there are a few core issues that need to be considered:
(1) the level of skill & knowledge of the population, but more particularly that of the working pouplation;
(2) which are the areas that Australia is at a competitive advantage relative to our trading partners; these will require government industry policy assistance in the short term to nurture their grpwth.
(3) there are certain industries that we as a nation needs to maintain for national security reasons, eg, steel industry and some other manufacturing industries, but which we cannot produce chaeper than our trading partners: these will require some form of govt assistance just so we will have thier expertise in time of a national emergency. such as regional conflicts, etc.
So, I do not think it should be on the fittest survive principle. Even now, you won't find a country that subscribes to the notion of a free economy with the free flow of capital and labour, not even in the US.
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