Australia has a permanent deficit on the current account. Indebtedness of Australian residents denominated in foreign currencies increases year after year. The figures of selected countries above shows that the typical first world country runs a persistent surplus on current account. The only European countries with current account to GDP ratios comparable to Australia are Hungary, the Czech Republic, Greece and Portugal, countries on the margin of first world status. The juxtaposition highlights the peculiarity of the Australian situation.

The next stage in the evolution of Britain and the US was when the deficit in merchandise trade grew sufficiently large that it overwhelmed the surpluses in the Services and Income categories. The balance on current account goes into the red. This is the situation currently for the UK and the US.

This is not an argument for a strident mercantilism of the Japanese variety, for which substantial current account surpluses are pursued for their own sake. But persistent deficits point to something profoundly dysfunctional. It doesn't need to be like this. But nobody in power cares. And, as usual, if somebody has to pay for the consequences down the track, it won't be the people who entrenched the malaise in the first place.

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