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Politics Versus Economic Reality: We'll All Lose

In the West there's quite obviously a battle between the politics and the economics. It is 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 is therefore unworkable - but somehow the politicians don't appear to get it: or do they think the choice is worse? And the reason behind this problem is above all else the resolve for excessive government spending primarily driven by the welfare state. And in the united states, that great bastion of free enterprise and also the American dream, is incorporated in the middle of a 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 before the day Congress discovers that it can bribe the public with the public's money." Which appears to be happening today. De Tocqueville is interesting because at that time France, and even the remainder of Europe had primarily aristocratic rule and he would be a liberal who supported the idea of democracy. But he was worried about the long term effect of that democracy on sensible economics: "From that moment on, the majority always votes for the 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 that the EU - in a desperate make an effort to save the Euro - has decreed that member states must have a balanced budget. Obviously the reason they did not possess a balanced budget was because politicians wanted to bribe their voters and or their financiers (these day almost exclusively big corporate).


Nevertheless the EU is fulfilling De Tocqueville prophecy by trying to sideline democracy - in both Greece and Italy an attempt by democratically elected leaders to even consider the possibility of leaving the Euro led to their instant removal by scheming EU apparatchiks and their replacement by so-called Technocrats. If the EU has its way I suspect the Greek election due soon will be postponed as will any other election that threatens a vote which will destabilise the union.

Of course the entire absurdity from the EU is whilst 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.

However the simple concern is this - can democratically elected governments really cut the money they're spending to the voters and ever hope to be elected again? Clearly the very first prerequisite is that the politicians are willing after which are able to 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 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 seems to be the most peculiar - with Europe to illustrate what goes on 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 need to be a member of the Tea Party to determine something needs to be done about US government spending - and surely the priority should be obtaining the budget balanced before contributing to it!

Britain's electorates dependence on the NHS (free healthcare) is definitely an illustration of the issues of attempting to alter something that is sacred cow - yet most accept it is 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 everyone knows that economics is sort of a river: it may be dammed, diverted and siphoned but it keeps coming as well as in the finish those trying to stop it should be overwhelmed.

Now you ask , when will economics win? I grew up in Eastern Europe after economics eventually won the Cold War. That suggests in my experience Europeans will eventually be living in some form of protected enclave where those outside have all the latest gadgets and they will be tied to a classic ipad: buildings will not be repaired and infrastructure will creak and barely work. The inevitability of economics shows that is how the EU is heading: a failing totalitarian state.

The reality is as to possess state spending - we have to generate enough wealth to invest in that spending. That's the economics from it. Furthermore that wealth should also must grow and become easily available to reinvest in new projects to create more wealth to keep paying your bills. Within the socialist/communist system the need to invest is ignored and inefficiencies sidelined in the have 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 exactly the same to 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 when it comes to manpower: whilst pushing people into welfare dependency just gets in cost towards the tax payer - net effect is the same - much less money for investment and therefore fewer, and finally no new jobs.