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Contact:
Foundation for Economic Growth,
P.O. Box 10-282,
Wellington, N.Z.
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The Foundation for Economic Growth is a group of like-minded individuals who have decided to act rather than accept New Zealand's continuing poor economic performance. The Foundation is not affiliated with any political party. Add Your Comments Here.

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Most recent update: Jul 3rd, 2017 - 15:54:31

REAL Economics : REAL Politics
Politics is Everything

We live in a real world where we can observe and measure things and develop theories to help us understand the reality around us. If we subject Politics to the same scrutiny then we should be able to work out which might be the best political system to have. Then we have to determine the best way to implement it.

This may be an impossible task. We have to keep our mind fixed on reality. We are not angels so we have to understand human frailty. We should also understand that the ideal system may be impossible to implement. We may also not be smart enough to think of the ideal system.

Above all else we must understand the system we currently live with and how to be happy within it. We are all separate human beings and we will continue to follow what we perceive to be in our own interests. This thought is the basic axiom behind Mises Human Action and the basis of Austrian Economics or REAL Economics as I call it.

Humans become very unhappy when they are constricted by government so that they cannot follow their own separate interests. Current events (2011) with the Arab nations disposing of their unwanted dictators shows us that very clearly. All of last century also proved that socialism cannot work and the reason is simple. People are just not designed to work for the common good at the expense of their own well being. Nature has spent 4 billion years developing organisms that are independent and live and work to improve their own well being. This ensures the continuance of each species. Those that do not work for their individual well being cannot survive the inevitable changes that arise and so they tend to die out. Darwin spotted this years ago. And it applies to humans just the same as to the Neanderthals and the dodo.

So we need a political system which allows us to continue to act in our own best interest. If you recall the Land of Nowhere from earlier in this discussion, they solved the problem of dictators et al by ganging up on anyone who started to show signs of authoritarian rule and giving him (it was usually a him) a one way ticket on the big dive over the 300 metre cliffs. Their system worked well and their economy developed beautifully with everyone doing their own thing and reaping the rewards of their efforts.

Unfortunately that world, as its name implies, exists nowhere in reality. We somehow need to be more clever than that.


Feb 19, 2011, 14:01

REAL Economics : REAL Politics
The Political Imperative

One of the things I have observed about the different areas of human endeavour is that there is always one or a few basic aims or necessary conditions required for success in that endeavour.

For instance, in the game of squash the basic principle is that the person who runs the most, loses. So the aim and object of the exercise is to make your opponent run. This was brilliantly demonstrated to a bunch of us squash enthusiasts some years ago by a top international player. He demonstrated this on the squash court with one of my mates who was a top A grader at the time and superbly fit. Our international player explained that the longest distance to run on the court was from one back corner to the diagonally opposite front corner. And he proceeded to demonstrate. Of course as a top international he had superb control of the shots and he played alternate shots dropping up the front then driving (or floating) back to the back corner. He didn't play for winners and he was easily able to get to my mate's shots. After about a minute my squash mate just stopped running. He was totally out of energy and the only thing he could do was to stop.

The people who understood that strategy understood squash and always had an advantage over those who didn't understand.

All sports are like this as far as I can see. So are jobs. There are always one or two basic things which, if you understand, will put you on the path to success.

Traffic engineers are mostly concerned with safety and the basic rule is to separate out the different modes of transport. So there are no pedestrians or cyclists on motorways, for instance. If we could follow this basic tenet around our cities we would have pedestrian ways for pedestrians, cycle ways of cyclists and roads for cars. Unfortunately we seem to have forgotten this basic rule around New Zealand - much to the pain of pedestrians and cyclists.

Pilots of light aircraft will always test the petrol before taking off by using a dip-stick in the petrol tank and then filling the tank up 100%. There are no petrol stations in the sky. They also don't trust gauges 100% which is why they use the dip-stick.

But back to politics. The basic rule is, "Get elected". The basic rule for a party is, "Get into power". If in power then, "Stay in power".

Now this seems very obvious but it does lead to some bad behaviour because there is the unstated corollary, "At any cost". Since politicians are the ones that make the law there is no higher controlling power. We are only saved to a certain extent by rule one - "get elected next time".

One of the problems is that with a paper money system it is always possible to pay for anything. And so we get the push to get into power at all costs and then worry about it after the election.

This led to Helen Clark's labour party promising to give students free money at the 2005 elections and getting into power for the third time on the strength of that promise.

The trouble is, of course, that there is no such thing as free money and the workers of the country have had to pay the interest bill.

This is the conundrum of the modern democracy. Politicians can run up huge debts and leave it for future generations to pay for. Us ordinary taxpayers mostly don't even notice.

The only reason that we can survive this continual spending of money we don't have is that governments know that they are printing up about 10% per year extra and this inflation reduces the debt over time. That is we take the money now and pay it back in devalued dollars later - much later. Bill English in the National Party described this as his party's strategy for surviving the downturn after he got elected in 2008. It is now accepted as an acceptable way to operate.

But there is no such thing as the free lunch. Someone is paying for it. We all just hope that the future generations will do it. Unfortunately many decades of taking this approach have produced unmanageable debts for most of the Western democracies. And we cannot stop doing it.

We have two options. Stop issuing credit and borrowing money and allow the economy to drop back to its natural sustainable level, or keep borrowing and printing and shuffling digits in the back of computers until we reach take off point and launch into hyperinflation.

Unfortunately the political imperative demands that we will take the second option - so hold onto your hat.


Feb 17, 2011, 14:23

REAL Economics : REAL Politics
A Political Ideal

So that is the realistic side of politics in the future. If you are interested in looking at some new thoughts about politics then have a look at this section of our website:

Visit Website ]
Feb 15, 2011, 16:49























































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