Should Australia be the richest country in the world?

A week ago the founder of Freelancer, Matt Barrie, went on somewhat of a rant discussing the current state of Australia. Specifically, Barrie listed off a bunch of reasons why Australia should – but isn't – "the richest country in the world":

"We're in a situation right now where we should be the richest country in the world, and we were the richest country in the world in 1900."

Before getting into Barrie's long list of problems and proposed solutions (his rant was based on a blog post which, according to Medium, is a 72-minute read), I'll just add that while Australia may not be the richest country in the world today, it's pretty darn close:

If you remove the oil nations, tax havens and entrepôts, then Australia is only below the United States and Taiwan. Believe it or not, but that's actually above where we were back in 1900, whether you're looking at the size of the total economy (19th) or on a per-person basis (5th):

And if GDP isn't your cup of tea, Australia is also right at the top of various standard of living indicators today, including education, health, civic engagement, and believe it or not, housing (many other places have it worse) – all pretty important things!

But that doesn't mean we can't do better. My issue is that while Barrie has correctly identified some areas in which we can certainly improve, his solutions would probably do more harm than good.

The housing theory of everything

Barrie kicks off his rant with housing, claiming that it has got to the point (in terms of affordability) where it's bringing down society itself:

"It's not a functional society anymore. You need people to be able to afford to buy housing and shelter in order to have a functional society. In Sydney now the median house price is about $1.8 million, which is mathematically impossible for the average person to buy the average house.
...
We have house pricing that is astronomically expensive — it doesn't make any sense anywhere in the world. A terrace house in Woollahra is the same price as a cruise ship. The root cause of this is the cost of land, and the root cause of that is mass immigration. We have the most expensive casual wages in the world but it's not enough to live on because people need somewhere to live."

There's a lot to unpack there. Barrie has a tendency to exaggerate, starting with his estimate of the median house price – the latest CoreLogic data has Sydney at around $1.45 million for a house, or $860,000 for a unit. It also varies drastically by location; out in Liverpool, about a 40-minute drive from the CBD, the median house value is $1.0 million, or $450,000 for a unit:

That doesn't mean he's wrong; Australia – but especially Sydney – has a housing affordability problem. But where he does make a mistake is blaming the problem on "mass immigration", when the evidence suggests that they have a minimal, or even negative, impact on house prices.