Snippets - economics and politics.
Happy Thursday. Not a continuous post, but a collection of observations.
If you are in the eye of the cyclone, please take care and stay safe. But enjoy this read.
European Welfare State:
Today I came upon an article from the Financial Times from December 2012. Yes. 13 year ago. It quoted then German Chancellor Angela Mutti Merkel:
If Europe today accounts for just over 7 per cent of the world’s population, produces around 25 per cent of global GDP and has to finance 50 per cent of global social spending, then it’s obvious that it will have to work very hard to maintain its prosperity and way of life.
At a guess, Europe’s share of population is roughly the same. It’s share of global social spending is the same. But it’s share of global GDP will have declined.
What a frightening collection of numbers. It would be interesting to assess Australia’s numbers within this rubric. Would venture they are proportionately similar. How depressing.
How to Kill an Economy:
Which reminds me of something else I read recently. Not the decline in global GDP share per the above.
At a recent gathering of European leaders, Italian Prime Minister Giorgia Meloni noted that over the past 35 years, Europe’s share of world GDP declined from 26.5 to 16.1 per cent despite the number of member states increasing from 12 to 27. Over this same period, China’s share of world GDP increased from 1.8 per cent to 18 per cent with the US’s share holding at 26 per cent.
Offering an explanation, Meloni pithily commented that Europe’s economic atrophy was because ‘America innovates, China replicates, Europe regulates’.
Perhaps if Meloni had studied modern Australian economic history, she might have added that Australia seeks to replicate Europe’s passions for regulation but with a special antipodean cocktail of high-income taxes, excessive regulation and anti-business posturing. It is after all modern Australia where a business can’t make too much profit lest it be accused of gouging but at the same time needs to pay ever more tax because otherwise it would be accused of not paying its fair share.
Given history and geography, Australia has always tried to take the best of both Europe and America. Look at our Washminister Parliamentary system.
It seems however that Australia has managed to get the worst of both.
Government Relations:
Your intrepid writer recently attended an industry government relations workshop. It was Chatham House Rules, but I will give even less away. The purpose of the workshop, with templates provided by a leading Canberra lobby shop, was to teach businesses how to get money and policy out of government.
The guest speaker was a senior Canberra parliamentarian who said words to the effect that, upon election, the number one priority of a member of parliament (presumably MP and Senator) is to be re-elected. Number 1 = re-election.
Call me naïve, credulous, unsophisticated, but I would have though that re-election was the reward rather than the objective. I, naively thought that people ran for office so that they could achieve positive outcomes for their constituents, local, state, federal, and if they did a good job, they would be rewarded with re-election.
Clearly based on some of the across the board dross that populates our elected class, you know of whom I speak, I was misguided. But the cold, hard clarity of this politician’s words, some how both shocked and pacified me. My cynicism is clearly warranted.
Rule by Technocracy. Or was that Kakistocracy:
Last week I strongly recommended a substack written about Australia’s Rule by Bureaucrats. If you have not yet read it, please do. It is excellent.
In this piece, reference is made to a podcast called …. the Joe Walker PostCast. Points for creative naming.
Walker is a youngish fellow who appears to be an economist by training. I think, but am not certain that he used to work for the Commonwealth Treasury based on my recollections of a very long and indulgent interview with Ken Henry. But points to Walker as he has had lots of interesting guests on his cast.
Except … and continuing with a theme, his latest is an interview with Professors Richard (there are no trade offs between economics and health) Holden and Stephen Hamilton. Both Hol and Ham are regular contributors to the AFR.
The podcast, in this case video, was like an auditory Ipecac. It is the advocacy of the technocratic nirvana so coveted by academics (both Hol and Ham) and by bureaucrats (Wal and Ham).
Technocrats promoting technocratic answers. Democracy and politics just a nuisance for them. A complete disregard for privacy, civil liberties and freedom of speech. is amazing.
I seem to recall that Stalinism, eugenics, and the Vietnam war escalation was the product of such thinking.