The failings of unconstrained liberal democracy

There is literally no excuse for newspapers and news broadcasters not to be filled to the brim with substantive global news.  However, as there is always trivia about celebrities, sports and the fetish for disaster porn, these will always come first, yet 2011 is becoming one of those years that may go down in history as marking a turning point.   It is a time when critical decisions are needed by elected politicians, most of whom are not really up to the job.   The difficulty comes from the nature of liberal democracy.

It takes a certain type of person to stand for elected office.  At best they are well educated, have benign intent (in their eyes), are willing to take advice, and will carefully weigh up the options before choosing policies that appear to generate more good than harm.   In fact, that's what voters by and large expect.

What people get is something else.  Despite the ravings of tabloid media and talkback radio, political office in and of itself doesn't pay well for the hours that politicians are expected to put in.  That is, if you're professional or entrepreneurial.  However, if you're Georgina Beyer, Ken Livingstone, Alamein Kopu, George Osborne, Jack Elder, Diane Abbott, Danny Alexander or Jami-Lee Ross (yes go read up on them to see what genius is behind them), then this is the pinnacle.  You're unlikely to be earning that much doing anything else.  If you want more, you need to be at best planning your future career (consider Simon Power), or to be corrupt.

Your first and biggest concern as a politician is getting elected, which means telling people what you think they want to hear.  It is an exercise in marketing, and to be fair most voters are either loyal customers of a single party (and so uninterested in results, but act tribally), or make the decision based on hunches and feelings, or single policies that tap their emotions.   The number of voters who thing of the long term, and use any combination of economic or scientific analysis (even flawed) to decide who to vote for is insignificant, and engaging with those who do, one on one, is a waste of any politician's time.   Avoiding conflict and avoiding difficult decisions is what they do, because to do so means upsetting people, and those are people you need for support.  

The Eurozone crisis is entirely because of that factor.  Politicians in Greece, Italy, Spain, Portugal and other European countries promised voters a lot of "free" things, whether it be healthcare, education, pensions, welfare, housing, or at least lots of cheap things.  They offered more, year in year out, they promised more, spent more money, didn't ask for it in taxes, and simply borrowed.  There were banks that were willing to loan because it was governments borrowing - Eurozone governments - the risk was perceived to be minimal, so they ignored it.

The politicians offered something for nothing, the voters took it and the bankers loaned to the politicians, in a cycle of delusion that is now breaking apart - because the bankers have finally figured it out.

It isn't confined to the Eurozone either.  The US is finally facing the same hiccup, the UK became close to it, all because for year in year out, governments overspent.

Some on the left will glibly blame it all on "capitalism" and "the banks".   Uncontrolled growth in government spending is about as capitalist as Che Guevara.  The blame banks get is for lending to governments in the first place, although you can be sure if they did not, that they'd be blamed for being "obstructive" and not "socially minded", although there are quite a few countries that find it difficult to borrow on international markets.

Certainly the bank bailouts tipped many government finances over the edge in terms of sheer debt load, particularly Ireland.   However, the counter-factual is rarely argued.  If banks were not bailed out, and they were allowed to collapse, and people faced their businesses, properties and deposits being lost, then would that have been preferable?  I'd argue that yes, there should have been a process for the orderly collapse of banks.  However, neither Bush nor Obama, nor Brown, nor Sarkozy nor Merkel, wanted to contemplate that.   

The arguments about debt claim it is all about the banks, but a cursory look at public debt before the financial crisis shows that is simply untrue.  Greece, Italy, the UK and the United States all had growing public debt burdens, the bank bailouts made it worse, but had the public finances for any of those countries been in a far better state - the current crisis would simply not exist.

So now there is the spectre of Western European governments asking a one-party state - the People's Republic of China - to "invest" in lending to their spendthrift governments.   The idea that the Communist Party of China (which, by the way, runs an economy that has a smaller state sector than most Western countries) will take lessons or instructions that suggest liberal democracy has anything to teach it, is laughable.

The one lesson unconstrained liberal democracy is teaching the rest of the world is that in democracies voters are short term thinkers, politicians are driven by popularity and placating whatever rent seekers are the loudest - and the result is the same as if you had a teenager with a credit card seeking to be popular with his or her friends. 

