With little happening across markets, I’m going to jump right in and make you choke on your Weet-Bix, offending just about everyone this weekend.
In my article in Wednesday’s Daily Reckoning, I said: ‘As far as I can see we have a choice on 2 July of the Devil, the Deep Blue Sea or a Donkey vote. I think the ass is smarter than all of them.’
This certainly stirred the hornet’s nest. The emails came flooding in.
Reader A: ‘A donkey vote? How is that going to help matters? Future?’
My response: Voting for either party is not going to help matters either. All we are being asked to do is vote for the lesser of two evils. Why choose any evil? As for the future…I think both parties are taking us to a place that’s going to result in a whole lot of pain for those who can least afford it.
Reader B: ‘How could you waste your vote like that?’
My response: A vote for either party is a waste. They waste our money on buying power, doing inside deals and enjoying the life of Reilly. They waste our time by promising a lot and delivering little. What is the greater waste?
Reader C: ‘An ass makes a donkey vote.’
My response: I thought that was quite a witty retort.
Reader D: ‘What would you do if you were running for parliament?’
My response: Glad you asked.
As space is at a premium, my manifesto will be limited to a few major points.
First, you have to start with the end in mind.
- Less government;
- Less duplication of services;
- Less welfare dependency;
- More encouragement to save;
- Abolition of the Reserve Bank;
- Make bank directors and executives personally liable for losses;
- Limit time in political office to a maximum of three terms (nine years).
There’s more I could add, but let me elaborate on these major points.
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Less government and less duplication of services: My aim would be to turn Canberra into a ghost town. Logic tells me that there’s a massive overlap and duplication between state and federal government services. Health and education come to mind. Identify where that overlap is…and get rid of it. Bloated bureaucracies are choking us to death.
For instance, did you know the US Constitution — with all 27 Amendments — is 7,818 words; or that the EU regulations on the sale of cabbage total 26,911 words? Unbelievable.
Tax and welfare are obvious areas of duplication. The tax department collects, and Centrelink transfers it back. This churn results in millions of households paying no net taxes. Why not reduce the tax collected in the first place by having households fill out an online declaration form? Presto, that gets rid of a good chunk of tax; and it cuts down on Centrelink’s bloated staff.
Less welfare dependency: We have reached the ridiculous stage where one in two voters are either on a government payroll or on welfare. You are never going to get genuine reform with this level of self-interest. My platform would be to exclude these people from voting.
But is it any crazier than deliberately sabotaging our financial stability by having half the population demanding more and more from a cash cow with udders of powder?
My longer term radical plan would be to make an age pension only available to those who’ve demonstrated the capacity to save at least 10% per annum (in addition to compulsory superannuation). This is a throwback to yesteryear when you had to demonstrate to the bank manager you had the discipline to save in order to qualify for a loan. I know that throws up all sorts of complications like: ‘How am I supposed to save while I have a huge mortgage?’ It could be a phased process, with incremental increases to reach the 10% goal. The detail is not important (because I am actually not running for office). What is important is the principle — changing the mindset of ‘spend everything’, and shifting the reliance on government. Culture helps shape a nation.
More encouragement to save: At present, our system is literally geared to encourage people to go deeper and deeper into debt. Debt is tax deductible, whereas savings are taxed. To me this incentive is depressing.
The core problem with the global economy is that we have too much debt that, at some point, will come crashing down on us. Why would you be encouraging the system to become more toxic? Abolish negative gearing (with losses to be carried forward) and provide a tax-free threshold on earnings from savings. People would think long and hard about the merits of their investment choices, without being motivated by the ‘beat the tax man’ con used by property promoters.
Abolition of the Reserve Bank: For most people, this particular proposal is absolutely preposterous. Then you ask them ‘why?’ They’ll tell you it is because we need them to set interest rates…to keep the economy stable, and blah. What rubbish. Look at what central banks are doing around the world with their ridiculous policies of printing money and negative interest rates. How’s that working out?
These are just desperate measures by desperate people. The Bank of Japan is now the proud owner of over a third of the government’s bonds. Since when did supporting your government’s inability to rein in spending become accepted as prudent economic management? You and I, and millions like us, make decisions every single day about the price of cars, oranges, jeans, telephone plans… Surely we can figure out the price of money (interest rates) for ourselves. ‘Oh, but you can’t be trusted.’ Trusted by whom, and for what purpose?
Heaven forbid savers and borrowers actually strike a deal where both parties feel reasonably satisfied with the outcome. At present, savers are being screwed to within an inch of their lives to accommodate the needs of borrowers. This is a lose/win situation if ever I saw one. That is not a good business outcome.
Make bank directors and executives personally liable for losses. In my opinion the financial sector needs to be reined in. The four biggest companies in Australia are banks…this is ridiculous. Banks make money from clipping the ticket on products. The more products they sell, the more they earn. And when things go pear-shaped, and their relentless and reckless drive for growth is exposed, they cry ‘too big to fail’ and taxpayers and depositors are tapped to pay for their folly.
If these guys and gals want the big bucks, they need to have skin in the game, and not just some exercisable options (that they didn’t pay for) at risk. Serious skin — their homes, family trusts, super funds — the whole lot on the table. Then we’d see a little more caution in their approach to rolling out products…especially derivatives. Holding the board and senior executives personally liable will achieve far more than any overpriced Royal Commission would in correcting the actions of bankers.
Finally, limit time in political office to a maximum of three terms (nine years): Career politicians become institutionalised. Living in a taxpayer-funded bubble completely removes them from the realities of life. Move ‘em on. If they know they have to go back to the world they created, maybe they will think twice before rolling out reams of red and green tape.
And another thing: double their pay, but they get no pension or travel perks at the end. Also, for good measure, a part of their salary should be held in escrow, to be released only after they leave office — and after it’s proven that they have not had their snout too far into the taxpayer trough.
I appreciate this broad brush manifesto is short on detail, and that the upheaval would create winners and losers. What’s more, the genuinely disadvantaged and elderly in our society still need to be cared for.
I recognise these policies will result in house prices falling, share markets being hit hard, retirements being postponed and people losing jobs.
None of this is particularly appealing, and hardly constitutes an attractive platform to campaign on.
But, folks, with the political leadership we have here and around the world, that’s where we’re headed anyway.
None of them can make the hard decisions. They all know the world is sinking under its debt commitments and welfare promises, yet not one of them does anything to genuinely remedy the situation. Instead, they get on the phone to their local central bank, ordering them to do the heavy lifting by dropping rates below zero and cranking up the printing presses.
If you think my plans border on insanity, wait until history passes judgement on the actions of today’s central bankers. Future generations are going to scratch their heads and wonder why these academics were not straightjacketed and put in long term care at the nearest asylum.
Before passing final judgement on my policies, take a look at what currently passes for economic management and good governance. Then tell me which one of us is crazy.
Now that I’ve promised you nothing but a whole lot of pain before we see any flicker of gain, do I get your vote?
Editor, The Daily Reckoning