Why should debt concerns in Greece, Italy, Spain or Portugal have such effect on Australia when we are in the middle of a resources boom supplying China's economic growth?
It seems to be all about perception. If some nations default in Europe then the first world's tangled web of loans and dodgy investments begins to unravel. Then we get a run on banks and mass "withdrawal of participation" in the financial system, with trust broken. This could end up in a 1930s style depression.
So the First World's financial system is a giant interconnected ponzy scheme teetering on the brink of collapse. Last ones out lose all their money. Banks close their doors. Countries go broke. Currencies collapse.
After largesse by various governments and politicians over decades, with unregulated dodgy financial trickery rampant, the solution is "austerity measures" on the hapless populations that pay the taxes.
Another solution is "Quantitative Easing" - which the United States is doing - which effectively means printing more money without producing, making or growing anything.
It seems to we need to redesign our financial system to eliminate speculation, waste, corruption and the endless fixation on endless growth.
In essence, this is a core concern of the Occupy Movement.
Here is a good video from The Guardian that explains some details about wealth and income distribution changes in the United States
4 comments:
Unfortunately there is no other system available. Over the past hundred years a few other systems have been tried (Socialism, Communism, Nationalism etc etc), but all have died when they did not work. If we fill halls with economists to try to create another system, it will probably take a few hundred years, then we will probably finish up in the same mess. One thing is for sure, and that is Countries must live within their own means, and that will result in the poorest being hit the hardest. Countries can only survive on the taxes paid by their residents, and if residents don't believe they should pay taxes (eg. Greece), then they had better get used to living like the Nth Koreans.
Grant, we need to work on creating a new system rather than repeat the mistakes of the past.
A system where we don't try and make money out of money.
A system where there is not a widening gap between the rich and poor.
A system where CEOs and other execs don't get paid obscene amounts of money.
A system where people and communities matter, not just numbers, offshoring and cost cutting.
A system where the First and Thirld worlds dissappear and are replaced by One World.
We need to develop a new paradigm that is fair, honest, equitable and sustainable.
Well put, Peter.
I think the only other society seriously attempted was socialism/communism; in my view nationalist and keynesian systems remained within the capitalist/market paradigm.
We all know that 20th century socialism didn't go very well, from catastrophic (USSR, North Korea) to barely limping through (Cuba) to complete sellout (China); but we can learn from their mistakes and also their successes.
Whatever we call our new system, it will have to learn from (and even build on) previous attempts to overcome the rule of capital, not ignore them.
Hi Peter
The ideals you mention have been worked for at least the last 2000+ years.
1. Removing the making money out of money would remove banking, did not work in the past as all wealth remained in the control of a very limited few. God forbid anybody allowing Govs to control wealth, just look what happened in Socialist countries.
2. A gap will always exist as individuals work hard to be educated and accumulate wealth. Those who don't fall behind.
3. CEOs generally are paid more that their managers / staff (pyramid system) although the QANTAS example was not so clear, where the CEO is documented as being paid less per hour than an Airbus A380 captain. Work through all levels in a company, and a CEO is generally the highest paid of permanent staff.
4. People and communities only exist due to numbers. Eg. the more people, the more that can be spent on / for the community. Off shoring in most cases occurs to reduce costs within one country, with the positive side effect of wealth distribution to poorer /less developed countries / communities.
5. First and third worlds have always been, since recorded history commenced. It would take, maybe 10 generations to bring areas of, say Africa, to the current level of the US, but of course the US would have advanced even further. It would also require African areas to be run by Western countries (back to colonialism ?).
6. Yep but a slight problem. Who decides what is fair for all, honest, equitable, and sustainable, as each of these terms has a different meaning in each society.
Anyway the thoughts are good, but if you could find an impartial group to look at, the ideals would take many generations to partially achieve.
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