In other words, Europe and the United States are telling the dictatorships in China, Russia, the Middle East, Asia and Africa that their way, is the path to economic ruin. 

Even those who were elected on the basis of dealing with this are largely impotent for they face the opposition from the rent seekers who benefit from the borrowing state.   The Tea Party Republicans in the US who were voted in on a platform of smaller government and less tax, are finding it rather difficult to cut spending.

The political landscape of liberal democracies has evolved to be dominated by the middle ground, that which Tony Blair called "the third way", or which Bill Clinton embraced.  It is naturally "conservative" in that it isn't dominated by radical reform, but is fundamentally corporatist.  It tinkers with the free market, meddles with business, regulates and taxes and tries to manipulate the economy, whilst maintaining a dominant public sector role in areas such as education, health and retirement incomes.  It is neither old left, nor free market "right".   It did require economic growth to keep tax revenues up to sustain budget deficits, and for the Eurozone, for cheap credit to remain on tap, forever.  The brief interlude of budget surpluses in the US in the late 1990s were quickly eaten up by the post 9/11 hit to economic growth, and then devoured as Bush spent up on wars, and everything else as well!

The problem with this model is that it was incapable of responding to the financial crisis, which it begat because at the heart of this model was belief that centrally managed fiat banking could deal to "boom and bust", and because in the US the tinkering was on a grand scale with Fannie Mae and Freddie Mac as the state owned mortgage guarantor, whilst banks were required to lend to those who would not otherwise be able to borrow.   When this corporatist approach unwound because of the property bubble IT begat, and banks faced collapse, the "middle way" suddenly bolted to the left.  Bureaucrats and politicians decided doing something was necessary, so they printed and borrowed. 

The choice was to be Keynesian - or not.  To be Keynesian, was to spend borrowed money and print some more, in the hope it could generate economic growth.  The problem was that public debt in a few countries looked so large, that banks, who had been warned about being profligate (and faced considerable new rules on the amount of leverage they could have), could see enormous risk, particularly in parts of the Eurozone, but also the US and the UK.

Now in the Eurozone reality is hitting home.  The Greek government needs to either cut spending by around 20%, or hike taxes by the same amount or some combination of either to avoid a crisis.  It is unable to do so, because Greek taxpayers are fed up.  Half of them are rent seekers who have been enjoying bank subsidised jobs and benefits, the rest are tax avoiders who don't want to pay for the rent seekers.  Italy is little different.  The German government faces telling German taxpayers to pay more because the Greeks and Italians have been living on borrowed money and they wont pay it back.

There no longer is a middle way.   Either governments live within their means, cutting back or raising taxes, or other governments bail them out.

It is either less government, more free markets and more of people paying for what they use.

Or it is more government, more transfers from those who are productive (in this case Germans, but also Austrians, as well as Dutch, Finnish and French people), to those who are not. 

Merkel and Sarkozy are looking for a middle way, of the banks that loaned to Greece and Italy taking a big hit, of Greek and Italian taxpayers getting less for more, and for German and French taxpayers to save their own banks.  Yet even this wont wash.  Obama also can't find a middle way, because he can't convince enough Americans to pay more tax, while he is unwilling to cut spending on anywhere remotely near the scale he needs to.

For the period from 1989 to 2011, it could reasonably be argued that mixed economy liberal democracies had "won" the battle of ideas, both in terms of economics, but also socially.   The moral and economic bankruptcy of "actually existing socialism" was obvious,  China and Vietnam already knew the economic bankruptcy of it and had started to change.   The moral dimension of freedom vs. dictatorship had won, at the time.  However, since then, it has been challenged.

Russia has seen some measure of economic success, coinciding with authoritarianism, as it has ridden on a wave of community price booms for energy.  China has gone from strength to strength to be the second largest economy in the world.  Meanwhile, Western Europe has been sclerotic, and the US, following the bubble of productivity and innovation arising from IT and telecommunications, is looking like it did in the 1970s - morose and stagnant.

