Never liked Paul Keating. Who could warm to a rock band manager? But he got some essential things done, for which the capitalist class should be eternally grateful. Whether you like the arrogant bastard or not, he’s always been interesting and his website illustrates this. He’s upbeat about the immediate years to come, too.
Have a gander:
It is worth noting that there were three economic long waves in the 20th century – 1904 to 1929, 1947 to 1974 and 1982 until now. Each had a duration of about 25 years; and each was technology driven.
The first wave, from 1904 to 1929, was driven by breakthroughs in petrochemicals, industrial production and transportation.
The second wave, the post-war wave, was driven by the economic rebuilding of Japan and Europe, along with technological breakthroughs in areas like plastics and aviation, and, of course, motor vehicles.
The wave we are currently living through has been driven by, the third wave, has been driven by– in the ‘80s – low terms of trade which was a subsidy from the developing world to the developed world, and in the ‘90s by telecommunications and micro-processing. By all reckoning, if the past is to be any guide, this wave should run until about 2007 or 2008. We’ve already had two legs, two business cycles, 1982 to 1990 and 1992 to 2000. The second one saw an enormous increase in stock market values around the world and in personal incomes and real wealth.
The good news is, I believe, that there will be a third business cycle. From about now. The bad news is that it won’t be so richly laden as the second one and we are beginning it at relatively high valuations for equities compared with those which obtained in 1982 or 1992. Or those which obtained at about this same point in the second long wave, which would have been about 1965. What will be different about this leg compared to the last two is that towards its end, the technological edge may have dissipated and the demographics will have acted to reduce unemployment substantially. Towards the end of this cycle, in say five to six years from now, we may see a pick up in real wages and with it wage inflation of a kind which may encourage central banks to do what they have traditionally done, and that is, cool the economy to keep wages and prices under control.