A property crisis in China tanks Australia's income into the worst state in twenty years. Australian police arrested 40 steel traders for credit card fraud.
How can they fix their economy?
-- Edited by zach nash on Monday 8th of September 2014 06:13:41 PM
Based on the article, I can actually understand Australian Prime Minister Tony Abbott's reasoning (to some extent anyway) that lower wages would lead to more jobs for the population. With living costs in conjunction with the wages growth, I think it makes sense that the plan for periodic tax cuts would help alleviate the economic burden that workers have, given that their risen incomes most likely had pushed them into the higher tax bracket.
Lowering wages would probably be the optimal solution to create more jobs and better the economy. Tax cuts will also better the situation by having more money be spread around Australia rather than into their government.
I feel like that lowering wages would lead to stagnation in Australia's economy but more importantly the big problem with Australia's economy is that it's way to reliant on natural resources. A country like the United States or Japan receives most of it's income from manufacturing consumer goods (mechanical parts in the U.S' case and computer parts in Japan's case) Australia on the other hand makes most of it's income on iron ore. This leads to problems such as this where the fluctuating price of resources causes a huge burden on there economy. What Australia needs to do for the long run is move towards an economy based on manufacturing so that a situation like this becomes less likely in the future.
