Australia booms with economic freedom.(the Overseas Economist)

The good times keep rolling Down Under. Australia is now in its fourteenth year of uninterrupted vigorous growth, outperforming other major developed economies. Unemployment has come down to a 28-year low of 5.1 percent today from almost 11 percent in 1992, and inflation has steadfastly remained at 2 to 3 percent since the early 1990s. The stock market is at record-breaking levels.

That Australia has been growing at a little less that 4 percent per year since the early 1990s is all the more remarkable when you consider that its farm sector has suffered its worst drought in a century. Australia's major trading partners, moreover, have faced serious downturns in recent times: Japan has remained mired in recession for more than a decade; East Asia experienced a financial crisis in 1997-98; and the U.S. slowed for a few years in the wake of the dotcom crash and 9/11 attacks.

Why then has Australia been so exceptional? Thank a smart mix of free-market reforms and prudent monetary and fiscal policies. By restraining the deadening hand of the nanny state and giving more play to market forces as the most reliable generator of wealth, Australian governments have transformed the way the nation does business.

Of course, most of the credit for creating the miracle economy belongs to the innovative managers and hardworking employees. But Canberra's political leaders have helped create a culture of competition and hard work that has driven the nation to new heights. And they have done so by taking the politically brave step of pushing a reform agenda onto a skeptical electorate. From the government-interventionist mindset that delivered economic turmoil in the 1970s, Australia has moved to an era of free markets.

Since independence in 1901, Australians had come to depend on the powers of the central government to solve nearly all the nation's problems. A restrictive immigration policy kept out competition from cheap Asian labor; high import tariffs and large subsidies protected domestic profits; and a heavily regulated workplace arbitration system guaranteed a large share of the protected pie for workers.

In the early 1980s, Australia remained economically insular, weighed down by ...