The trend towards more personal freedom continues.  The Arab Spring is, in one part, about that, as people throw off the shackles of dictatorships, although whether they elect their new shackles is a moot point.  China too, is experiencing freedom of speech and debate unseen in over 60 years, although there are still lines that are dangerous for citizens to cross.

However, on economics, mixed "third way" economies are now seen to be wanting.   It is, in part, due to fiat banking (the inflationary bubble created by printing money is only starting now to apper), but is moreso due to politicians being incapable of being fiscally prudent.   In the US the debate is becoming one about whether Americans want a smaller government, with lower taxes, but less benefits/subsidies, or a bigger government, with higher taxes (for a few), more like Europe.  At least there, the debate is being opened up.  In Europe, the debate is yet to be entered into, but the far-left and far-right are starting to sound off where they want it to be.  The far left want to squeeze business and run big governments, the far-right want to reassert national sovereignty and not pay for bankrupt foreign economies.

The centre is floundering about wanting a "solution", but given their philosophical base is neither to increase taxes, nor dramatically shrink the state - they have no clear answer to fiscal profligacy.  Their bumbling attempt to discuss a financial transactions' tax being inept, and largely pandering to the far-left desire for blood, theft and destruction of the financial sector.

You see, it comes down to politicians.  Most do not understand economics, let alone finance.  A TV journalist some months ago asked a cross section of UK MPs what the difference is between the deficit and debt, and many had no clue.  Why would anyone trust any of them to spend your money or borrow in your name?

They do not know what they are doing, and the voters do not understand what is going on, and will vote based on short term imperatives rather than long term ones.

In other words, liberal democracies can't find an answer because they are inherently incapable of making difficult decisions that must be made.

In this climate, is it any wonder that China is looking on to see the eclipse of the West and the slow withdrawal of Pax Americana from the world, as Obama withdraws from Iraq, seeks withdrawal from Afghanistan, plays a back seat role in Libya, and seems ready to leave the world to others, whilst seeking to follow the European example on economics.

The only way this will be confronted is if voters decide they will no longer expect politicians to deliver them answers, but that government should stick to what it is good at, and do less, and tax less.

The alternative is what the "Occupy" lot incoherently seem to want, which is more government, more taxes on those they don't like, to confiscate property and bugger the consequences.

You see the approach being taken now, of spending a little less and taxing a little more, doesn't deliver an environment for economic growth and more jobs, nor does it meet the demands for blood and money that the far-left are bullying for, because it maintains the corporatist state - that borrows and taxes to give privilege to some.

Meanwhile, figure out for yourself who represents what view in the New Zealand elections and in mainstream politics everywhere else.  Good luck at finding those who aren't of the middle ground or the grow the government mob, or indeed journalists who can understand it at all.

Fear unbridled government? The answer isn't a coalition

When Geoffrey Palmer wrote "Unbridled Power" his concern was primarily about the lack of constitutional limits on government in New Zealand, and how Cabinet would dominate single party government which itself would almost always dominate Parliament.   Jonathan Milne has taken the latter tack in his latest article in the NZ Herald.  His hypothesis is that small parties will do badly this election, and that there is a real chance of something "dreadful" - one party government.

Of course he might think he looks like he is making a rather generic point about the advantages of coalitions and minority governments compared to single party majority government.   Yet he hardly hides his colours at all.  He doesn't pick on Rob Muldoon "banning inflation", spending billions on Think Big and bribing voters with national superannuation, he doesn't pick on Norman Kirk for creating big government businesses, expanding the welfare state and greatly expanding subsidies for government trading departments.  He wouldn't.  You see he isn't exactly an economist, or a historian or a political scientist, he's a leftwing reporter.  What other explanation is there for this comment:

The controversial free market reforms of the Rogernomics era were pushed through by the all-powerful fourth Labour Government without warning or by-your-leave. Similarly, there were few fetters on the National Government when Ruth Richardson presented her slash-and-burn Mother of All Budgets. No presidential veto, no senate or upper house sitting in oversight, and no small coalition partners to soften the hard edges of these governments.

