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As The Fires Burn, The Emperors Fiddle

NeroRome burned and Nero fiddled; or so the story goes.

Many historians have written that Nero not only played sad songs on his lyre as Rome went up in smoke; he actually started the fire. Some suggest it was because he was mad, which was probably true considering that it was a fairly common affliction among Roman emperors.

A book on the history of Roman emperors, that I’ve just recently finished reading, theorizes that Nero started the fire to punish some of his critics in the patrician class and to make way for the construction of new buildings including a grandiose palace in his honour.

Whatever is or is not true, two things are fairly clear. Rome did go up in flames and Nero was almost certainly  mad – stone, cold nuts. He, like many of his predecessors and successors was more obsessed with the privilege and indulgences of governing than with its responsibilities.

And so continued the formal decline – the big slide – of an empire that had sowed the seeds of its own destruction at its birth.

Take a look around. We don’t appear to have learned much since then and there are moments when I believe our political leadership has gone as mad as any Roman Emperor. Like the good people of Rome, many of us are just as happy to tolerate it as long as there are bread and circuses to feed us and to keep us amused.

War, terrorism, wealth disparity, excess taxation, disease, political corruption and economic failure were as much a part of ancient Rome as they are today. For all of our technological sophistication and our intellectual arrogance, we have not successfully overcome or even mitigated any one of them. Indeed, we’ve added a few new ones to the list including developing and amassing weapons with sufficient power to destroy the planet many times over; global pollution and uncontrolled government debt and borrowing.

We live in an era when it no longer matters which political ideology forms government. The size of government and its associated costs continues to grow exponentially. It is driven by political leadership focused on obtaining and maintaining political power and a populace focused on the benefits it can milk from the public teat.

Left or right – it makes virtually no difference. Many of us have our hands out and politicians on both sides of the political spectrum are only too happy to write the cheques if it will get them elected.

In democracies, election promises about fiscal responsibility have become as meaningless as the self-promotion of dictators and tyrants in totalitarian regimes. Regardless of a politician’s initial motivation, all too soon political power becomes an end unto itself. Just as it has throughout the ages, the lust for power breeds greed, arrogance and cynicism that is eventually unrestrained by decency, integrity or a desire to benefit much beyond various special interest groups.

Responsible governance is allowed to become just one more cheap illusion used to garner votes.

We can argue until exhaustion as to which government, political leader or ideology is worse but it’s a mugs game; a foolish debate between fools because in the end, there is no difference. Conservatives, Liberals, Republicans, Democrats, Labour – pick your poison and rationalize it any way that you like but regardless of who is in power – we have been lied to by them all.

Consider just one issue; government debt.

The total global government debt to GDP ratio currently stands in excess of 100%. According to an article in last year’s Wall Street Journal; when you factor in household, private and financial sector debt, the ratio is in excess of 333% of global GDP.

What does that mean? It means simply that world has more debt than the combined financial output of all nations. Usually when a company or an individual achieves that level of debt, we tend to refer to it as bankruptcy and few survive it.

Economists, media pundits and politicians disagree with each other about debt at various times and there seems to be a significant amount of justification for excessive borrowing being thrown around. It’s part of the ‘don’t worry be happy’ attitude that has become so prevalent but it always comes down to two inescapable facts. Government debt is increasing exponentially and ever-increasing debt will eventually crush you.

You don’t have to look much further than Detroit or be an economist to see the impact of too much debt.

It wouldn’t be quite so disturbing if public sector debt had been capped and world governments were now united in their understanding of how precarious the global economy is at this point in time. It might even be encouraging were they fully engaged in reducing debt but it is not what is happening.

According to The Economist,  current world-wide government debt now stands at more than $54 trillion and is growing by a few million every five minutes.There is a fair degree of disagreement on the size of global debt and I’ve read reports that peg it anywhere between $100 trillion and more than $600 trillion. It appears to depend on what gets included. I decided to go with the smallest figures but even that isn’t encouraging.I have The Economist’s live debt clock open on my desktop and in the few minutes it has taken to write this post, global debt has increased by almost $100 million

However anyone chooses to measure it; regardless of what figures they choose to believe – global government debt exceeds global GDP andCan_MapleLeaf_2011_Obverse Canada is right in there doing its part to drive it higher.

