Australia always take defeat hard and to go into this week's final Ashes test at the Oval three down with one to play is a bitter pill to swallow.
But while those wearing the 'baggy green' have been losing at Trent Bridge, Lords and Chester-le-Street, the Aussies have at least been able to take comfort from an economy that in recent years has out-muscled the old country in the way that the cricket team did when it was led by Steve Waugh.
The golden years for Australian cricket ended a decade ago. Decline was hard to spot initially although the warning signs were there: a lack of suitable replacements for great players and too great a focus on one-day cricket that resulted in sides being less familiar with the five-day format.
It may prove to be a similar story with the economy. Australia was one of the few developed economies to emerge from the global recession largely unscathed. Growth has been good for a quarter of a century, public debt is low, the banking system proved resilient during the financial crisis and it is one of only a handful of countries that still retains a AAA credit rating.
Success initially was based on some important structural reforms to labour markets and to welfare policy, coupled with macro-economic policies that used inflation targeting to keep increases in the cost of living in check. Australia's banks were better capitalised than those in Europe or the US when the crisis broke.
These reforms in the late 1980s and early 1990s coincided with China's emergence as a global economic superpower. China needed raw materials – coal, iron ore, aluminium – for its rapid industrial expansion and Australia had them in abundance. China now takes 40% of Australian exports.
As a result, Australia was the Ireland of the antipodes. Both countries put in place supply-side reforms designed to boost growth and both had access to a huge market. Ireland's 20 years of expansion can be neatly divided into two phases: the first decade in which growth was the result of getting the fundamentals right at a time when multinationals were looking for a European base; and a bubble decade of wild property speculation and irresponsible lending.
Before looking at why Australia could go the same way, it is worth looking at the way in which the global economy has evolved over the past five years. In the days before the financial crisis, there were three groups of countries. In the first category were the workshop nations, the ones that produced the cars, the clothes, the machine tools, the TV sets and the toys. Low-cost countries such as China fell into this category, but so did high-cost countries such as Germany.
In the second category were the debtor nations. These countries bought all the goods churned out by the workshop nations, running up big current account deficits in the process. The United States and the United Kingdom were prime examples of debtor nations: levels of private debt exploded to allow consumers to live beyond their means.
Finally, there were the resource-rich countries. Some of these were the oil-rich nations of the Middle East; others included Russia and two important developed countries – Canada and Australia. All these countries did nicely out of a global economy in which China was growing at 10% a year and the US was acting as the spender of last resort. In the four years before the sky fell in, global growth averaged around 5% a year – its strongest since the latter years of the post-war boom.
But this model has now collapsed and 5% global growth now looks like an aberration. In the US, growth is struggling to rise above 2% despite the extraordinary stimulus provided by the Federal Reserve.
Wall Street fully expects the Fed to start 'tapering' its bond-buying under the quantitative easing programme next month, and that has already had an impact on some emerging countries – such as India. The notion that the US is easing back on electronic money creation has strengthened the dollar and sent the rupee down to a record low. That is unhelpful to policymakers in New Delhi battling against already strong inflationary pressures, since it makes imports dearer.
But if India is struggling to adjust to the new normal so too is China. With the US less willing to buy up everything Chinese factories produce, the new leadership in Beijing has worked out that it might not be sensible for investment to make up 50% of the nation's output. But the transition to an economy less dependent on investment and exports is likely to be slow and fitful. One thing is certain: the days when the emerging world was expanding at 9% a year, as those countries did at their peak in 2010, are now over. Neil Shearing at Capital Economics estimates that emerging economies are currently growing at an annual rate of 4%.
All this has obvious implications for those countries heavily dependent on exports of energy and raw materials, such as Australia, where the mining industry has doubled its share of national output to 10% in less than a decade. Exports relating to exploitation of natural resources account for 60% of the total and while the mining sector has growth by 7.5% over the past decade the rest of the Australian economy has expanded by around 2.5%.
Australia now bears all the hallmarks of a country where its industrial base has hollowed out. The decision by Ford Australia to close its manufacturing plants at Broadmeadows and Geelong is evidence of what economists call Dutch disease: a natural resource boom drives up the exchange rate and makes all other exports deeply uncompetitive.
With the outlook for the global economy far less rosy than it was, the mining sector is also cutting back on investment. That has left the economy propped up by the one remaining source of growth – an overvalued real estate market.
As the economist John Llewellyn has pointed out, household debt in Australia rose sharply in the 1990s and 2000s and now stands at 150% of GDP. Noting that the housing market may already be in bubble territory, he adds: 'Depending on a strong pickup in housing as a means to sustain growth and rebalance the economy would therefore appear to be fraught with danger. The risk is of unsustainable boom followed by destabilising bust, with considerable collateral damage to both financial and non-financial private sector balance sheets.'
The Reserve Bank of Australia is now cutting interest rates and talking down the currency in an attempt to rebalance the economy. That is easier said than done when your economy amounts to a large hole in the ground ringed by some expensive property. The risk is of a sudden Aussie collapse of the sort that has become all too familiar on English cricket grounds this summer.
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image: © Graham Dean