There is an old adage about a week being a long time in politics. A few weeks ago I wrote a leader in my newsletter about the entitlement mentality. This was sparked by an interesting op-ed piece in the New York Times about the then upcoming French election. The take home message was that the various candidates were outdoing each other to resist the march of globalization and the movement of people and capital. It concluded that despite the promises, France could not escape the reality of the world around it. Specifically it could no more live beyond its means than any other country.
The world is getting more inter-connected and anyone trying to stand against this will be about as successful as King Canute standing against the tide.
The result last Sunday shows that they want to try. Elections in Greece also were essentially a vote for continued largesse that cannot be afforded.
The Australian budget was a good old-fashioned pork barreling exercise with handouts targeted at those in marginal seats who it is hoped can be “bribed”. Concurrently the Prime Minister described people who lived in an area of Sydney (the north shore) as not being “real Australians” based on the need of the opposition leader to leave the area if he hoped to find “real Australians”.
Perhaps one of these “real” Australians is the member for Dobell who until two weeks ago had the Prime Ministers full confidence despite a series of allegations about misuse of funds whilst a union official. I commend this article by Paul Sheehan.
The shadow Australian treasurer set off a “storm” when he opined that no country could live beyond its means and that Western countries could not dole out more money in benefits than it takes in forever. All the usual suspects came out to criticize him for attacking welfare rights.
Today, society is able to support those who in the past would have been left at the proverbial side of the road. But the modern welfare state is a recent phenomenon. For most of human existence the weakest also fell by the wayside. In nature the lion eats the weakest zebra.
Yet governments like businesses, families and individuals can only spend what they get as income or can borrow. The GFC of 2008 showed us (again) what happens when borrowings get out of hand. The issues facing Greece and other European countries have come from spending beyond their means and looking to borrow to make up the shortfall. At some point borrowings have to be repaid!
It is estimated that the number of taxpayers to those on benefits has shrunk from 20 to 1 in the 1960s to under 10 to 1. Some economists project the ratio to worsen as the population ages further. Hence the fuss in France over raising the retirement age to 62 would be laughable except the new president wants to reverse it.
The welfare pendulum may also have swung too far when, what is essentially a privilege bestowed on members of society by fellow members of society is deemed an inalienable right. Interestingly the worst offenders are those employed in the welfare “industry” that have a vested interest in keeping people on welfare and hence themselves employed!
The world does not owe anyone a living!
Living beyond ones means ends in tears whether you are an individual or a nation. It is a poor reflection on the standard of public discourse that any politician who states the obvious is criticized.
The other big cost to governments (aside from welfare) is “health care” or more correctly “disease care”. I have written numerous times that the system in its current form will collapse under its own weight. Hence the solution is not more spending or more beds.
The solution is people looking after their own health and hence a reduced demand on the system from diseases, which are lifestyle related.