This approach plays out in the book's overall hypothesis: Australia's past, present, and future do not depend on natural resources, an orthodoxy that suggests that we are hostages to luck (good or bad). Rather, Australia's future, like its recent history, will be shaped by human capital, via a deliberate and sustained willingness to embrace new resources through mass immigration.

Just as Australia squandered greatness by shutting down mass immigration in the late nineteenth century, we find ourselves at the same turning point at the beginning of the twenty-first century. We have restored our fortunes through reopening the door to migration, diversity, and competition in recent decades – hence the 'second chance' of Megalogenis's title. But the same kind of forebodings that arose in the nineteenth century – fears that a surfeit of 'outsiders' would diminish Australia's prosperity – are reviving now. Australians run the risk of developing a closed-door mentality that would surely result in decades of stagnation and irrelevance, as it did a century ago.

Megalogenis sets out his argument in three sections. The first tells of Australia's early trajectory from white settlement – but not in the conventional way that portrays a brittle proto-nation of underdogs. Rather, he explains how this momentum was powerful, striking, and innovative, 'predicting economic trends many decades before they were normalised in the rest of the world'.

Drawing of migrants disembarking from a ship circa 1885 (source: Cassell's picturesque Australia vol. 3, Cassell & Co. Ltd., 1888)Within a few decades of being settled as an 'open air prison', Australia had fashioned itself into the Western world's idea of utopia. Australia anticipated many of the world's democratic innovations. It embraced the latest in communications and transport to mitigate the immense physical distances. Thanks to a steady and popular flow of migrants, the nation's population grew so quickly that (combined with New Zealand's) it was expected to approach 200 million by the turn of the twenty-first century. The result of this injection of human energy was an economy and society that surpassed all others. Australia's income per person was typically a fifth larger than the next wealthiest nation between the 1860s and 1880s, and at one point sixty per cent greater than that of the United States.

Again, it is common to regard this liberality as the result of luck, largely achieved through the easy gains of the gold rush in the mid-nineteenth century. But Megalogenis stresses the fact that our rapidly growing prosperity for most of that century pre- and post-dated the gold rush era by a significant number of years. Australia created its own good fortune, he asserts, through attracting, utilising, and maximising human capital.

This dynamic was evident from the First Fleet. The quality of this capital was sometimes below par, but while the rest of the world continued to labour under ancient hatreds and class divisions, Australia set itself apart with a unique talent for social and economic inclusiveness that brought out the best in even the worst.

The book's second part documents how this first round of greatness went bust. Megalogenis acknowledges that the reasons are complex. But ultimately, as he demonstrates persuasively with statistics and other evidence, it was the result of Australia turning its back on the world. Initially, it was Chinese migrants who bore the brunt of our growing xenophobia and anti-migrant posturings. But it broadened and hardened to become the White Australia policy, a wall of racist exclusion dressed up as national policy to 'protect' our livelihoods and way of life.

Seeing the first half of the twentieth century through this prism of self-imposed barriers, it is difficult to maintain the view that World War I was a heroic age for the newly federated nation. Instead, it was a time of economic and political stagnation that diminished our national character and endangered our living standards. Likewise, the impact of the Great Depression was not attributable to sheer bad luck but a consequence of the deepening national funk we had deliberately mired ourselves in over the previous three or four decades.

Megalogenis observes that at the nub of this rise and fall lies a troubling paradox. Australia is a country of bold experimenters. When all is going well we are world beaters. But the negative side of our national psyche is an insecurity that has its roots in our history of dispossession and makes us prone to sabotage our migrant-driven prosperity. 'Deep in the subconscious there must be some recognition that the migrant nation rose at the expense of the Indigenous nation,' Megalogenis writes, 'because the white man has always worried that the next arrival would overrun him.'

The third part of the book charts Australia's economic prosperity since the mid-twentieth century. Again, conventional arguments hold that the Hawke–Keating economic reforms of the 1980s, or the great mining boom of the 2000s, renewed the nation's fortunes. Rather, Megalogenis asserts that it was the steady jettisoning of the White Australian policy in favour of broad-based migration after World War II that laid the foundations for our renaissance.

To be sure, Australia's new spirit of openness and inclusiveness took a slower course when it came to macro-economic policy, where protectionism remained the order of the day until the early 1980s. But the postwar period re-established the link between strong migrant flows and economic growth through low unemployment and higher wages, while underpinning strong growth in the housing market – that quintessential obsession of middle Australia. This in turn created the broad political and national consensus that embraces mass migration from Asia. The low road of racial politics surfaced from time to time, but by and large this notion of 'open Australia' remained intact. Until recently.

Australia Day Citizenship Ceremony (source: DIAC Images, via Wikimedia Commons)

The lessons outlined in Australia's Second Chance are further explored in Megalogenis's new Quarterly Essay, Balancing Act: Australia between recession and renewal, which focuses on the political and economic present. The author explains in detail how we have arrived at another critical crossroads in our history. The continuing fallout from the global financial crisis, yawning gaps in national infrastructure, and growing socio-economic inequality are just a few of the challenges that Australia faces and must address if it is to remain prosperous.

Megalogensis also makes no bones about two of them: first, Australia's failure to meet these challenges; and second, the distinct possibility that Australia will again condemn itself to also-ran status. This failure is the result of a parochial political class seemingly incapable of initiating 'big ideas' or building the consensus to enact them, a corporate sector bent on rent-seeking, and a national mood characterised by a surly sense of insecurity

The title of Megalogenis's essay refers to the depressing political short-sightedness we see and read about in the news each day. What sets Balancing Act apart is the rich historical context and the razor-sharp clarity with which he explains present realities. We have been here before, he says. And as in the late nineteenth and early twentieth centuries, we shall be guilty of sleepwalking towards irrelevance if we continue to close ranks rather than open up.

The essay is a pressing call for a smarter and braver Australia – politically and economically – than was achieved in the past two decades, a time of unprecedented affluence, insularity, and complacency on back of the Chinese economic boom. As the author highlights, an improved Australia will depend on new policy directions driven not by increasingly erratic markets but by more strategic, innovative government. Crucial here will be a recognition and transcendence of national demons of insecurity.

Megalogenis's latest writings offer a prescient and provocative addition to the national debate about Australia's future. They are especially pertinent as we approach another federal election. After almost a decade of incoherent political leadership, this election – more than most – will be critical in determining whether Australia reverts to a path of expansion and ingenuity or ploughs on blindly toward mediocrity.

George Megalogensis concludes Australia's Second Chance with these words: 'Australia matters more than most nations because it remains a settlement of potential ... our previous eras were punished so severely because the world believed we had let it down. This is the pragmatic argument for openness, because history tells us the alternative is an isolated, belittled Australia.' The implication is that if we fail this time there will be no third chances.