All governments are "controversial", but you'd only say that if you thought that.  Except Jonathan is naive.  In 1987 Labour asked for a mandate to continue the reforms, got one and continued.   "Softening the hard edges" is the sort of comment one would only make if you disapprove, and those who disapproved were Jim Anderton and Winston Peters, and their bands of socialist, nationalist and xenophobic state worshippers they founded.

I opposed MMP in 1993 primarily because I had seen the previous two governments implement the most politically courageous policies in modern history.   Governments that cut subsidies, cut public spending, including cutting benefits.  They restructured government departments, made thousands redundant and privatised in the face of venal xenophobic hysteria.  Farmers, state sector workers, beneficiaries, pensioners and unemployed people were unhappy at the time, not a state of affairs most political parties are keen to promote if they want to be re-elected.  Contrast that era to the smile and wave of John Key, and Helen Clark's middle class welfare, and cash thrown at various interest groups (and craven acceptance of support from Winston Peters).

Even at the time of the 1984-1993 governments, the "hard edges" had plenty going the other way.  The fourth Labour Government opened up the Treaty of Waitangi settlement process, created bureaucracies for conservation, the environment, womens' affairs, youth affairs, Pacific Island affairs, and sowed the seeds for the Bolger government to pass the RMA.  Foreign policy saw New Zealand effectively step away from being aligned with the United States in the Cold War.   Education and health care remained firmly within the grip of the state sector and the rent seeking unions that dominated them. 

For Jonathan, stopping governments doing all they want is a good thing.  Which of course would be all very well, if what they wanted to do is more.  However, Jonathan's opposition to single party government is not that, indeed he rejects it because of history when governments were deliberately pulling back from spending money they didn't have, and telling people what to do.

He showed a childish thrill to think of the Greens and National working together on transport policy - because two conflicting ideologies must produce the best results.   He mentions NZ First, ACT,  Jim Anderton, Peter Dunne and the Maori Party, as if he misses them having influence (remember the positive influence of NZ First after 1996?).

Somehow he links Brian Tamaki to Peter Dunne, and then concludes while the Greens might not be good on "roading policy", one party government is "far worse", and his only evidence is the reforms of the 80s and early 90s.   That's just being rather vacuous.

Frankly, if either National or Labour were committed to privatisation, commercialisation, cutting government spending and winding back the state, I'd say bring on one party government.  However a Labour-Green-Maori-Mana government would be a four headed hydra of disaster, which would easily spook foreign investors and send more aspiring New Zealanders abroad. 

Unfortunately Jonathan hasn't really bothered to check what the two main parties have on offer.  National is hardly driven by a desire to engage in major reforms, it is instinctively conservative.  Labour is hardly seeking to engage in radical reforms, although is at least masochistically more interesting than National.

So no Jonathan, one party government after this election wont be perilous or dreadful, it will be "meet your new boss, same as old boss".  Politicians wanting to boss people around, spend their money while saying "it's good for you".  The only difference with a coalition is that the flavour changes.  Maybe if National needed ACT, and ACT gained 10 seats, there might be something more radical - presumably that's when Jonathan gets upset because that's not what he meant.  You see to him, like so many reporters in New Zealand, government should be there to fix problems, not get out of the way.

So you're having an election

Get a feeling it is a little like 2002?

Elections in New Zealand haven't been the same since 1996 when MMP meant that "winning" wasn't all it used to be.  However, sadly, neither the media nor the public have fully got to grips with it.  The simple truth is that it is extremely unlikely that National will get to govern alone, just as it was the same for Labour in 2002.  

A cycle has commenced.  In 1999, 2002 and 2005 Labour cobbled together coalitions, in 2008 National did, and it will likely do so again.  However, it cannot be guaranteed.  You see after one term, with a media essentially presuming a simple result, voters get complacent.

National will desperately want to ensure it gets a good turnout, for it will fear a low turnout will mean things are far closer than usual.  Bear in mind MMP means that it is getting party vote out that counts, and that means all electorates.  The flipside is that Labour will also be seeking a turnout, when it knows most assume it cannot win.

Yet it isn't quite as simple as that.  2002 is an object lesson for the two main parties, because it saw a significant shift in votes.

In 2002, Labour saw polling say it might win an absolute majority, yet it gained only a small swing of 2.5% in its favour, primarily because it gained at the expense of the Alliance.   National was decimated.

