To do and say what is right – as distinct from popular – means that you sometimes have to stand alone which takes strength of character. But if you have a clear vision of the future and how it ought to be, then you can drive change in the face of opposition through the courage of your convictions.
Regrettably, such bold leadership is increasingly difficult to find in politics as politicians have become scared of upsetting the electorate. Opinion polls and minority groups now unduly influence policy formulation resulting in long-term economic credibility being sacrificed for short-term populist reforms.
Paradoxically, when political leaders make decisions based on opinion polls they end up being followers, not leaders. They also become reactive rather than proactive. Moreover, inspired leadership gives way to emotive and ill-informed slanging matches.
The end result is the public gets policies that are against their own best interests, particularly those that threaten business. There are many examples of this in Australia. The Australian Retailers Association branded the government’s push to ban plastic bags as populist politics.
The Business Council of Australia believes the immigration debate has descended into populist rhetoric, noting that we need continued, sustainable growth to ensure that our children inherit a strong economy. The ANZ Bank boss recently warned that populist policies were spooking foreign investors.
For my money, former Western Australian Premier, Geoff Gallop, got it right in a recent article, When populism raises its ugly head, wherein he stated that populism:
... prefers nationalism to internationalism, protectionism to free trade and fundamentalism to multiculturalism. Populists want politicians to support “us” as against “them”... They distrust business and support local environmental activism but don’t like... the philosophy of economic rationalism.
Okay, here comes the sting in the tail. Brace yourself – it’s largely our fault if we end up with poor political leadership. As French political philosopher, Alexis de Tocqueville said: In democracy, we get the government we deserve.
We all “have a say” in voting governments in and politicians should be worthy of the people they serve. Equally, we have an obligation to behave responsibly and to avoid short-term community hysteria just because we don’t get our way on a particular issue.
For example, when it comes to rising interest rates, I know, politicians know and every first-year economics student knows that they are a sign of economic growth and prosperity. Yet many in the electorate expect the government to say the opposite – and it does – as it knows mortgage rates are a political hot potato. Boy, I’m glad I can speak the truth.
Posting Date: 16 May 2011
Modern day Greek tragedy
Is it a case of life imitating art? We’ve had the Big Fat Greek Wedding, now we’ve got the Big Fat Greek Debt. Unlike the light-hearted movie, the drama that’s unfolding in Greece is a sobering tale of the crippling impact of government largesse and corruption.
This sorry saga – let’s call it The Art of Political Deception – started long ago. While Greece’s economic mismanagement does not date back to the time of her famous sons, Socrates and Plato, it can be traced to the establishment of the modern Greek state in the early nineteenth century.
A welfare state mentality emerged and a marathon of fiscal trouble began that continues to run its course today. The benevolent Greek Government introduced automatic indexed salary increases rather than base annual pay raises on market indicators such as productivity.
The resultant lack of economic growth created few opportunities and caused the large-scale emigration of Greeks to Australia and the US after World War II. With one of the highest rates of emigration in the world, remittances soon became the largest component of Greece’s GDP.
Meanwhile back in the homeland, economically incompetent Greek Governments continued to build an oversized and pointless civil service. The average government job now pays almost three times the average private-sector job. Civil servants are also protected by law from being fired and retire with bloated pensions creating the best working conditions in Europe.
The retirement age for Greek jobs classified as “arduous” is as early as 55 for men and 50 for women. According to a Vanity Fair article, more than 600 Greek professions have managed to get themselves classified as arduous including hairdressers, radio announcers, waiters and musicians and all receive generous state-funded pensions.
The spendthrift attitude of successive Greek governments is one of the root causes of Greece’s current sovereign debt crisis. However, the government is not solely to blame. The Greek people themselves must also accept some responsibility for the country’s economic mess since tax evasion is rampant.
Greece’s deep rooted culture of tax evasion costs the country about 30 billion Euros annually in lost revenue. Tax dodgers can be found everywhere. Plumbers, electricians and taxi drivers are notorious for not giving receipts. Doctors grossly understate their income while wealthy home owners deliberately lie about owning a pool to avoid paying a luxury tax.
And so ends Act I of our human tragedy. With a short interlude to reflect on the fact that Greece – at both a sovereign and personal level – has been living beyond its means for decades – we move to Part II and meet the third “villain” (metaphorically speaking) in our plot – the Euro currency.
The Greek crisis became a European crisis due to the common use of the Euro. A single currency is only as strong as its weakest link, as the 16 other Euro nations have discovered. Tiny Greece has been dominating the headlines with speculation it could bring down the Euro if it defaults on its debts.
If Greece still had its own currency, it could employ the standard policy of devaluing its drachma to become more competitive and restart growth. Devaluation makes a country’s exports less expensive for foreigners and makes foreign products more expensive for domestic consumers. This helps increase exports and decrease imports, thereby reducing the current account deficit.
However, Greece’s monetary union with the Eurozone means it cannot follow the devaluation path. So just over a year ago the European Union put together a €110 billion bailout package for Greece that briefly calmed markets. The IMF recently warned that a second bailout package is necessary to prevent the world’s second global financial meltdown in three years.
The crumbling ruins of the Parthenon are testament to the fact that the Greeks have failed once before. This latest tragedy could again leave the country in ruins. How this tragedy ends is still to play out but the cradle of Western civilisation and birthplace of democracy is fighting for economic survival.
Posting Date: 4 July 2011
Government concessions for many
When it comes to decision making, politicians are pulled in multiple directions. The judgments that politicians make can affect thousands or millions of lives. An endless stream of business associations, community organisations and pressure groups lobby governments to influence outcomes.
These special interest groups play a legitimate role in all democratic systems of government. They are an important mechanism through which citizens can make their ideas and views known to elected officials. The ultimate aim of this advocacy is to shape public opinion or affect public policy.
An individual acting alone has little political clout but, as part of a special interest group, can assert considerable sway. Interest groups come in all shapes and sizes, can be transient or permanent and cover a multitude of issues e.g., anti-abortion, environmental protection or workers’ rights.
A well-known interest group in America is the