24 February 2009

Vaclev Klaus -v- Santa Claus Kev

The Great Recession Cage Match

Rudd's tactic:

Give out cash prizes to the grateful punters.
(Hope nobody notices that the cupboard is now bare)

Klaus' game plan:

Treat it like flu: let it go through.
(If you don't cure it, it takes 7 days. If you do, it takes a week)

Quick quiz:

Which of these is good management and which is good politics?

On 19 February 2009 Vaclev Klaus, the President of the Czech Republic (not to be confused with his predecessor, as I have done, Vaclev Havel), addressed the European Parliament (Lid dip to Eric Falkenstein). Here is the text of his speech.

In amongst the many gems in this magnificent speech, which touches on the excessive restrictions on freedom and the absence of true democracy in the European Union, there is this:

. ... the present economic system of the EU is a system of a suppressed market, a system of a permanently strengthening centrally controlled economy. Although history has more than clearly proven that this is a dead end, we find ourselves walking the same path once again. This results in a constant rise in both the extent of government masterminding and constraining of spontaneity of the market processes. In recent months, this trend has been further reinforced by incorrect interpretation of the causes of the present economic and financial crisis, as if it was caused by free market, while in reality it is just the contrary – caused by political manipulation of the market. It is again necessary to point out to the historical experience of our part of Europe and to the lessons we learned from it..

This speech is a wonderful statement of the resilience of the ideas of human freedom from the would be shackles and derision of authorities, whether those authorities are"democratic", "doctrinal", "dictatorial" or "divine".

Compare Klaus' inspiring statement above with the recent miserable global pablums of the desperate one eyed Scottish demagogue running Westminster and Nic, his Parisian action man fashion accessory.

Why do smart, insightful and caring people continue to get sucked into big government's self important self destructive vortex of delusion? Do these political harpies, who are just pieces of flotsam on the tide of economic history, really believe they are in control of their economies and that they are not actually making things worse by imposing their current partisan version of a big government spending non-solution on the governed? All these power junkies apparently know for sure is: if they are not seen to be doing something, anything, then they will be blamed, no matter what happens. For them any action, and the bigger it is seen to be the better, is preferable than taking no action, in order to protect their own political hides. And this is so even if the action taken is counter-productive. Their sycophant enablers in the life style media and from the protected groves of academia, egg these governments on with active encouragement for them to dip still deeper into the bottomless well of other peoples' debt. And what was it that precipitated this downturn again?
What if, as seems likely, spending as little of taxpayers money as possible, is the path to causing the least damage to a nation? A government that stabilizes or reduces its debt going into a downturn, maintains essential infrastructure, encourages private investment and give business incentives to expand seems likley to be optimizing conditions for a turnaraound.

Any leader genuinely interested in prioritising the best outcomes for the people they have a responsibility for, and not just in the maintenance of their own access to power and popularity, can clearly see from history, that large scale taxpayer funded make-work programmes (bicycle paths anyone?) are not solutions at all, they in fact make the problem worse by increasing debt and discouraging personal initiative.

So for we Australians, compare Klaus' approach with our Kev's Santa Claus approach. Mr Rudd radically and precipitously alters the nation's budgetary settings in the space of 6 weeks from boasting about maintaining a surplus, to going into deep deficit. How does he do this? By giving every worker earning less than approx $80 grand p.a. a cheque from Treasury for $800 or so. He also gives grants to councils to build cycle paths (what is it with leftists and bicycles?) and to primary schools to build assembly halls, music studios and changing rooms. That'll sure stimulate domestic demand for a quarter or so Kev and workers, parents and retailers will think you are Santa (Heh Kev, seen the polls?). But what then?

If the recovery doesn't come for another year or so, can you do it all again without bankrupting the nation's treasury? But if you don't the voters might see that your profligate generosity had no lasting effect on the recession or jobs, whilst weakening Treasury's capacity to recover when the inevitable private sector driven economic turn around does arrive.

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