The debt crisis was on Greek Prime Minister Panagiotis Pikrammenos and European Commission President Jose Manuel Barroso’s agenda.
Yves Logghe, Associated Press
ABOUT THE AUTHOR
Fred Zimmerman is professor emeritus of engineering and management at the University of St. Thomas. He spent many years in industry before entering academia and has served on the boards of directors of several corporations. His email is firstname.lastname@example.org.
Business Forum: Economic fix lies in math, not politics
- Article by: FRED ZIMMERMAN
- June 3, 2012 - 12:13 PM
One of my mid-20th century history professors was fond of asserting that wars were inconsequential to the pattern of history. He argued that technology, economics, demographics, education and moral development were more influential. In addition to wars, the professor might have added elections as less meaningful events in the long term.
Much of the world is embroiled in election fervor in 2012. Citizens in France, Ireland, Egypt, Greece, Russia, several German states and the United States are fervently championing one candidate or another in the hope of restoring the prosperity and comfort of past decades.
Yet, given our collective abhorrence of any sort of behavior modification or sacrifice, prosperity and comfort may no longer be within our reach. As an informed friend has noted, "We have one party that will never increase any taxes and another that will never stop spending. Where will it end?"
Europe, the United States, and many other countries have something in common. Many of their citizens have absolutely no personal interest in participating in either responsible fiscal policies or qualitative improvements in their own activities. Yet, they insist that greater prosperity is due them and harbor the mistaken belief that deep societal problems such as neglect, waste, declining production, over-compensation, premature retirements and profligate spending can be reversed by elections. As we all become energized in identifying the evils of opposing political parties, we perhaps have overlooked the dysfunctional influence that we, the citizens, have played.
Did Greece's economic fortunes improve with elections? Will France fare any better if that new administration repudiates recent European initiatives to forestall financial contagion? Will U.S. citizens really support the tough remedial actions necessary to avoid similar problems in this country?
It is easy to blame elected officials, and many of them do have grievous faults. But, perhaps their greatest fault is listening too much to us, the constituents. We want to retire earlier than we should and we want someone else to fund it because we don't save anything.
Collectively, we want more social programs, no taxes, and the complete freedom to conduct all of our affairs without regulation -- even if that sometimes results in financial catastrophe. We want a highly technical modern society, but we don't want to spend any money maintaining the infrastructure. Almost all of us, individually, want any economic adjustments to be borne by somebody else. We tend to deny any responsibility for ourselves.
While we fight with one another about which political party is the personification of the greatest evil, we are rocketing forth to an economic situation that is unmistakably arithmetic rather than political. The debts we are accumulating are so large that they are not payable without stifling growth, scaling back needed programs, raising unemployment and neglecting further our already deteriorating infrastructure.
Whether we are Republicans, Democrats or Independents, this endemic denial of responsibility is likely to end poorly for us. We forget that interest payments are part of a sovereign nation's budget that has priority over such worthy endeavors as education, health care, construction, maintenance and national defense. Interest rates are held to artificially low levels now. But what happens if the Chinese ever need their money to address their many unsolved social problems? What will interest rates be like then?
The way out of the developed world's difficult financial quandary is unlikely to be solved by electing anybody. We need to change ourselves. Serious modifications of our own behavior are overdue. In order to avoid financial implosion we are going to have to work with more dedication and innovation, accept more reasonable compensation, retire later, stay healthier, embrace practical financial regulation, incorporate reasonable taxation, collect the taxes we have, and make meaningful investments for the future. These steps should not be that difficult or that surprising. As recently noted in the Financial Times, "Billions of people around the world would give anything for what Europeans (and Americans) call austerity."
By taking these needed and overdue steps, our country and others like it, will have reasonable chances of avoiding the long gradual descent to far more problematic and less pleasant societies. Then, whoever is elected might have a chance of succeeding.
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