Too much of the good life can drain the well

IT is easy for smug Australians to laugh at the collapse of Greece and other 'Club Med' economies inside the faltering European Union, and then say it'll never happen here. Easy, but wrong.
Before thinking you read similar remarks to these from Bystander last week, it's worth considering some of the evidence to have recently emerged in German investigations into what ails Greece.
And before asking who cares what Germans think, it's important to understand that it is Germans paying Greek bills - and then ask who will pay Australia's bills when we go too far down the easy road. China?
What killed the Greek economy, and might yet kill the entire EU, is a habit of avoiding hard decisions and opting for a comfortable lifestyle, even when you can't afford it.
Invariably this has meant government policies that win votes, rather than policies that are best for the country.
Greece did it for 30 years before falling off an economic cliff. Australia is on the same track, but about 20 years behind - which is some comfort for people of Bystander's age, as the next generation will have to fix today's bad decisions.
The reason for this particularly gloomy view of the future is that most Australian voters like the idea of whacking the mining industry with a big new tax. We might not like it in Western Australia, but in Sydney and Melbourne it's more than welcome.
There are many reasons why mine bashing is popular. One is environmental, another is envy, a third is ignorance.
Bystander can understand the first two. Some miners have made a mess of the environment, and even this grumpy old scribbler tires of being told how to live his life by filthy-rich mining entrepreneurs.
But it's beyond comprehension why a government would choose to stifle a growth industry by over-taxing it, and then allocating the tax raised to industries that are withering under the heat of global competition, or boosting social welfare handouts to people who could be working - in the resources sector.
Before anyone thinks that Bystander is sounding like a broken record, or is merely playing the WA card, take a look at what's happened in Greece - as in really happened.
This is a country that took the comfy, lifestyle-driven, politically popular route - and crashed.
The Germans are furious about what's happened in Greece, especially as they're having to pay for bills run up by people sitting in the Mediterranean sun. Unless we're careful we will also need someone to pick up our bills.
Trim the fat
DER Spiegel, one of Germany's better publications, recently sent a team of reporters to Greece to try and find out where that country's money had gone. What the journalists discovered was astonishing.
In one case there was an office staffed by 30 people charged with the job of draining a lake so a new road could be built. The office was set up in 1957. The lake drained itself. The road was built, but there are still 30 people (not the original staff) planning how best to drain the lake - which no longer exists.
Then there is an office in Thessaloniki, a European cultural capital of 1997, where a fully staffed office of civil servants are planning how to settle accounts from the cultural events - 13 years later.
What the Germans found is that Greece has five-times as many government employees per head as Britain. Fully paid pensions are triggered for some people at age 50, which means they could be on a government pension for twice as long as they worked.
Australia is not that bad, yet. But every time we make a decisions based on lifestyle factors, or in order to pursue a politically popular, but economically foolish idea, we lay a fresh coat of fat on the civil service.
Examples are to be seen everywhere, but the one Bystander likes best is the fully staffed office of the climate change ministry six months after the Copenhagen climate change conference ended in disarray. According to one estimate, there are still more than 50 government staffers paid more than $150,000 each to wind down the Copenhagen effort, and prepare for the next conference.
Perhaps a fully staffed climate change department is popular with voters, but it is also a sign that we are on the road to Athens.
Growth curve
FOLLOWERS of Hans Rosling, a brilliant Swedish statistician and medical researcher, will be familiar with his prediction that the wealth of China, on a per head basis, will match that of Britain and the US by 2048.
Delivered as a semi-humorous one-liner by Dr Rosling, because he probably figured that few people would believe him, it came as a surprise to Bystander to discover that he might be right.
In a remarkable insight into how the wealth of the world is migrating from west to east, what Dr Rosling did was apply a 10 per cent growth rate to the gross domestic product (GDP) per head of the average Chinese person, and compare it with the Western world.
Today, those GDP numbers are (in $US): Britain, $45,440; the US, $45,592l; China, $2,430 - a gap also known as a country mile.
But China's average growth rate in the five years to 2007 (the years before the global financial crisis) was 13.5 per cent versus 3 per cent for the Western world. If you use that inflated pre-GFC figure for China (and apply zero for the Western world) China catches up in 2038. If you use a 10 per cent growth rate for China then Dr Rosling's prediction of 2048 is spot on.
Turf war
TO finish this week's gloomy column, Bystander is still struggling to cope with something he saw in London two weeks ago - an unemployed man fighting for an unemployed job. What that means is that a vendor of the magazine, The Big Issue, was conducting a one-man protest over the loss of his street corner to a rival vendor of the same magazine. There is something disturbing about unemployed people competing for the right to peddle stories about unemployment.


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