Global Public Debt – a simple perspective

Global Financial Crisis, round two.  Global Public Debt.  The words on everyone’s lips these days.  I am not an economist, but everyone seems to have something to say, from Twitter to eminent university professors, so why not me?

I Stumbled (literally, on the website) upon this interesting little debt clock and map this morning at http://www.economist.com/content/global_debt_clock.

Global Public Debt - Three Nations Compared

Take a look at the actual map, it is very interesting.  All the VERY red (i.e. in big trouble) countries are the ones we like to think of as being the world leaders or the most advanced civilisations or something equally complimentary.

Of course, in Australia, politicians LOVE to use the debt situation as a way to attack each other.  Looking at the media, it seems that is reasonably common globally. Looking at the figures to the left, we could be a lot worse off than we are.  I am NOT saying this to support the current Federal Government (I have my own personal little battle with that lot), I am simply making an observation about the information as presented by www.economist.com.

I’m a mother and an accountant.  Debits and credits translate into “how much money do I have” and “how much have I spent“.  Yes, I’ve had to borrow, so I have personal debt.  Don’t many of us?  Do I have more debt than I can repay?  No, I don’t (provided I don’t get hit by a bus any time soon and I have insurance against that possibility).

There are so many commas in the numbers to the left, I actually get confused!  Are  we are talking billions, trillions or something greater?  Eight trillion, creeping up to nine, for the USA, depending on which scale of magnitude you use (yes, globally we can’t agree on magnitude).  

Let’s look at the per person debt.  So far, Australia is still, compared to the other two, remarkably healthy, although I can’t say I like how dark pink we are on the map!  I am well aware of how all the economies are intertwined these days, so essentially I consider us rather lucky we aren’t sitting at USA or UK levels.

On top of my own personal debt, I only have to pay off another $11,462 of the public debt.  If I was in the USA I’d have to pay off another $28,350 and I may not have a job, given the unemployment levels in the USA.

I have read a bit about people being up in arms in the USA because the current solution is spending cuts but no increase in taxes on certain groups that many feel should be paying more tax.  Let’s face it, governments get their “income” from taxes (unless the country owns natural resources and generates revenue for the country from those resources).  Countries have budgets, just like any household or business.  Clearly someone’s been overspending!  For a long time! 

This puzzles me.  The USA policy of “fend for yourself” means that they don’t have the same funding of education, hospitals, medications and so on that we do in Australia.  How did they spend so damn much?  What on?  I could read umpteen articles and find a myriad of arguments, as everyone has a perspective.  I’m not going to, because the bottom line is simple to this simple mother.  Spend more than you have, print money you don’t have and guess what happens – you end up in the red.

I remember some years ago, when Bush introduced his first budget, global analysts stating the USA would pay about ten years down the track.  Seems those analysts were not far off the mark.  While it is now hard to find those old articles, I quote from www.economist.com again:

The most important legislation of his first year in office was a $1.35 trillion tax cut that handed an extra $53,000 to the top 1% of earners. At his farewell press conference on January 12th Mr Bush called his tax cuts the “right course of action”, as if they were an unpopular but heroic decision. They weren’t. The budget was in surplus in 2000, and both Mr Bush’s main Republican rival, John McCain, and his Democratic opponent, Mr Gore, also wanted to cut taxes, but by less, so as to pay down more debt and shore up Social Security (public pensions). Mr Bush’s much larger tax cut reflected his, and his party’s, belief that lower taxes restrain the size of government, empower individuals and are good for both growth and Republican prospects.

http://www.economist.com/node/12931660

We all know on a personal level, if we borrow money and have to make repayments, those repayments chew into our disposable income.  If we tighten our belts, we will be OK – if we keep spending at the same rate we were without an increase in money coming in, we’ll end up owing even more.  Is this difficult logic?  What applies in our own households, in our company boardrooms, even to our children’s pocket-money, applies equally to countries.

Some of the poorest countries owe the least.  No-one will lend those countries anything!  Same with poor people – they are not a good risk to lenders, so while they have little, usually they owe little as well.

What will happen?  My crystal ball is in for repairs, sadly, but while everyone is running around blaming everyone else, there is little likelihood of a good solution.  You are up the creek without a paddle, guys, so get your acts together and work in a bi-partisan way to fix the messes you either created or inherited. 

That’s what we pay you for!

HeraldSun screams “thugs”?

I broke my silence on this already: I will continue.

Thugs?  Could we possibly have some rational reporting instead of headlines designed to feed moral panic?