One interpretation of what happened was that support for the government, which had been slim, shifted around a bit, from the Alliance to Labour and the Greens.  There isn't quite the same parallel for National.  The Maori Party isn't a natural ally, and ACT is more likely to face fear of oblivion seeing its support go to National.

In 2002, the decimation of National was due to an assessment by many of its supporters that it had no chance, so they voted for United Future to give Labour a tolerable coalition partner.  This time, it is Labour that may be seen as having little chance, but Labour supporters aren't going to back Peter Dunne the same way (why would they? he is back to being a one man band), unless he gets some lucky media traction.

Some Labour supporters may choose to vote Green for the same reason ACT did better in 1999 and 2002, because they prefer a more principled opposition. 

This time round there is another dynamic - the Maori seats.

Mana Maori is making them a three horse race, and my pick is that it benefits National. 

You see, Mana Maori is more likely to take votes from the Maori Party than Labour.  Odds are this will not see Mana Maori pick up seats besides Hone's one, but could decimate the Maori Party.  It could eliminate the Maori Party overhang (but create a one seat one for Mana Maori), which can only benefit National.  Moreover, if Labour has a clean sweep of the Maori seats, the overhang is gone, but it only takes seats away from Labour's list allocation.  It can only be good for National.

Except of course, if ACT doesn't get Epsom or North Shore, and National is just short of 60, and Peter Dunne isn't enough.

National is playing its traditional game, being the classic "do next to nothing" party that saw it win most elections since the war.   It impresses the masses who like the smile and wave.  Labour will get out its core vote of public servants, low level aspirational control freaks, beneficiaries and some of the working classes.   What's left is who votes for the other parties.

The Greens have the clearest consistent brand for those who want someone else to do the thinking for them, or at least the emotive neo-Marxist posturing.  It's the party for people who believe the end is nigh, but also those who think they know best for other people.  The classic authoritarian party.

ACT is on its last legs, on life support, but still offers - just - a more "National than National" party with policies that are closer to National's own principles.

The Maori Party has shed its most racist, Marxist, pro-violence wing in the form of the Mana Maori Party.  However, will it have satisfied its supporters?  Has it handed them enough in coalition?

Beyond that, we are saying bye bye to Jim Anderton's personality cult party as he retires, and Winston Peters is having another go at attracting malcontents, but most of his past voters have passed away.   Peter Dunne faces his repeated challenge from two sides, and the only minor parties that remain outside that which have survived are the Alliance retards, Libertarianz and the ALCP.

Of that lot, only three parties offer any hope of less government.  ACT has a leader who talks the talk, and policies that mostly face the right way.  Libertarianz is consistently pro-freedom, with a nicely refreshed lineup, and ALCP maintains its single policy.

I hope to do a bit of a quick review of the main people on the party lists and the electorates, if the psephologist in me gets the time.

Greece is to collapse under the weight of its own reality evasion

Greek Prime Minister George Papandreao's decision to hold a referendum on the "bailout" plan agreed with other Eurozone countries has sealed the final act for Greece's democratic socialist attempt to live a life that it wasn't willing to pay for, and should serve as a warning for the economic catastrophe that the Euro project has become.

Let's recap what happened.

Since Greece became a liberal democracy in the 1970s, it has run policies that could broadly be called "democratic socialism".  A typical right/left democracy saw little difference between policies, but the Communist Party consistently would come third.  Progressively more generous welfare policies and a growing public sector, combined with a lackadaisical approach to tax collection, and feather bedding the armed forces.  Meanwhile, the Drachma devalued again and again.

Greece joined the EEC in 1981 and the money came rolling in.  As the poorest Member State it gained funding to build infrastructure, generous agricultural subsidies and access to markets in Western Europe.  The typical EU type deal was made.  Greece gained new markets for its goods and services, grew tourism and attracted investment, whilst the money flowed in from Brussels to prop up a burgeoning public sector, inefficient state companies (Olympic Airways being one of the perpetually near bankrupt ones). 

