An interesting paper from Australian economist John Quiggin which sends an explosive message to politicians and business all over the world.

Quiggin's arguments suggest that the force now influencing voters is risk. Individuals and families are vulnerable to social, economic and other risks and that is now shaping up as the big issue for the early 21st Century.

His paper, The Risk Society, says: "Risk and uncertainty, in a variety of forms, have become increasingly salient features of life in the early years of this century. Arguably, 'risk' will be a central idea of the early 21st century, just as 'globalisation' was the dominant idea of the 1990s."

Quiggin, an economist with the University of Queensland, is neither a creature of the left or the right. I have read his work for many years and he is very much a free-thinker.

In his paper, he says the risks associated with the problems in health care and education are compelling.

In the last quarter of the 20th century, he says, there was a strong reaction against the welfare state, associated with the movements variously known as "Thatcherism" in the United Kingdom, "Reaganism" in the United States, and "economic rationalism" in Australia. As a result, risk was transferred from government and business to households. We are now seeing the consequences and it's not pretty. The result is a schism, he says, between business and government on one side, and the community on the other. The sub-prime fiasco in the Us is just one example.

"A particularly striking feature of this transfer has been the extent to which business and political leaders have been insulated from it," Quiggin writes.

"Top managers are protected by increasingly generous "golden parachutes", ensuring that even if they lose their jobs for poor performance they are still entitled to large payouts. Although this has been accompanied by the expanded use of devices like payment in share options, which appear to expose senior managers to risk, these are largely shams. Options that fail to deliver the expected benefits, because the price of the company concerned falls below expectations, are routinely repriced or reissued by company boards. Likewise politicians, so long as they have not offended business interests, can expect to enhance their generous superannuation with lucrative jobs in the private sector, many of which appear so undemanding as to be virtual sinecures.

"Meanwhile, households are exposed to increasing levels of financial risk. The results are most evident in the United States, where bankruptcy has become more and more common. By 2005, more Americans experienced bankruptcy than divorce. A "reform" introduced in that year made bankruptcy much harder, but this merely shifted the form of financial distress. Because the new laws made it harder to refinance housing debt in bankruptcy, they contributed to a wave of foreclosures on "sub-prime" loans made to high-risk borrowers. Rapid growth of household debt means that Australians are vulnerable to similar risks in the event of an economic downturn."

Quiggin has delivered a strong warning for business and governments.