Do they publish any of the ASRC myth busters: no, they take the line of what they think sells papers!  No thought for the damage it does!

Irresponsible reporting, in my view.  Very irresponsible.

Who do we want running the country?

Katharine Murphy writes a very interesting piece on the increase in “influence peddlers” in today’s edition of The Age.

We all know there are lobbyists.  They’ve probably been around as long as politicians in one form or another.  It does seem the whole thing is just getting a bit out of hand.  It is the PEOPLE who should have access to politicians, not highly paid representatives of interest groups.  The people never get a look-in.

I am not considering the sides to any debate here, I am only considering the influences on those debates.  Australia has long been a country that has been good at saying “only in America” about anything we thought “too American”, yet as time goes on we seem to adopt more and more American trends.  While we may not yet sue for a hot coffee, we have certainly become more litigious.  Now we seem to be lobbying our little hearts out in a similar style to the USA, or at least heading in that direction.

Katharine’s article is a must read for any Australian that is concerned about where this country is headed.  For our children and our children’s children.

A Question of Free Speech

Most of Australia is probably aware of the case currently making the front pages.  If not, read a report in The Age here.

In the USA, Freedom of Speech is enshrined in the constitution.  Not so here in Australia, where it is “only implicitly recognised” in the constitution.  Australia also has stringent antidiscrimination legislation.  According to the report, this case is seen as a case that may well bring the collision of free speech and antidiscrimination in this country to a head.

I have long been a critic of  those who claim the right to free speech to get away with blatant discrimination.  In my view, free speech comes with responsibility.  We have a human responsibility to not discriminate against others.  Even if we have hold personal views that are effectively discrimination, we should not be voicing them or publicising those views.  The outcome of this case will be interesting.

The case also raises questions about what rights any one of us has to define ourself.  In Australia many, many people are born of cross-cultural marriages.  They go on to marry someone from yet a third culture.  We are a mixed up, muddled up lot in this country, my own family included. 

I didn’t read the articles at the centre of this case, so I am not going to offer an opinion one way or  the other on the articles themselves.  I am certainly watching the case with interest.

Where do we draw the line?  How do we marry freedom of speech with antidiscrimination?  Given what we see happen in other countries, do we even consider freedom of speech a right everyone should be entitled to?  How “free” should it be? 

Boardroom Quotas?

Those of you who browsed The Age today, probably other media as well, will have noticed our Governor-General Quentin Bryce suggested we introduce affirmative action to get more women on the boards of companies.  While towards the end of the article, Quentin admitted she wasn’t in favour of quotas, quotas were indeed mentioned.

I’m not a fan of quotas.  I’m a woman (in case you hadn’t noticed), so I feel I am at least slightly qualified to comment!  I’ve never been in favour of quotas.

Definitely, definitely support equal rights, equal pay and equal opportunity.  I’m just not sure we achieve any of these things in a real way by legislating for a certain percentage of boards of companies (as an example) to be female. 

My biggest concern is that we may well end up with token appointments and that does no-one any good, least of all the reputation of women.  I am a woman who could have taken that path, had I wanted to.  I have the qualifications and the intelligence.  I CHOSE, very specifically, to do what I do because I enjoy it.  I have no desire to be the CEO of one of the major banks either.

I consciously stepped back into the sort of role I have now because I like doing the work I do. I personally believe there are a lot of women who are similar.  Just because we can do something, doesn’t mean we want to.  I have met men who are of a similar mind – it is not just women who choose enjoyment over a larger pay packet.  I just think more women make such choices than men do.  While I would possibly consider a role in an organisation I was passionate about, such as an NGO or a hospital, my motivation comes from enjoying what I do, not having the corner office on the 40th floor.  I’ll admit first class air travel is attractive though!

So before I could support quotas, I would want to be assured that there are enough appropriately skilled women out there who WANT to take on those roles, otherwise we’ll get those token appointments I mentioned.

I would like to see us find other ways to encourage companies to  include more women on their boards and appoint women to senior management positions.  A reward system may work better that waving a big legislative stick.  Businesses know that over 50% (in many cases) of their customers are women.  Women control a VERY large chuck of not only the family budget but also discretionary spending.  We are good for business at ALL levels.  Just let’s keep our choices open!

If you are a woman reading this, would you want to be the CEO of the ANZ, NAB or some similar organisation?  Would you want to be on a few boards?  80 – 90 hour work weeks in some cases.  A lot of travel in others – or both.  I’d rather have more time with my family.  Maybe that is just me.