In yesterday's SMH by Clive Hamilton. It really needs to be read in its entirety, but the following extract sums it up ....

The Howard Government has ridden the extraordinary debt binge to resounding political success and has been loath to spoil the party with the sobering advice and policy signals that any responsible government should have dispensed.

As long as it was riding high, it was never going to warn the public that their overspending was unsustainable; that sooner or later spending more than you earn must be matched by earning more than you spend; that the price of one asset - houses - cannot get too far out of kilter with the price of other assets; and that capitalist economies have always been subject to business cycles, and always will be.

The Government has profited from the financial illiteracy of great swathes of Australians blinded by the promise of instant wealth and egged on by tax rules that stimulated massive investment in rental property.

Optimists will hope that the country can go through the coming readjustment without too much pain.

The cynics at the Sty are battening down the financial hatches.

I've been thinking for some time about the flavours of governments and the economic cycles in which they rise and fall. As it happens, some other commentators have already written about this, but, hey, it's my blog and I'll rehash if I want to.

As I push into my 50th year, I've seen the cycles come and go.

It's such a broad and complicated subject that books have be written on it, but I think you can make two broad assumptions with regard to economics:

Labor governments reform, Liberal governments do not. I accept that this a gross generalisation.

When I was young (the 60s), the Liberals were in, and the economy was booming. The good times were built on agricultural exports (mainly wool) and manufacturing industries protected by high tariffs.

The conservative's policies did little to make the country's industries more efficient. If competition started to harm an industry, they could apply to have tariffs raised.

They completely ignored new technology. Australia was at the forfront of computing and electronics research during the 50s. This was never exploited. Golden opportunities lost.

When the Liberals were eventually thrown out in 1972, the Labor party took over an economy that was outdated and inefficient.

During the termoil of the Whitlam years, tariffs rates were reduced by 25%. Looking back, it may have been the first major step taken to modernise the economy. Whitlam also introduced the Trade Practices Act, a landmark reform in the field of corporate behaviour.

In 1975, Labor was out and the conservatives did little to introduce any meaningful economic reform. Enter in 1978 a Labor government headed by Bob Hawk and his treasurer, Paul Keating.

It was the Hawk / Keating Labor government that did the hard yards in reforming the economy. Against a hostile Senate, they deregulated the financial markets, floated the dollar and introduced a new, cooperative approach to industrial relations.

We all know that period was painful. During the reform process, there were a couple of nasty recessions, but the ground work was laid in reforming the economy; reforms which have resulted in more than a decade of continuous growth.

So, what have the conservatives done to maintain the modernisation of the economy during their decade in office? Not that much. Not enough to encourage research and development. No policies about trying to keep and develop industries in Australia.

They gave a free kick to the tax avoidance industry by halving capital gains tax, a move which set off a real estate boom. They allowed conditions where it was easy to fund consumption on the back of rising property prices.

Rather than continue to foster a cooperative industrial environment, the conservatives are resorting to increase the power of the employers and create conditions that will see the erosion of worker entitlements. That just about sums it up .... where the former Labor government was interested in exploring ways to make the economy more efficient and share the spoils, the conservatives are interested in gaining efficiency by reducing the wages and conditions of the least advantaged in the community.

The present day conservative economic legacy is a record current account deficit financed by debt borrowed against wildly overprised real estate.

And this is how it's alway been. Hard reforms by the left, and lazy policies of growth by speculation by the right.