Since 2008, Canada’s national debt has increased by more than $160 billion and that is only the federal government’s share of the increase. Our current total public debt is more than $1.6 trillion or in excess of $47,000 per person. How does that stack up against other countries?

Canada’s public debt per person is 31 times greater than Russia, one and a half times higher than Greece and is higher than the per person debt of both the United States and Britain.

Our governments both progressive and conservative are burying us, and future generations, in a deep financial hole that will undermine our economy, erode our infrastructure, healthcare and education systems and increasingly threaten our national security.

We have already experienced some of the consequences of recent government decisions yesterday when Canada’s Parliament buildings were attacked by a home-grown terrorist. Literally every spokesperson for law enforcement and public safety has echoed the same message throughout the day today. They need more resources to keep this nation safe.

It is the kind of situation that you would hope would cause government to take responsible action but if you did, your hope would be in vain.

Election promises by both the left’s New Democratic Party and the right’s Conservative Party already exceed the projected budget surplus predicted for next year and we’re still 12 months away from the election.

I suspect that they’re just getting warmed up and there will be more promises to come.

Unfortunately, many Canadians on both the left and the right are rationalizing the promises with stars in their eyes. They have embraced the belief that you can live on borrowed money forever while politicians delude themselves into thinking that they can improve the economy sufficiently to manage and eventually eradicate the debt.

If that were true, why haven’t they done it before now? The reason they haven’t done it is because governments cannot do much to improve the economy (although they can screw it up) and you simply cannot borrow your way out of debt.

Contrary to what many believe, you actually can’t live on borrowed money forever.

Well – maybe we can but it is guaranteed that our children’s children can’t. They are the ones who will pay for our greed and our leaders’ lack of responsible foresight. We are not only robbing our children and our grandchildren of the quality of life we enjoyed as we were growing up; we are leaving them to clean up the rubble of what will be left of Canada’s economy and social network after we have gorged ourselves.

Increasingly, it appears that our legacy to them will be to leave them the debt we incurred to pay for our lifestyle.

There is a solid case to be made for borrowing money at times but there is always a caveat. You have to be able to afford to pay it back. You cannot live beyond your means indefinitely but that is precisely what we are only too willing to believe from whatever political party each of us supports.

Try getting a mortgage when you don’t have the means to repay it. Telling your bank manager that you expect things will be better later when the economy improves isn’t going to get you that loan if you can’t afford it now.

Most of us live our lives with an understanding of what has to be paid out of our incomes before we start throwing money around on discretionary items. Things like rent or a mortgage, food, hydro/heat and, of course, taxes are core expenses; what I call “needs”. Things like a new car, large screen LED HD surround sound televisions or a new smart phone are discretionary expenses. They’re nice to have but not essential. I call those “wants”.

Too many people get into trouble because they have borrowed beyond their ability to repay the debt in order to obtain “wants”. Eventually, servicing the debt forces them to start cutting back on “needs” just to try and juggle their debt. Eventually the cost of servicing the debt becomes crushing which often leads to bankruptcy and the loss of everything they had borrowed money to obtain in the first place.

Increasingly, government and those of us with our hands held out are incapable of distinguishing between ‘need’ and ‘want’.

Governments borrow money to provide entitlements and programs that will appeal to one group or another in order to buy votes and then convince themselves that once the economy improves, it will address the debt but it never does.

The Liberal government of Ontario is the brand standard for that delusion.

At any point in time, there is only so much available wealth in the world. Governments bank on the fact that there are still resources that have not been tapped and growth opportunities but even if we haven’t yet reached it, there is a finite amount of wealth in the world. Beyond that limit there simply is no more. The thing that is of real concern is that no government or political leader has asked, “What happens when we hit that limit?”

Even more worrisome  – we actually have hit that limit and few of our leaders seem aware of it while the rest are either unaware or simply don’t seem to care. They lecture us about our personal debt which is a legitimate concern but do little to nothing to get their own financial houses in order.

The EU is headed for another financial crisis. China has little to no money left to loan western spendthrifts and in Canada, we are already seeing the effects of increased debt on our ability to meet government’s core commitments.

In Ontario alone, interest payments on the province’s debt are the third largest budget line item after healthcare and education. Those three items alone chew up 80% of all government revenue which leaves precious little for everything else government does or should do. That hasn’t slowed down the Liberal government for a moment, however, and they continue to spend money – borrowed money – like lottery winners at an outlets mall on Black Friday.

