, your time is up

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9 March 2011 09:40

The mining boom isn't close to over, but it does seem time to think about what the future Australian economy will look like

Michael Wesley, executive director of the Lowy Institute says debate is long overdue on what services or industries should help to rebalance the economy away from mining. "We've never really thought hard about what makes this country successful, vibrant and important beyond our physical assets," ....Australia has world-class companies such as BHP Billiton, Leighton Holdings, Rio Tinto, ResMed, Cochlear, Macquarie Group and QBE Insurance. But few of our services sectors or industries have global clout outside of mining and agriculture.

"Why in America can they have Yahoo!, Facebook and Google," asks Pengana's Lin. "How come we don't have that in Australia'" 

Like most, I've long thought that this meant that Australia needed to go high-tech, with much greater levels of compulsory education, and low skill jobs automated or moved offshore. However, Paul Krugman suggests we've got it wrong:

...since 1990 or so the U.S. job market has been characterized not by a general rise in the demand for skill, but by “hollowing out”: both high-wage and low-wage employment have grown rapidly, but medium-wage jobs — the kinds of jobs we count on to support a strong middle class — have lagged behind. And the hole in the middle has been getting wider: many of the high-wage occupations that grew rapidly in the 1990s have seen much slower growth recently, even as growth in low-wage employment has accelerated.

In many ways, this is good news, as mid-level office workers are more likely to have skills transferable across a range of industries. However, it should make us ask if forcing many of these future workers to spend $15,000 and 3-4 years at university to gain a basic skill set is helping anyone — save future employers who get slightly more mature workers.

Walter Russell Mead, meanwhile, argues Krugman is half right, but that he is unable to see the full implications of his own argument. 

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