THE AGE http://www.theage.com.au/news/19991016/A58283-1999Oct15.html OECD warns of backlash By TIM COLEBATCH ECONOMICS EDITOR, CANBERRA Saturday 16 October 1999 A failure by governments to spread the wealth around is fanning a global backlash against free-market reforms, according to the secretary-general of the OECD. Mr Donald Johnston warned that people would not support painful reforms that had been championed by the OECD for the past 20 years unless they benefited from them. Surveys in Australia and overseas suggest the distribution of income and wealth is becoming increasingly skewed towards the top end. In an interview with The Age yesterday, the OECD chief sketched a broad vision of the goals of economic policy. Governments, he said, had to focus more on issues of income distribution and equity, on achieving full employment, and on providing education, training and retraining to ensure all workers had the skills to compete in a fast-changing world. "The real challenge for governments is to deal with the distribution of the benefits from trade and investment," Mr Johnston said. "The gains have to be felt in Main Street as well as Wall Street. This is the major challenge we face in order to keep up the momentum for liberalisation." Economic growth needed to be linked to ensuring social cohesion, and the fair transfer of the benefits of growth, or else public support for the policies generating it would collapse. "The best way of doing this is through jobs," Mr Johnston said. Full employment brought with it a wide range of other social and economic benefits, he said. Governments should focus on achieving it by making their labor markets flexible and ensuring that workers had "the skills to be able to adapt to a very rapidly changing universe". Australia, he argued, had "more work to do" in both areas. Liberalisation of markets increased the need for flexibility in the workforce, in structure and skills. "The most important element in growth is now human capital," he said. Mr Johnston said some countries could learn from Denmark's example. The Danes tolerated high personal tax rates to allow low corporate tax rates - making Denmark attractive to investors - free education and training, and a comprehensive welfare safety net, he said. Denmark has unemployment of 4.4per cent. In a separate interview with wire agencies yesterday, Mr Johnston also endorsed higher infrastructure spending in Australia, saying the Budget surplus should be used for long-term projects that benefited the economy rather than short-term consumption. A former Canadian Finance Minister, Mr Johnston has been head of the OECD since 1996. ************************************************************************* This posting is provided to the individual members of this group without permission from the copyright owner for purposes of criticism, comment, scholarship and research under the "fair use" provisions of the Federal copyright laws and it may not be distributed further without permission of the copyright owner, except for "fair use." -- Leftlink - Australia's Broad Left Mailing List mailto:[EMAIL PROTECTED] http://www.alexia.net.au/~www/mhutton/index.html Sponsored by Melbourne's New International Bookshop Subscribe: mailto:[EMAIL PROTECTED]?Body=subscribe%20leftlink Unsubscribe: mailto:[EMAIL PROTECTED]?Body=unsubscribe%20leftlink
