Coming to terms with low growth

The apathetic response of U.S authorities and the WHO to the Mexican Flu virus, highlights the modern Anglosphere's obsession with making sure nothing gets in the way of short-term economic growth.

Despite the flu being containable (with only two deaths outside Mexico) Gywnne Dyer points out that the US and Canadian government's response has been pretty lax compared with Japan and Europe.

Even the modest sacrifice of losing a few weeks tourism income and spending a little extra on flu medications seems to be just too much for America's commerce-obsessed elites.

Probably the flu won't turn out to be as serious as the media's hyped it up to be, but the fatalistic U.S attitude typifies the short-term thinking that's pervaded the Anglosphere since the early 70s.

Economic growth in Continental Europe and Japan has been stuck in the 0-2 percent range for 20 years now, yet it still hasn't dawned on the English-speaking West that 3 to 4 percent growth just isn't sustainable in a post industrial economy.

Take for example the Obama administration's extravagant 1930s-style stimulus plan, which started out as a way to stabilise the banking sector, but has now turned into a full-blown
Keynesian attempt to stimulate consumer spending in the face of unprecedented private debt. Instead of rationing out the methadone, the Democrats are continuing to dish out the Chinese-supplied heroin.

Canada and Australia have taken a slightly more long-term view, but only slightly - the Commonwealth resource kings may have a greater concern with fiscal solvency, but their focus on sustainablity high growth rates can be seen in the on-going commitment to expansive immigration policies in the middle of the biggest recession since the end of WW2.

Industrially speaking, the English-speaking West has pretty much been in recession since 1973, when they passed the baton of industrial growth on Japan, Germany and Korea, who then passed it onto China in the early 90s.

The recent bankruptcy of Chrysler is just the latest in a long series of Anglo-American industrial setbacks starting with the ill-fated nationalisation of the British car industry in the 1970s.
From the late 70s to the early 80s there was at least an attempt to face the bad news and revive the old protestant values of thrift and prudence that took a battering in the late 60s.

President Carter warned Americans about the cost of debt, waste and dependence on foreign oil, while Reagan and Thatcher went someway to down-sizing the state and rolling back the unions.

However, by the mid-80s, voters had had enough of bad news and the baby boomers "live for today" philosophy was once again the dominant theme on Wall Street.

When the share market inevitably crashed in the late 80s the focus turned to real estate, as Australia, New Zealand, Canada and the U.S stoked-up the housing market by bringing in large number of immigrants and building houses for them (or in the U.S case simply selling the land and getting the immigrants to build their own houses).

Naturally, running an economy by selling land was only a temporary solution to economic decline and the long housing boom has now finally come to an end. For many Australians and New Zealanders is has also meant the end of the colonial dream of affordable housing for the masses.

Continental Europe of course, has had it's own share of denial since it's post-war peak in the 1980s.

In a age of low growth, intense industrial competition and demographic decline, Europe's extravagant income-related welfare programs are like a heavy ball and chain on the ankles of its shrinking workforce.

On the plus side, most of Europe has at least resisted the temptation to make things worse by joining the Anglosphere's orgy of debt-driven pseudo prosperity. This was highlighted by Angela Merkel's curt dismissal of Obama's stimulus appeal during his recent European visit.

The challenge now is to somehow get the Anglosphere to follow Continental Europe's fiscal realism, while getting Europe to par-back it's bloated welfare state and poor record in family formation.