Jul 15, 2015

Greek crisis: Some lessons for Australia on debt and deficit | Maurice Newman

New York Times bestselling author Debbie Ford writes about “living for the now” and asks: “What does being present really mean? It means being here, completely here, right this moment.
“It means this is all there is. There is no tomorrow or even a yesterday, or a later today. Now is all that exists.”
For decades the West has been progressively moving to a state of no tomorrow. We see it reflected in busted sovereign balance sheets from Athens to Washington. Following their parents’ lead, members of the now generation, defined as those born between 1980 and 2000, cheer politicians who indulge their endless demands for instant gratification, however unrealistic. Their views and values are heavily influenced by technology and social media. If their expectations aren’t met, government, rather than personal responsibility, is to blame.
This generation has received an education that teaches the evils of competition and discourages self-reliance. Katharine Birbal­singh, the inner-London teacher who exposed the failings of the British comprehensive school system and was fired for her trouble, bravely criticised the poor quality of today’s union-protected teachers, the lack of discipline and the reluctance to stretch students, let alone grade them.
She blamed the influence of leftist ideology for consigning society’s least advantaged to a lifetime of welfare dependence.
This ideology is dumbing down Western education just as Oxford academics predict that, in 20 years, a high percentage of the occupational categories into which the world is customarily sorted will be at risk to robots.
Could this be a temporary phenomenon? Will coming generations, as they move into adulthood, realise the folly of their parents? Will traditional values of thrift, hard work, self-reliance, personal responsibility and respect for the rule of law reassert themselves? It’s possible, but so far Western society shows little interest in the future or in restoring traditional values. Surveys also confirm the growing pervasiveness of drugs in Western culture, the ultimate living-in-the-moment experience.
With no world wars or economic depressions to distract them and spurred on by the fall of the Berlin Wall, progressives (the new name for socialists) have pushed the ideal of a “more equitable” society as if there were no tomorrow. Using debts and deficits to fund welfare policies, the consequence of this intervention invariably has been to widen the gap between the rich and poor, making more people than ever dependent on taxpayers. It’s not surprising. These policies stifle entrepreneurship, misallocate resources, reduce employment opportunities and limit mobility between wealth classes.
In this “more equitable” society, the likelihood is if you’re born poor you’ll stay poor, and be exposed to poorer health, drug and alcohol abuse, domestic violence and other crimes — unless, of course, you’re a crony capitalist, a trade union official, a public servant or some other taxpayer-funded elite. This is today’s Greece, a country that truly has believed in no tomorrow.
As Bret Stephens writes in The Wall Street Journal : “Greece wanted to be prosperous without being competitive. It wanted to run a five-star welfare state with a two-star economy. It wanted modernity without efficiency or transparency and wealth without work. It wanted control of its own destiny — while someone else picked up the cheque.”
Some Australians draw parallels between Greece’s reckless past and our own insatiable welfare aspirations.
Others join economist and Nobel laureate Joseph Stiglitz in applauding Greek Prime Minister Alexis Tsipras’s defiance and defending his and his predecessors socialist policies.
Stiglitz advised Greeks to vote no in the referendum, saying it gave them the chance to “grasp their destiny in their own hands, even if it means a future not as prosperous as the past”.
So says a wealthy, progressive, non-Greek academic who will not have to live with the upheaval of another default.
Ironically, having followed Tsipras and voted no, the Greek people face stiffer bailout terms than those they rejected only days before. The European Monetary Union was always a political conceit based on the notion that central planning could produce prosperity and full employment. To bring discipline to member states’ finances, unenforceable debt to gross domestic product limits were incorporated into the Maastricht Treaty. Yet nearly all eurozone members, including France and Germany, have breached those limits. Many countries, including Greece, failed to meet all the reference values required for entry.
This is the story of the EMU: blind eyes, missed deadlines and increasing costs of membership. Moral hazards abound. Happily, kicking the can down the road means avoiding reality. In the meantime, political will and knee-jerk reactions can keep the euro alive for the moment, but the weak condition of many EU economies, forced to stick with a pricey currency, means a final day of reckoning is a matter of time. Greece is just the most obvious casualty.
The Abbott government has its own battle with the live-in-the moment mindset. Joe Hockey’s Intergenerational Report was quickly dismissed as a political document, not worthy of discussion. Why should it be? Today’s youths should be grateful for the efforts of the generation that has sustained them. If they inherit substantial debt obligations, so what? They can always tax multinationals and the rich when it’s their turn to govern.
The headlines from Greece and other failing European economies make no impression. The plight of the sick and elderly, 50 per cent youth unemployment, business bankruptcies and debts growing faster than GDP are seen to have no relevance to us, notwithstanding Australia broadly has chosen the same dir­ection to the fair and equitable society that’s crippling Europe. It’s just that Europe has been at it longer.
So spare a thought for Abbott as he tries to persuade Australians to lift their sights and realise that there’s not only a later today but also a tomorrow.

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