Low growth (USA) vs no growth (Australia)
Retirees won’t spend more money if you give them more money. Baby boomers have passed peak spending. They will spend less every year for the next few decades. A few bucks here or there won’t change that.
Until governments realise that, they will keep wasting money pushing on a string.
Economies need to become more global to keep up with their liabilities. The US will be fine because the tax revenues (whilst currently being manipulated to be lower than they should) will continue to grow due to their dominance of a number of industries. The tech sector in the US is absolutely powering. It will continue to grow at an extraordinary pace. Amazon, Google, Apple, Facebook and others such as Netflix and LinkedIn are all amazing businesses that were virtually non-existent 15 years ago.
Australia doesn’t have any businesses like that and so we will struggle. The US will continue to grow even though their baby boomer population will continue to grow as a liability over the next 2 decades. Australia’s baby boomer population liability will continue to grow, but we don’t do anything that will offset the liability. The mining boom is over. The housing bubble is about to be a very big problem.
Unproductive assets such as housing are a liability on society over the long term. The higher the house prices, the more money wasted in assets that produce nothing. Australia at 4 times GDP in housing has the biggest housing bubble in economic history of any country in the word. The US ratio is only 1.5. The cost to households to live because they aren’t wasting money on a mortgage is so much lower that allows them to be far more competitive than Australia. We are in for a rude shock going forward.
Johny Howard’s tax free super was the worst tax policy in the last few decades. Having the bulk of the population not paying tax just won’t work in the coming years. It was the dumbest thing Australia has done for a few decades. Reversing this decision will be difficult, but is paramount.