Monday, 24 February 2014

Democracy in Trouble: Part I, The Economy

Part I, The Economy | Part II, Our Rights | Part III, How Can We Fix It

Democracy has been one of the greatest developments of the human race. The idea of democracy is thousands of years old. Modern democracy that we use today began in the 17th and 18th centuries in many European countries and American colonies.

Democracy spread throughout the world, monarchies were transformed and dictators were put in jail or executed. I think democracy took off so well because it gave everybody a stake in governing their society without resorting to violence. Back then ruling was not as difficult as society was far simpler.

Recently, democracy seems to be having a bit of trouble typified by what is going on in Thailand, the Middle East and now The Ukraine. Even in the Western world no one is proud of our democratic governments - in fact they are despised.

The global financial crisis was brought on governmental incompetence. The rich and powerful on Wall Street have far more sway over those in power than any other group. When they lied, cheated and stole from the American public they got away with it scot-free.

Then to make matters worse a political decision made many years ago almost destroyed our financial system again. A single European currency replacing national currencies was always a stupid idea. The decision to create a single European currency was not taken for financial reasons, but for political ones. A single European currency would forge Europe into a single nation - World War II could never repeat itself. A very good intention, but very poor execution.

We have it pretty good in Australia, but it could be that much better. In the Hawke-Keating era there were a number of financial reforms, such as floating the dollar, that set Australia up for a massive amount of economic growth. Howard got the budget back into surplus and introduced the GST. It was after this that everything started to go wrong. The Howard government should have used its popularity to push through difficult financial reforms.

They should have got rid of negative gearing of investment properties and never introduced the first home buyers grant. Both these things helped to inflate property prices to ridiculous levels. It is now normal for both parents in a family to work full time. It is the only way to pay off a million dollar mortgage. They also could have changed the rules on family trusts to tax them as companies. They also should have stopped flushing money down the toilet on stupid things like the baby bonus.

When the Rudd government came into power they still refused to do the difficult financial reforms that needed to happen. Middle-class welfare continued. We could have had so much more money in the kitty for when the financial crisis did hit. I think the Rudd government probably made the right decision to splash the cash to prevent Australia from going into recession. Although, I am sure they could have found better ways to deliver the cash injection. Just arbitrarily handing cash out to every taxpayer, really?

Then the carbon tax was introduced that was supposed to be revenue neutral. They did cut some taxes, but also introduced even more middle-class welfare. They also royally screwed up the implementation of a mining tax.

Continued... Part II, Our Rights


  1. Well said. In the current environment of Abbotopia, what are your thoughts on labour reforms? Michael

  2. Thanks for the comments, maybe my blog is becoming more popular after all.

    Hmm... Difficult question. I sort of see both sides of the debate. If they could allow employees greater freedom without impacting their rights, they could make changes. But how do you add "flexibility" without Giving more power to employers. On the other hand I think labour laws are needlessly overcomplicated - part of the legacy of employees gradually gaining more rights over time. The thing is it's always going to be politically difficult and there are people that have vested interests on both sides that could make it incredibly hard to create better laws.

  3. I think you may have inspired me to write a new blog post.