The delusion worked for a while, and then Greece got the next offer - get a Western European currency.  The Euro.  Greek governments lied their way into the Euro, not really having a 3% budget deficit (hiding defence and hospital spending) at all.  So out went the Drachma, and Greece borrowed - more and more.  Borrowing for the Olympics in 2004, and this time credit flowed freely.   The Euro was being loaned out at interest rates reflecting the economic environment of the dominant Euro Member States - Germany and France.  So Greece was receiving credit not on the basis of running large budget deficit and public debt approaching 100% of GDP, but rather running low budget deficits with a reformed economy - like Germany.

Greek government kept getting elected, by Greek voters, to give them their pork, at little cost to them.  Ridiculously generous pensions, a public sector where nobody could legally be fired under the constitution, a bloated armed forces that had not changed since the Cold War (nor since Bulgaria became an EU Member State rather than the front line of the Red Army), and a tax system that was a bit of a joke, saw Greece slip slide its way to bankruptcy, as banks in France, Germany and to a lesser extent Britain and elsewhere, lent to the Greek government believing all was well - because it was the Euro.  A currency those banks believed would be government guaranteed.

They didn't factor on a Eurozone government going under.

Greece is to all intents and purposes, bankrupt.  Its austerity programme of cutting spending and increasing taxes only slices off some of the overspending.  It cuts the budget deficit NOT the debt.  Think of it as you being on the brink of being personally bankrupt and you've managed to cut your spending to be only 5% higher than your income rather than 10%.  You still need to borrow.

So who is to blame?  Well, quite a few.  Greek voters, Greek politicians, Eurozone governments, the European Commission and Greece's creditors all carry some blame.

Greek voters

If you believe in liberal representative democracy, then Greek voters are to blame.  They voted for politicians who gave them public spending that was unaffordable.   They didn't support politicians who believed in containing the size of government or even increasing taxes to pay for their socialist state.   They benefited from the loans taken out in their name, they happily evaded taxes, but they didn't evade taking advantage of the money spent by their government.   Now they are unhappy about facing reality - the reality that they have been living beyond their means, or at least, supporting governments that have been doing so.   For so many they need only look in the mirror to find who to blame.

Greek governments

Many Greek voters and citizens obviously did not support the government, and were not public servants or major users of the profligate Greek state.  They can rightfully blame Greek politicians for lying.  Lying to join the Eurozone, lying about the state of the books and engaging in massive reality evasion at elections.   It is telling how so few Greeks are pointing fingers at past Prime Ministers and Finance Ministers for their combined failure to confront the public finances, and most of all in colluding with the state sector to lie - and I do mean lie - about the budget deficit to join the Euro.   That big lie is now costing lives and livelihoods.   Greek citizens should be baying for the blood of these lowlifes - lowlifes who now live off the back of generous political pensions.   Greek politicians didn't just evade reality, they denied it and covered it up - for shame.

Eurozone governments

Greek governments would not have been facilitated down this path had Eurozone governments not allowed it to happen.   They could have shown greater due diligence with Euro membership, but the Euro is a political project, driven by France, accepted by Germany, to bring European economies together.  It is not an economics project, but one driven by hubris, pushed by people sharing a democratic socialist vision of the EU being a fortress of common laws, taxes and generous business and personal welfare states.   They wanted it to be central to EU membership, and France itself has almost always failed to meet the Eurozone membership test itself, of a budget deficit no greater than 3% of GDP.   They supported lending to Greece, supported Greece's fiscal profligacy (given their own) and engaged in their own wilful blindness of both Greece and their own failures to meet their own disciplines.   Reality ignored

European Commission

The EC got Greece hooked on the corporate and state welfare of its subsidy programmes and cohesion fund.  It supported Greece's growth of the state and addiction to the European project as part of its political culture.  The EC is adept at covering up its own embarrassments and at pretending things are what they are not.  The EC wont admit failure, wont admit the inherent immorality of its project of transferring wealth from the earned to the unearned, and of power from Member States to the unelected Council and Commission.   The European Central Bank is, of course, central to this.

