Free market capitalism at risk as discontent is exploited

Free market capitalism at risk as discontent is exploited, by Maurice Newman, ex-head of Deutsche Bank in Australia.

According to a recent Ipsos poll, fewer than 41 per cent of Australian citizens are satisfied with the way democracy works, down from 86 per cent in 2007. Public satisfaction has fallen particularly sharply since 2013, when 72 per cent were satisfied. Generation X is least satisfied at 31 per cent, while baby boomers are agnostic at 50 per cent.

If this poll is accurate, it is disturbing. Perhaps Australia’s revolving prime ministerial door is partly to blame. And maybe gen X’s response can be explained as the result of ­almost 40 years of neo-Marxist indoctrination by teachers and academics who want freedom for themselves but not anyone else. However, the baby boomer view is especially concerning. It is an expression of discontent with a system many believe is increasingly stacked against them. And they have reason to feel that way.

For decades government, trade unions, and crony capitalists have actively colluded to create an effective mutually reinforcing cartel resulting in economic power being concentrated in fewer hands. To outsiders, democracy no longer means government of the people and by the people but is seen as a means of the self-aggrandisement and advancement of elites. They miss the social mobility they enjoyed with competitive capitalism. They think politics today is about replacing what works best with what sounds good or works well for the collective. …

To quote Ayn Rand, they have watched “money flowing to those who deal not in goods but in favours”, and they feel disempowered by a system where men “get richer by graft and pull than by work”. …

Debt and banks are the biggest problem:

Having created a “too big to fail” status, many bankers exploited their exalted position. In response the government hit them with a tax and a royal commission. Now it’s dealing with scared bankers and the unintended consequences of a looming credit crisis.

After decades of misallocated resources and the embedded rigidities that follow protection policies, these consequences may be unintended, but they were always predictable. The political and economic costs of dismantling them are near prohibitive. But so too are the risks of doing nothing.

It is a global phenomenon. Indeed, never in peacetime have national economies, outside of recession and with full employment, managed to generate such recklessly high deficits and extreme levels of debt. The world has built a house of cards that is now in danger of collapse.

So, for the second time in a decade, the burden of these failed fiscal and monetary experiments is starting to hit Australians already struggling with low wage growth and rising costs. Is it any wonder they feel disenfranchised and are easy targets for agent provocateurs such as GetUp that claim these people are victims of the “hard Right”? …

But we are getting closer to a tipping point where a rewind becomes politically impossible. Before we reach it, ordinary folk should be aware that once passed, their lives will be subject to increasing direction and that in their growing poverty and misery, free market capitalism will become a fond but fading memory.