A very long time ago, my Uncle Jack and I got into a heated debate about government borrowing. He was an assistant deputy minister of finance in the federal government and he was adamant that I didn't understand that it was quite harmless for the government to borrow money because essentially, we were borrowing from ourselves. Apparently it wasn't ok or else borrowing from ourselves evolved into borrowing from others and now most of the world is in hock up to its eyeballs....and stupidly, we seem to be in debt to many of the same countries to who we either lend or provide foreign aid.
How in the hell does that work? How do governments who borrow money from others also end up being lenders to them? It seems to make sense to someone out there because almost all major governments including the US, Canada and most of Europe are in debt...mostly to each other and the mountain of debt service is about to cripple the global economy. Increasingly many are in debt to China, probably to get enough money to loan to other countries.
Delightful!
Politicians, of course, take no responsibility for any of this convoluted mess. They blame previous governments or they blame you and I. It's our fault because we demand too many social programs. But, I don't actually remember demanding anything (other than to be left alone). I do remember countless, visionless and faceless politicians from democracies all over the world promising all kinds of things in order to get elected. They also promised good government but that's another story.
Typically, politicians make promises to get elected and then borrow money to deliver on some of those promises. They don't regulate major financial institutions and the high-flyers who misuse the capitalist system to sate their own greed and when it implodes, they blame you and I, the great unwashed.
To be honest, I do believe that to some extent, it is our fault. We bought the fantasy, after all. We fell for the honey-words and let them bribe us with our own money and money they borrowed. Like over-indulgent parents , we gave them a huge credit card and like arrogant and spoiled children they spent money we didn't have to buy things we didn't need. The result? Mom and dad had to bail the kid out either through increased taxes or the reduction of the very services purchased with the borrowed money. It's sort of like borrowing to buy new golf clubs but having to turn in your membership at the club because you can't afford to play anymore.
Typically, politicians make promises to get elected and then borrow money to deliver on some of those promises. They don't regulate major financial institutions and the high-flyers who misuse the capitalist system to sate their own greed and when it implodes, they blame you and I, the great unwashed.
To be honest, I do believe that to some extent, it is our fault. We bought the fantasy, after all. We fell for the honey-words and let them bribe us with our own money and money they borrowed. Like over-indulgent parents , we gave them a huge credit card and like arrogant and spoiled children they spent money we didn't have to buy things we didn't need. The result? Mom and dad had to bail the kid out either through increased taxes or the reduction of the very services purchased with the borrowed money. It's sort of like borrowing to buy new golf clubs but having to turn in your membership at the club because you can't afford to play anymore.
Unfortunately, countries can't flush their debt with a simple bankruptcy and we're not allowed to spank them. Countries can default and have in the past but today we're more connected financially than most of the 400+ million people connected to each other on Facebook. If one country goes down, the entire house of cards collapses taking the world economy down with it. Fortunately the governments of the G20 are on the case. Don't be concerned that these are the same governments that got us into this mess.
Some blame the left's tax and spend agenda while others blame the right for mismanagement. What a pointless argument! They are the same when it comes to borrowing and it doesn't matter whether you support the left or the right, the borrowing continues and believing that one party or the other will change that is lunacy.
In my adult lifetime, a series of conservative and Liberal governments have run the national debt in Canada from $17 billion to half a trillion. It may not sound like much compared to the $15 trillion debt in the United States built by both Republicans and Democrats but Canada is a nation of only 35 million people and that national debt doesn't include another half trillion in provincial and local government debt.
It is the same in democracies around the world. The orgy of borrowing continues and government debt is spiraling out of control. The United States, Canada, Ireland, Spain, Itally and, of course, Greece the poster nation for where it all leads, continue to borrow as if they never have to pay it back.
As the people of Greece are discovering................you do!
Some blame the left's tax and spend agenda while others blame the right for mismanagement. What a pointless argument! They are the same when it comes to borrowing and it doesn't matter whether you support the left or the right, the borrowing continues and believing that one party or the other will change that is lunacy.
In my adult lifetime, a series of conservative and Liberal governments have run the national debt in Canada from $17 billion to half a trillion. It may not sound like much compared to the $15 trillion debt in the United States built by both Republicans and Democrats but Canada is a nation of only 35 million people and that national debt doesn't include another half trillion in provincial and local government debt.