Greek creditors

The banks that loaned to Greece believed they were lending to a watertight debtor.  They believed German, French, Dutch and other Eurozone taxpayers would cough up, if anything went wrong.  They facilitated Greece's overspending and expected to make money out of making taxpayers pay up - whether they be Greek, or other Europeans.  They pretended governments couldn't go bankrupt, the "bailout" deal is based on them swallowing a 50% write off of the debt borrowed to date.

What now?

The bailout is doomed, quite simply because Greece is still overspending, its economy is on its knees and the banks that have loaned to Greece will be forced to face a larger than 50% cut in their loans.   It isn't enough and can't be enough.  France and Germany are pretending they can fool the markets into having confidence, through the construction of complicated derivative lending instruments, akin to those blamed for hiding risk before the financial crisis of 2008.   

However, the collapse will come from the referendum on the bailout.

If Greek voters choose yes, they face short and medium term pain, in the form of a vastly smaller state and longer term pain, by being hooked to the Euro.   They could take a bitter pill of reducing their failed democratic socialist state and become a reformed, free market economy that is competitive, following the reforms of its northern neighbours (e.g Bulgaria).   However, I wouldn't count on it.

If they choose no, as it widely expected, then Greece will default.  It will be unable to borrow, the government will effectively shut down many activities, and is likely to be forced out of the Eurozone, meaning it will have to either create its own junk currency, or operate in Euros independent of the European Central Bank.  The price of that will be severe in the short term.  Any Greek resident who isn't moving their money into a foreign bank in Euros is gambling, because Greek banks will collapse.  Greece will face an Argentine style default so will have no budget deficits after that, but then it could reawake and be revitalised.

The Greece experiment in profligate democratic socialism will have been dumped - and eyes will be on the Italian, Portuguese, Spanish, Belgian and French varieties.

Oh and despite the vapid plaintiff words of some protestors, most of the blame for all of this lies not with the private sector but the political classes, and ultimately, the majority of voters.

The Eurozone crisis is not a crisis of capitalism - it is the dying gasps of a grand project of democratic socialism, and the first - weakest - branch of that tree is about to fall off.

I want to vote ACT

but I'm unconvinced.

Rodney Hide's record the past three years has been bitterly disappointing.  I am glad I didn't vote ACT in 2008, for I'd be, in part, to blame for the gargantuan planners' wet dream called Auckland Council.  

However, ACT has purged Rodney Hide and installed Don Brash, a man for whom I have immense respect, a man who almost single-handedly rescued National from near oblivion to near victory in 2005 - a mission that failed because of the National Party and some ill-advised campaigning.

The candidates are largely a fairly impressive lot.  Brash and Isaac top the bill rightfully, but there are two issues.

Firstly is John Banks.  How he got admitted to be a candidate is beyond me.  Peter Cresswell says much of what I think of him.  It's not that he's a bad man, he is certainly interesting, but he is not a lover of individual freedom.   Indeed, his profligacy as Mayor (remember how he once opposed the grand plans for Auckland's rail network then supported them?) is not what you'd want from someone seeking to keep the National Party's spending in check.  Actually, as a man who held Rob Muldoon as a figure of respect, you'd already be wondering why he could ever be trusted to help reduce the size of the state, and that's ignoring his vocal and solid opposition to the Homosexual Law Reform Bill in the 1980s.  

Now it wouldn't be so bad if he was an electorate candidate in Whangarei, and lower down the list, but he isn't.  He is ACT's lifeline.  ACT is betting on him winning Epsom to stay in power, so ACT will owe John Banks everything.  Now I'd like to think the people of North Shore might choose Don Brash instead, but Banks is still number three on the list.   In other words, he is hard to hide from.

Choosing Brash as leader appears to be in part a purge of gutlessness and the remnants of pro-state conservatism, but why include John Banks?  Nobody can pretend he has a profound belief in smaller government and individual liberty.  Similarly, what delusion can ACT have that Banks is some sort of high profile "celebrity" candidate, in the mould that Hone Harawira, Jim Anderton, Winston Peters and Richard Prebble have been for minor parties before?

Let's say I swallow Banks and look at policy.  How does that look?  Let me rank the policies out of 5.  1 being virtually worthless. There are 18 policy areas, possible score of 90.

Defence - Positively allowing nuclear powered ships, and strengthening the armed forces, including rebuilding relationships with the US and Australia.  4 out of 5.

