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Politics Versus Economic Reality: We Will All Lose

In the western world there is quite obviously a battle between the politics and also the economics. It's clearest is Europe where - all most as you - the economists are saying the Euro is condemning many to long-term austerity and inevitable poverty and it is therefore unworkable - but somehow the politicians don't seem to have it: or will they think the alternative is worse? And the reason for this issue is above all else the resolve for excessive government spending primarily driven through the welfare state. As well as in the USA, exceptional bastion of free enterprise and also the American dream, is in the middle of the battle to bring the identical welfare state to people 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 public with the public's money." And that seems to be happening today. De Tocqueville is interesting because at that time France, and indeed the rest of Europe had primarily aristocratic rule and he would be a liberal who supported the thought of democracy. But he was worried about the long term effect of that democracy on sensible economics: "From that moment on, most always votes for that candidates promising the most benefits from the public treasury which means that a democracy always collapses over loose fiscal policy."

An interesting rise in the EU - inside a desperate make an effort to save the Euro - has decreed that member states should have a well-balanced budget. Obviously the reason they didn't possess a balanced budget was because politicians wanted to bribe their voters and or their financiers (these day almost exclusively big corporate).


However the EU is fulfilling De Tocqueville prophecy by trying to sideline democracy - both in Greece and Italy an attempt by democratically elected leaders to even think about the possibility 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 own 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 total absurdity of the EU is as it clamps down heavy heavily on rising budgets in EU members states its 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 spending towards the voters and ever hope to be elected again? Clearly the very first prerequisite is that the politicians are willing and then can result in the argument - and win it - using their voters. Nowadays, with politicians who use opinion polls rather than conviction his or her guiding light, that seems a large ask. Or perhaps is it conviction from the wrong kind - a conviction to the liberal democratic model that believes the state should 'take care' from cradle to grave. The problem in america seems to be the most peculiar - with Europe to illustrate what happens when an excessive amount of is spent of social largesse it's extraordinary the united states appears to be following a same model. You don't have to be considered a person in the Tea Party to determine something needs to be done about US government spending - and surely the priority should be getting the budget balanced before adding to it!

The UK's electorates obsession with the NHS (free healthcare) is definitely an illustration of the problems of attempting to alter something which is sacred cow - yet most accept it's not efficient. Even talking about NHS reform has government pollsters in a lather of despair.

So in the western world the politics is ruling the roost: maybe we should say the little head is ruling the large head because when everyone knows that economics is sort of a river: it may be dammed, diverted and siphoned however it keeps coming and in the end those attempting to stop it should be overwhelmed.

The question is when will economics win? I lived in Eastern Europe after economics eventually won the Cold War. That suggests in my experience Europeans will ultimately be residing in some type of protected enclave where those outside have the latest gadgets and they'll be tied to an old ipad: buildings won't be repaired and infrastructure will creak and barely work. The inevitability of economics suggests that is how the EU is heading: a failing totalitarian state.

The truth is if we are to possess state spending - we need to generate enough wealth to invest in that spending. That is the economics from it. Furthermore that wealth should also must grow and become readily available to reinvest in new projects to create more wealth to keep paying the bills. In the socialist/communist system the need to invest is ignored and inefficiencies sidelined in the have to maintain the system.

In the united kingdom the Blair/Brown years saw a vast numbers shuffled onto welfare dependency often called disability. It was exactly the same towards the communist regime allocating every participant of the workforce employment - regardless of whether a brand new employee was needed. It made Communist business hopelessly inefficient when it comes to manpower: whilst pushing people into welfare dependency just gets in cost towards the tax payer - net effect is the same - less and less money for investment and therefore fewer, and finally no new jobs.