As the world staggers from one financial crisis to another - or is it really all the same crisis ? - one wonders what, if anything our rulers are learning along the way.
For generations, many governments have believed that the road to success is paved with public spending, fuelled by vast amounts of government borrowing. There can be no doubt that this approach bore fruit for many years and western nations prospered as wealth was spread more widely through an assortment of government initiatives, ranging from direct spending on building and engineering schemes to the creation of the vast array of social support that exists today. Unfortunately, the underlying ability of nations to support their extravagant spending has not kept pace with their ambitious plans.
Added to this, the ludicrous attempt to tie European nations together with a single currency, the Euro, has created pressures that everyone anticipated, excpt, of course, those politicians who saw the Euro as a means to an end and were intentionally blind to any negative consequences.
What we now have is financial melt-down of potentially catastrophic proportions. The borrowing that has been out of control for decades has finally come home to roost; the idiocy of the Euro means that many of the Euro-countries cannot survive with a 'one-size-fits-all' financial and monetary policy. The answer so far is for the richer nations, in Europe meaning mostly Germany, bailing out the debts of those in trouble; this approach can only continue for so long. Greece, Ireland and Portugal have failed but been bailed out; now it seems that Spain may fail but that Italy, the third largest Euro-economy, almost certainly will. Bailing out Italy is likely to be a step too far, even for Germany, so what will be done ?
In Britain, our government has sat back and congratulated itself on its independence from the Euro, while also having to recognise that its dependence on its trading links within the European Union make it horribly vulnerable, nonetheless. Regardless of this, the British government is also borrowing far more than is good for it in order to prop up the vast amount of spending that it feels committed to, mostly social spending aimed at areas such as health, pensions and social services. It is institutionally incapable of acknowledging that this is where the real problem lies and doing anything meaningful about it.
The truth is that every government in the western world has been living beyond its means for several decades. Their people have experienced enhanced standards of living that they have not really earned, principally financed by borrowing against expectations of future economic growth. Now, it seems that these expectations are not to be fulfilled and we will all be poorer as a result, the youngest in society being the ones most likely to bear the greatest burden. While we in the west suffer decline, those in the developing world of China, India, Brazil etc., will, of course, take our place as the leaders of tomorrow. Britain, together with the other over-indebted nations, will become part of the new 'third world' or, perhaps, that should be 'fourth world'. As financial reality takes hold, Europe and, eventually, North America, will find themselves increasingly impoverished; China, India and the rest will take over.
Where all this will lead is hard to say. There is no doubt that the USA and Europe have been the driving force behind most innovations in the last few hundred years and it's questionable whether other countries will be able to do the same in the future. Can China produce a next-generation 'Microsft', or India a next-generation 'BP' ? Will Brazil be able to create the confidence to house the next HSBC ? If the developing nations prove unable to replace the dynamism exhibited by the west since the Reformation, we may well be in for a future period of stagnation which could easily last for centuries.
The western world is not yet finished but its decline is inevitable and its end certain; to deny this is not only arrogant but also stupid. Every empire, and I count the western dominance of the world over the last few centuries as such, collapses as a result of its own certainty that it is immortal and cannot possibly die; those who run it become increasingly focused on their own comfort and position and forget about the need for innovation and effort, and they also become increasingly desperate in their attempts to shore up a lost cause, such as the 'Euro'. In Britain we have already lost most of our great manufacturing base; we no longer make cars, ships or aeroplanes to any extent. Instead, we rely on the so-called 'service industries' of finance and insurance to keep us wealthy, industries that are all to moveable. More and more people have become reliant on the state for support, something that is wholly unsustainable, and we continue to poor billions of pounds into largely pointless social ventures as well as fatuous schemes to promote an apparent air of well-being and success, such as the Olympics. Government charges on with but one aim in mind, winning the next election and damn the costs or consequences, while the opposition does no different.
The future belongs to China and the other third world nations that are now undergoing rapid development. In Britain, Europe and the USA, we will continue to encase ourselves in a bubble of self-denial as our politicians refuse to either accept the truth, or to tell the people what it is, for fear of electoral rejection. Eventually, though, the brown sticky stuff will hit the fan and all hell will be let loose; revolution, blood letting and all the other horrors that we now think of as being purely the property of uncivilised nations will be unleashed upon us and our descendants - I can only hope that I'll be long gone by then.
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