Trends, Issues and Community

Australian policymakers have long been impressed with the Northeast Asian success stories which they have chosen to see through a prism of neoclassical economic theory. The previously mentioned fact coupled with the reality of limited economic resources renders it impossible for any government to continue to stimulate demand in order to generate growth as required by the Keynesian economic approach. Thus, neoclassical thinking has become infused into Australian policymaking even though such neoclassical thinking goes contrary to traditional Australian values. However, neoclassical approaches are also not without their flaws and thus practical policymaking ought to be about ensuring that the government is driven hard to deliver that which is the best from available resources. This brief essay presents a discussion about the neoclassical and the Keynesian or the welfare state approaches to policy making and presents an examination of the impact of neoclassical approaches to policymaking in Australia.