Economy - Cut spending to 29% of GDP (the level Labour left the country at in 2005), cap spending increases to inflation and GDP, cut regulation and privatise.  Hardly bold.  Nothing on flat tax. 2 out of 5.

Education - Increase school autonomy, increase state funding of independent schools, increase school choice in assessment systems, more scholarships for underprivileged children.  Less ambitious than National's 1987 manifesto.  1 out of 5

ETS - Remove agriculture from ETS and suspend the rest till majority of trading partners have caught up.  A quite respectable approach.  4 out of 5

Environment - Push road pricing, market pricing of water, support mineral exploration and "acknowledge" the role of voluntary groups.   With RMA elsewhere, this largely looks positive.  4 out of 5

Health - Encourage competition, target subsidies on the poor, reduce taxes so people can buy health insurance, review occupational licensing and reduce bureaucracy.  Promising, but a bit vague.  3 out of 5.

Immigration - Lower administrative barriers to entry, favour productive workers, ensure it is no drain on the welfare state.  Reasonably positive, although somewhat vague.  3 out of 5

Law and order - Review procedures around self-defence, consider re-introducing Sentencing Council, sanctions for prisoners who reject opportunities for rehab/education, "broken windows" approach, victims to receive reparation payments.  Nothing on victimless crimes or National's authoritarian approach to drugs.  1 out of 5.

Local government - Pressure local government to focus on core role, reduce restrictive land use planning.  Less policy than before.  Such an opportunity to reform!  1 out of 5

One law for all - Allow more choice in education and health (yet not really mentioned much in either policy), accelerate Treaty compensation process, remove RMA requirement to consult by race, no Maori seats, no local authority Maori seats and no statutory boards.  It goes much of the way there, but could be clearer. 4 out of 5

Primary industries - Reduce spending, dump ETS, streamline RMA.  It could be worse, but could include property rights as well.  3 out of 5

Regulation and red tape - Continue Productivity Commission, pass Regulatory Reform Bill, reform RMA.  Could have been a long list, but it is aiming the right direction 3 out of 5

RMA - Separate planning and approval functions from councils, limit consents fees, widen powers to order costs against objectors, increase rights to compensation from planning decisions, removing "intrinsic values" from consideration.  Nothing on property rights, but otherwise it is a positive step forward. 2 out of 5.

Spending cap - Pass Spending Cap (People's veto) Bill, promote culture change and innovative policies.  Not a lot to say about this.  A step forward, but not nearly enough. 3 out of 5.

State owned assets - continue a rational evidence based debate about the government's role?  Well yes, but you can do better than that.  Much better.  You say so in economic policy, so I will say a 3 out of 5.

Tertiary education - Remove fee caps, introduce market interest rates for student loans, open trade courses to competition, lower taxes so students can pay back loans quicker.  A useful step forward, but not more so 3 out of 5.

Transport - Invest in projects with higher benefits than costs, embrace better pricing, streamline the RMA for building infrastructure, push government to invest in any modes.   RMA streamlining shouldn't interfere with property rights, and the government should be investing less. What about the private sector?  Disappointing 2 out of 5.

Welfare - Youth minimum wage, tougher approach to welfare, reform Working for Families, and more detail.  Definitely the best thought out policy of the lot.  A generous 4 out of 5

50 out of 90.   Is that enough?

I wish I could say yes, but there are three things missing.

Property rights

Where are they? Where is putting property rights at the centre of the RMA?  This should be central to any liberal party.  They are alluded to, indirectly, but why just that?

Tax

Nothing specific about taxation, about reducing it, about flattening it.  Yes, spending caps are all very well, but there isn't even a focus on deficit elimination and then lowering taxes.  That is disappointing.

Victimless crime

I don't expect legalisation of drugs, but I do expect something to be mentioned.  I do expect a review of criminal laws to consider how there might be a reduction in regulation overall and interference in people's private lives. 

It's a shame.  I wanted to vote for ACT,  I really did.  I like Don Brash a lot.  He could make a very positive difference to a government,  but what I've seen so far is very very disappointing.  Can it be saved?