Why is the world in such a sick place economically? I believe the answer can be found in the fact that the world is overweight as a result of extreme economic overconsumption.
Individuals, businesses and even whole countries have been overfed for too long and now that the gravy train has eventually grinded to a halt we are all feeling the repercussions.
We are now all on a forced economic diet. No industry is safe and there is no going back. What we have now is the new normal, so get used to it!
Just like any diet, where there are short-term fixes that don’t last long, to be successful requires an acceptance of reality and a fundamental change to long-term thinking.
In Australia, I believe this means moving our mindset from a disposable economy to a savings economy. We all have to start thinking about what is in our best interests long-term.
Just like those committed to saving the environment with a long-term approach, so too must those who want to protect our economic future. It is our economy and is just as important!
The disposable mentality of never-ending consumption of new TVs and cars and reckless spending on drinking and cigarettes by those who can’t afford it must be left in the past.
People have to change their mentality and think long-term about saving. At the moment, as a country and as individuals and businesses, we are not saving.
We are just spending, selling and taxing and living purely off export. This is not a sound or sustainable long-term strategy.
The economic fundamentals of property, food and costs of labour are always rising. However, the costs of everything else should be going down, except for resources.
Resources you say? Yes, until recently I put resources in that category as going down as well but I truly believe we should be treating our resources as prime long-term assets.
I believe our resources are just like waterfront land in a major city – they are not making any more of it, so it should naturally rise in value over time.
Of course there will be ups and downs along the way. In Brisbane, we had a flood and riverfront property prices halved but they have now gone up higher than they were before.
The prices for our resources will rise again. It may take three to four years, and it will never be like it was, but it will happen because they have an inherent and irreplaceable value. The key is that they have to be managed property with a long-term strategy and not just a short-term approach of force feeding them to the rest of the world at low prices.
This is the correction we had to have, it will never go back to where it was, but it is an important time for us to have a good think about the way forward and what is in our best long-term economic interests.