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Politics Versus Economic Reality: We Will All Lose
In the West there is quite obviously a battle between the politics and the economics. It is clearest is Europe where - all most as you - the economists say the Euro is condemning many to long-term austerity and inevitable poverty and is therefore unworkable - but somehow the politicians don't seem to get it: or will they think the alternative is worse? And also the reason for this problem is above all else the resolve for excessive government spending primarily driven by the welfare state. As well as in the united states, exceptional bastion of free enterprise and the American dream, is incorporated in the middle of the battle to create the identical welfare state to those shores whilst ignoring escalating public debt.
In Democracy in the usa (published in 1835 in France), Alexis de Tocqueville wrote "The American Republic will endure until the day Congress discovers that it can bribe the general public with the public's money." And that seems to be happening today. De Tocqueville is interesting because at that time France, and even the rest of Europe had primarily aristocratic rule and he would be a liberal who supported the thought of democracy. But he was concerned about the long term effect of that democracy on sensible economics: "From that moment on, the majority always votes for that candidates promising the most benefits in the public treasury with the result that a democracy always collapses over loose fiscal policy."
A fascinating rise in the EU - inside a desperate make an effort to save the Euro - has decreed that member states should have a balanced budget. Obviously the main reason they didn't have a balanced budget was because politicians wanted to bribe their voters as well as their financiers (these day almost exclusively big corporate).
Nevertheless the EU is fulfilling De Tocqueville prophecy by trying to sideline democracy - both in Greece and Italy an effort by democratically elected leaders to even consider the chance of leaving the Euro resulted in their instant removal by scheming EU apparatchiks as well as their replacement by so-called Technocrats. If the EU has its way I suspect the Greek election due soon will be postponed as will every other election that threatens a vote which will destabilise the union.
Of course the entire absurdity from the EU is as it clamps down heavy heavily on rising budgets in EU members states its very own budget expands exponentially with screams of protests if anybody suggests otherwise.
But the simple issue is this - can democratically elected governments really cut the money they are paying out to the voters and ever hope to be elected again? Clearly the first prerequisite would be that the politicians are willing and then can make the argument - and win it - using their voters. Nowadays, with politicians who use opinion polls instead of conviction as their guiding light, that seems a big ask. Or perhaps is it conviction of the wrong kind - a conviction to the liberal democratic model that believes the state should 'take care' from cradle to grave. The situation in the US appears to be probably the most peculiar - with Europe as an example of what goes on when too much is spent of social largesse it's extraordinary the united states seems to be following a same model. You don't need to be a person in the Tea Party to determine something must be done about US government spending - and surely the priority should be obtaining the budget balanced before contributing to it!
Britain's electorates obsession with the NHS (free healthcare) is an example of the issues of trying to change something that is sacred cow - yet most accept it's not efficient. Even referring to NHS reform has government pollsters inside a lather of despair.
So in the western world the politics is ruling the roost: maybe we ought to say the little head is ruling the large head because when we all know that economics is sort of a river: it may be dammed, diverted and siphoned but it keeps coming as well as in the end those attempting to stop it should be overwhelmed.
Now you ask , when will economics win? I lived in Eastern Europe after economics eventually won the Cold War. That suggests in my experience Europeans will ultimately all be living in some form of protected enclave where those outside have the latest gadgets and they will be tied to an old ipad: buildings won't be repaired and infrastructure will creak and barely work. The inevitability of economics shows that is where the EU is heading: a failing totalitarian state.
The truth is if we are to have state spending - we have to generate enough wealth to invest in that spending. That is the economics from it. Furthermore that wealth must also must grow and be readily available to reinvest in new projects to produce more wealth to keep paying your bills. In the socialist/communist system the necessity to invest is ignored and inefficiencies sidelined within the need to keep up with the system.
In the united kingdom the Blair/Brown years saw an enormous numbers shuffled onto welfare dependency known as disability. This was no different towards the communist regime allocating every new member of the workforce employment - regardless of whether a new employee was needed. It made Communist business hopelessly inefficient in terms of manpower: whilst pushing people into welfare dependency just gets in cost to the tax payer - net effect is identical - less and less money for investment and therefore fewer, and finally no new jobs.
