aspect of unemployment. if you look at the really big changes in employment or unemployment over decades, rather than years, monetary policy plays a very small role. the biggest change in employment performance of which i am aware is the contrast between the united states and continental europe. in the united states, the unemployment rate is back to its 1960s level, whereas in europe it is about five times as high as it was in the 1960s. a few european countries have done better than that - - including the united kingdom - - but others have done worse. if you try to explain the superior us employment result by faster economic growth you get nowhere. europe has grown as fast as the united states over three decades - - it just has not generated jobs. the explanations for the poor european performance on jobs all centre around various types of rigidities, especially in wages and conditions of employment, but also the social security system and the difficulties involved in starting businesses and the subsequent lack of entrepreneurship. i do not intend to go into this in any depth because it is a huge topic. i only raise it to point out that there is much more to the story than the growth of demand, and the role that monetary policy plays in it. in other words, even if we succeed in having good economic growth and sustaining it for a longer period than in earlier expansions, it will not solve all our unemployment problems. we will make some progress, but it is too optimistic to think that we will be able to emulate the americans and return to the 1960s level of unemployment through macro - economic policies alone. i saw in the paper yesterday someone from acoss saying that the big challenge for australia was to achieve us - style economic growth and low unemployment without us - style inequality and poverty. i think this is a realistic way of looking at it. it shows an awareness of the current trade - off, and i suspect a hope that, with some ingenuity, we might be able to improve on it somewhat. my only quibble is that we already have achieved us growth rates - - in fact, exceeded them - - it is the us unemployment rate that has eluded us. this is something that people like myself, who studied economics in the 1960s, find surprising. in the 1960s it was the united states that was always criticised by countries like australia and most of europe for their high unemployment. now the boot is on the other foot. there is a lot more that i could talk about, but i will confine myself

complementary, not competing with multilateral arrangements. leadership one serious issue for the future of regional arrangements in this region is the unresolved issues of leadership. in terms of gdp and technological sophistication, the obvious regional leader is japan. partly for historical reasons, and partly because of its internal focus, japan has not exercised the sort of leadership which is commensurate with its economic clout. in terms of population and potential economic size in the long run, china might claim the role. hong kong, singapore and australia have sophisticated financial markets, but each of these economies is relatively small. within asean, the dominant country ( indonesia ) is, unfortunately, in no position, for the moment, to be a vigorous leader of regional arrangements. so there is a major unresolved issue here. where to from here? from the australian viewpoint, this is in some ways a low point for regional arrangements. the real progress which has been made in getting better representation in the multilateral forums for non - european ( and particularly asian ) voices is undisputed. g20 ( the lineal successor to g22 ) now has the potential to become a premier group for discussing the critical issues of globalisation, with a representative audience no longer dominated by europeans. the financial stability forum has been formed, again with good representation from the region, to hammer out the specifics of financial rules and regulations. membership of the bank for international settlements has been significantly opened up to non - european members. so there has been real progress at the multilateral level. but at the regional level, the asian crisis has been an enormous distraction from the mundane task of building regional institutions, with the officials who had got to know each other well in such forums as emeap and the manila framework being very substantially weakened and dispersed in the aftermath of the crisis. peer surveillance has not taken the major role that it might have, lacking any clear functional model or strong leadership. the current focus on the chiang mai swap proposals could be the basis of some important ties, but we should keep in mind that asean has had such swap arrangements in place for quite some time, and emeap had in place somewhat similar repo arrangements, which did not provide much advantage in the asian crisis in 1997. such arrangements are valuable in that they get people together and talking about other issues, but it would be a mistake to see them, taken by themselves, as massive breakthroughs in regional cooperation. as for australia ’ s role