17 August 2010
Usually when people are sad, they don't do anything. They just cry over their condition. But when they get angry, they bring about a change. – Malcolm X
Credit Suisse's Lars Kalbraier steers the money for some of the world's very rich people. The head of research for Private Banking, his team decides on how to help millions of dollars become many millions more…or at least not become many millions less. No pressure.
Headquartered in Zurich, Lars drops by Australia once a year to brief the troops here on the company's view on the big global issues of the day.
While the company's views on the US economy (weak, but not heading for a double dip recession), Europe (doing better than people think) and China (government finally seems to have cooled the economy off in a decent sort of way) are interesting, it's even more interesting to hear his ideas on how the GFC has made the world a better place. Or at least Europe a different one.
The jargon term “structural reform” refers to the government making the big policy changes that matter not just to their surviving the next election, but that equip their country for the long term. It's usually the boring, complicated stuff that only economic nerds (guilty) and political buffs (guilty) follow. Forget the cash splashes or any policy with the word "scheme".
Take the ageing population challenge – it's as much an issue in Europe as it is in Australia. Governments in Europe have, for the first time, been able to talk about increasing the pension age – in other words, old people won't get it until a bit later in life.
Two years ago Germany was able to lift it from 65 to 67, and France is currently trying to push through a change that sees the pension age increase from 60 to 62. That's quite a political achievement in Europe, and especially France where industrial action has long been considered a God-given right, or whatever the equivalent is now that they've gone secular.
Lars says that kind of change (whether you think it's a good idea or not) would have been unthinkable politically before the GFC – but a crisis is one time when people will actually consider major changes. And Europe, it's safe to say, has copped both the Global Financial Crisis, and now its enthusiastic little brother, the Sovereign Debt Crisis.
The OECD (the well-off countries club) is with Lars on this one. Deputy Secretary-General Aart de Geus told me last week that when the world is in a funk, that's the time to get structural reform on the table. Get it locked in, and as the world gets better, then great – you've now got the money to afford some of it.
Of course, the desperate-times-call-for-desperate-measures phenomenon isn't always a good thing. Frustration with hyperinflation saw Germans boot out the Weimar Republic in favour of the Nazis, and that great musical aside, the French Revolution replaced tragic poverty with even more tragic mass murder. Life is always about balance, but as Aart says, it'd be a shame to waste a good crisis.
Back home now. It's now fairly obvious why Australia's election campaign has been a fairly cautious affair. We dodged the GFC so there's hardly any appetite for major reform, and don't think the pollies have missed that.
So before we blast them for their lack of inspiration, let's not forget that in a democracy, they're here to do the bidding of the people. JFK said as much even in the introduction to his "courageous pollies" classic, Profiles in Courage. Sorry to my colleagues who have been tweeting like crazy about how uninspirational pollies have been...just because political junkies would love to see some big time, daring changes…most voters don't. And why would they, when things simply haven't been too bad? It's the counter intuitive curse of the Lucky Country, and internal polling knows it.
Sure, the Howard Government passed the GST (when was that again?), but almost lost an election as a result. And if you're willing to knife your leader because the polls showed you down 4% in the two party preferred, you're probably not likely to roll the dice with any inspirational policy thunder.
More likely, the Gillard government is probably hoping (assuming it wins on Saturday) to go down the Howard route of building a bigger majority (not likely this time around) and then maybe consider something more radical than say, adopting three suggestions from the Henry Tax Review. Things take time in the Lucky Country. After all, where's the fire?
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Pauline, NSW (19 August 2010 9:41AM) wrote:
First it was the bungled pink batts program, then the bungled schools building program, now the out-of-date NBN broadband program destined for obsolescence before it’s completed. Isn’t it going backwards to get all wired up? We have ugly Telstra wires and Optus wires dangling in front of us at home. When it rains, the phone crackles and the internet dies. So we’re using wireless internet – obviously a technology of the future. Even the GP superclinics is a fizzer duplicatine already existing services. Then there’s the superannuation program. Our super went down the gurgler during the financial stimulus. Yet the government wants employers to hand out more – just to see it go down the gurgler again. Unlike Kevin from heaven, Julia doesn’t believe and her programs are making life hell.