Considering that a mere 1% increase in interest rates, will double the interest payments on that debt, it isn’t difficult to see where that lack of fiscal responsibility is headed.

Unfortunately, it isn’t much different anywhere else. Even the Conservative government of Alberta has plunged that province back into debt with reckless spending and careless management.

At a certain point, it will no longer matter what an individual nation does or how responsible it is. It will be negatively affected by the circumstances of too much global debt. If you thought 2008 was rough; it would be a good idea to get a firm grip on your hats because the global debt clock continues to tick.

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© 2014 Maggie’s Bear

all rights reserved The written content of this article is the sole property of Maggie’s Bear but a link to it may be shared by those who think it might be of interest to others

Twitter: @maggsbear – Facebook: Maggie’s Bear  – ivmaki@sympatico.ca

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  • Guffman

    Absolutely bang on with everything here. It’s no longer about IF the governing party will increase the debt (be it federal, provincial, or municipal), but HOW MUCH they’ll increase it.
    My only quibble is that you mention in closing “even the Conservative government of Alberta…”. The (not so) Conservative Party of Alberta has been overtaken in recent years and is anything BUT what it used to stand for, and should no longer be referenced as any example of good fiscal governance. The party’s predecessors were an entirely different political lot, and I find it pointless to refer in any way to this empty shell of a brand name anymore.

  • Pingback: As The Fires Burn, The Emperors Fiddle | Grumpy Opinions()

  • morri

    excellent article. I see no fault in your reasoning. I do not think I can add anything. you have said things that I have been yapping about for years. now if only the tiny minds that have control of our country could think and see as clearly.

    • bertie

      CONTROL OF OUR PROVINCE IDIOT.The country is doing fine.Ontario is the problem.

      • morri

        you would seem to be the idiot. your response does not make any sense when it is applied to my post.

  • dikmeover

    If you add in the debt of social security , disability payments in the U S it is well north of 100 trillion and will never be paid back. The debt bomb is going to explode

    • MaggiesBear

      In doing research for this post, I found it interesting that most government economists skillfully avoided including social security in their calculations of debt. But that is precisely what social security is and you’re right. When it is included, the numbers become truly frightening.

  • charlie98

    it’s interesting that in Ontario the party that took the province from “have” to “have not” status was able to achieve a majority in the last election. Apparently debt isn’t a primary driver for voting or maybe those with their hands out view the debt as a future problem, one that they can avoid.

    • MaggiesBear

      I think that the conservatives shot themselves in the foot in Ontario. It was their election to lose and they did. All they had to do was keep the electorate focused on two things: Liberal corruption and prudent governance. Instead, Hudak sprung his public sector job cuts on voters. His numbers were wrong and his message to strident. People are tired of being threatened and lectured. What they want is a government that treats them with respect and as we have seen across the country lately, they don’t much care if that government is left or right.

  • Gerry

    Not sure about there being a finite amount of wealth in the world. At any particular moment in time that is true and could be known if we could measure/count it but at the very next moment in time the total amount could be higher or lower depending on the wealth creation/loss dynamic. Simply put, the total global wealth in 1750 is quite different from the total global wealth in 2014. However, your point about the debt is bang on as regardless of how much wealth is ostensibly created our debt rises at a faster rate.

    • MaggiesBear

      Your points are well taken and I think I probably worded things badly in my post. It is true that the wealth differential between now and 1750 is significantly different and there is still room for more wealth growth. My point, which I expressed somewhat clumsily is that the ability to generate wealth is finite. At some point, there are no more resources upon which to build growth and a global population that will chew up wealth faster than it can be created. At that point, for all practical intents and purposes, we will have hit the wall. Wealth will not grow and that means it is finite.

      Hmmm, I’m still not happy with how i’ve tried to express that but it will have to do. It’s Friday and my brain is fried.

      • morri

        I do not think you worded it badly. just think of the earth as what it is, a finite piece of dirt that has finite resources. you were correct with your post. you are correct. if the population of the planet drops dramatically, then things can or could continue on, possibly as a completely agrarian society.

        • MaggiesBear

          I actually am quite fond of food so for me an agrarian society wouldn’t be all bad :-)

          • charlie98

            The UN is predicting that around 2050 the earth’s population will begin to decrease due to declining birthrates so you just might get your wish or if not you your offspring