Apparently we are at the moment facing the greatest economic crisis the world has seen since the Great Depression, and therefore the G20 leaders who are gathered in London not only have to dodge protesters but also come up with some solutions to this mess. The only problem with what I have just written is that we are not facing the greatest economic crisis since the Great Depression and the people gathered in London are part of the problem: they may come up with some solutions, but you and I will be paying for them.
The Great Depression as bad as it was, did not threaten the global economy anywhere near as much as World War 2, and World War 2 had just as much to do with economics and the grab for resources as it did with any grand military strategies. Not only did the war itself literally destroy entire countries and economies, the aftermath of the war left the world facing far more challenges than this global economic crisis will ever throw up.
Yes we have had some big banks go under, General Motors is looking like a dead duck and companies are in trouble, but all this pales into insignificance if you compare it with almost the entire industrial sector of entire countries being wiped out and whole cities destroyed, not to mention the millions of people who died.
We are not faced today with the challenge of rebuilding entire economies, we are simply going through the pain that comes when an economic bubble bursts…this is no comfort for investors of course or people losing their jobs, but let’s just keep things in perspective. It is a mess to be sure, but hardly the end of the civilised world, although that view does get more attention in the mainstream media.
What we are also witnessing at the moment is a once in a lifetime opportunity for governments to grab power on a scale not seen in many years, especially in western democracies. Take Australia for example; where the Government has been able to rush through a massive spending package with very little debate either in the media or in parliament, simply because the Government insists that the nation faces a “national and international economic crisis”.
This package will give the Government (and and State Governments) significant power simply because they have a large bag of money and to get your hands on it, you will need to play by their rules. The Government is now deciding which sectors of the economy will get assistance without any real debate or cost benefit analysis; the car industry for example gets a few billion whereas the tourism industry seems to go begging, homes will get pink bats but where is the boost for the high tech sector?
I suspect if we were to follow the trail of political donations and then look at polling numbers we would see the logic behind where the money is going.
In the U.S. the Obama Administration has effectively sacked the head of General Motors and is now dictating how the company will be restructured. This sounds a little like Soviet era State-run enterprise to me and also makes a bit of a mockery out of the notion of free trade.
I can appreciate the need to protect the jobs of thousands of auto workers but can you see the power-shift happening here? Governments are using tax payers money to wield power in the U.S, U.K, Australia and other countries and it is the taxpayers that are funding these little power grabs. Every time a government bails out an industry or hands out money then someone is either directly or indirectly indebted to them. These debts will not be forgotten by the people in power.
Of course it would help in Australia if we had a strong Federal Opposition but it appears that the people have had a good look at Malcolm Turnbull and they are not warming to him. He would probably make a great Federal Treasurer one day but I doubt he will ever make it to the Lodge unless he stages a coup (or is a guest).
Then we have the man who should be taking the Government to task on economic issues being none other than Joe “I need another T.V gig” Hockey. Oh my…is that the best person that can be found amongst the Liberal and National Party ranks for such a critical role? If so, then they deserve to remain in the political wilderness.
The only chance we have for an Opposition that has legs is for Peter Costello to stop massaging his ego on the backbenches and make a move for Malcolm’s job…or resign and stop being a nuisance like a naughty school boy at the back of the class making fart noises.
Now I am not suggesting there is any coordinated conspiracy by the leaders of the G-20 economies to jointly rule the world; they really do not like each other enough for that. But what I am suggesting is that each leader will, as all politicians do of any flavour, try and use the current economic crisis to increase their political clout and support base.
Of course this happens all the time; politicians will be politicians after all, the problem I have with the current situation is they are using vast amounts of public money to do so. (as opposed to the smaller amounts they normally use)
However it could be argued that governments across the world are just trying to sort out the destruction wrought upon us all by greedy (extreme capitalist) bankers and that the public purse is being used wisely to avoid the collapse of the global economy. I am not suggesting for a second that governments should not have intervened and tried to sort out some of the economic mess we are in, but I do suggest that this intervention will come at a price; will probably go too far and we will emerge from this crisis with a hefty bill to paid and with governments in place that are a little too entrenched for our liking.
Now I am not great fan of big government so I am writing from a biased position. Perhaps I have got it all wrong and the way of the future is for governments to wield more power?
But just remember, we would probably not be in this major economic crisis if successive U.S. Administrations did not lean on banks to extend (sub-prime) loans to get people into houses they could not really afford..so maybe we would have been better off with just better regulation and less government intervention in the first place? (Just like the neo-Liberals were running things in Australia a few years ago!)