- I am in my hotel room in London, outside it is raining and news of recent elections in France and Greece and the recent UK local body elections have got me thinking. In 2008 we had the global financial crisis where decades of unfettered behaviour by the financial sector finally played out.
- The cure for this crisis in confidence has been to push fiscal austerity and to avoid market reform. So far we have seen those the top continuing to get richer, while the middle class and everyone else gets squeezed. Thus we have seen governments fixation with "balancing the budget". Social spending has been decreased, wage growth has slowed and the traditional Keynsian means of redistributing wealth being pegged back. The result of this is a further growth in inequality and the growing perception that governments are not representative of ordinary people.
- Even in New Zealand these waves have hit our shores. The bailout of South Canterbury Finance, tax cuts for the rich paid for by borrowing, the rise in GST, employment law reforms, the insidious chipping away at welfare, privatisation and cuts in public sector services and jobs are all signs that in fact our Government is acting out a shadow play paralleling the international chaos.
- This brings me back to the recent elections in Europe. We have seen recent successes for the left, but also for the far right. In France Marine Le Pens' French National Front is surging and garnered a huge 20 percent of the vote on a platform of xenophobia and patriotism. Greece now has for the first time a neo-Nazi party Golden Dawn entering it's parliament with 7 percent of the vote. The Greek people have had enough of austerity and it is providing a rich mine for the Far Right.
In 1929, the American Stock Exchange collapsed in our first Global Financial Crisis. This led to the "Great Depression." America called in all it's foreign loans. This crippled Weimar Germany and German unemployment rose to 6 million. Like many governments today (including our own), in July 1930 Chancellor Brüning put in place austerity measures and cut government spending, wages and unemployment pay. As workers lost income, spending went down, demand reduced and unemployment and anger and resentment grew. This provided the perfect seed bed for what became Nazi Germany. I hope we don't keep repeating the mistakes of our past.