It is the same in democracies around the world. The orgy of borrowing continues and government debt is spiraling out of control. The United States, Canada, Ireland, Spain, Itally and, of course, Greece the poster nation for where it all leads, continue to borrow as if they never have to pay it back.
As the people of Greece are discovering................you do!
I keep hoping that a politician will show up who a) can think beyond the next election b) is a true leader and will show leadership and c) tells the truth from the beginning and not only when there is no other alternative. I also hope that we will put aside our differences and our entitlement greed to listen if that person ever does emerge.
It's a vain hope I admit but in that regard, I'm like our dog, Jasper, who still follows me around hoping that food will suddenly fall out of my pocket. Sometimes, hope is all you have, especially when your fate and that of so many others is in the hands of people who's logic it is not only convoluted but downright dangerous to our success as nations.
It's a vain hope I admit but in that regard, I'm like our dog, Jasper, who still follows me around hoping that food will suddenly fall out of my pocket. Sometimes, hope is all you have, especially when your fate and that of so many others is in the hands of people who's logic it is not only convoluted but downright dangerous to our success as nations.
Politicians of all parties, both the right and the left, like to think of it as pubic service. I think they should think again before they create a world economy that will make the depression look like a minor inconvenience,
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© 2011 Maggie's Bear
all rights reserved
RELATED
Obama's Revenue Soup
http://online.wsj.com/article/SB10001424052970203918304577241513296604128.html?mod=wsj_share_tweet
The Drummond Report - The Liberal Gravy Train Exposed As An Economic Train Wreck
http://bearsrant.blogspot.ca/2012/02/drummond-report-dalton-mcguiintys.html
Government Takes Over Where The Mob Left Off
http://bearsrant.blogspot.ca/2012/03/government-vs-mob.html
The Teddy Awards - For Outstanding Achievement In Government Waste
http://bearsrant.blogspot.ca/2012/03/for-outstanding-achievement-in.html
© 2011 Maggie's Bear
all rights reserved
Thank you, thank you, thank you... for the logical discussion about government debt!!!
ReplyDeleteDemocracy is, by definition, always a work in progress. That's not a knock against democracy, for every other system, so far, has turned out to be worse. But it is a realistic appraisal of our system.
One of the things about the democratic system which is in drastic need of improvement is the present election cycle which rewards politicians with more terms in office for tossing unaffordable goodies at taxpayers, just before each election.
We keep falling for it! Is is "their" fault, or is it "our" fault?
Well, we keep re-hiring them! So, it's our fault!
Not only that, it's worse than that! Remember former Prime Minister Jean Chretien and his Finance Minister Paul Martin?
Weren't those the two that took Canada from near 'junk-bond' status - well on-track to be in worse shape than Greece (!) is now, and within 6 years returned Canada to a zero-deficit condition AND...AND(!) with significant government debt paydowns?
Well, yes they were.
For that stellar accomplishment both men received tepid support from voters. First Jean Chretien and next Paul Martin were voted out of office, for good.
I say we get the governments we hire, the governments we deserve and the governments that spend more than we can afford, because that is who we, as a people, are - spoiled little children.
Until we grow up as a society and learn enough to know better than to hire over-spending politicians, we will ever be in a state of near-economic peril.
For now, I'm a big fan of balanced-budget legislation for all levels of government. Not only that, Canada's total accumulated debt is obscene for a first-world nation with uncountable resources and a small population, we must do better than just balanced budgets every year, we must pay down our debt to reasonable levels.
My goodness, little Switzerland with next to no resources or territory runs zero deficits and has no debt at all!! Many other well-run countries do well with tiny deficits (for convenience-sake, not crisis) and very small government debt. None of them has Canada's advantages!
Wikipedia has some good but basic information on this, check Wikipedia "Economy of Sweden" "Economy of Norway" Economy of Australia" - same goes for Liechtenstein, Oman, Qatar, Argentina (yes, Argentina), South Korea and many others.
Finally, the best link on global debt belongs to The Economist:
http://www.economist.com/content/global_debt_clock
Great Post, you two! Very well done!
Best Regards, John Brian Shannon
For plenty of links on these topics visit my blog:
http://www.scoop.it/t/politics-in-the-21st-century