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Saturday, February 4, 2023

Austerity

By: Keith Miles

Normally every generation experiences some sort of austerity. If we go back to the wartime generation of the Second World War, my parents and grandparents, not only did they have the difficulties with getting enough food, but also the suspension of much of education, and lack of money. Of course many also experienced their young men being away for years with children growing up without fathers for a long time.

But they accepted the austerity because they knew that they were experiencing it in a noble cause.

Most families when times got difficult did not automatically turn to the government but looked where they could cut back on their expenditure or maybe do a little extra work. Most families also had what was called savings ‘for a rainy day’. Most people realised that there are ups and downs to life. Obviously there was and is a minority for whom family support, or church, or civil association came into play but not an immediate call on the government. Government has a place but not to solve every human difficulty.

Under communism in Yugoslavia there was a similar attitude  in Slovenia to that of having something for a rainy day, so that money under the mattress was common and a small amount of foreign currency ’for a rainy day’ was common. The ups and downs of the economy was obvious in villages as wood burning declined but came back when gas and electricity prices soared. Blackouts in electricity supply were not uncommon in winter so alternative lighting was always a necessity. Expensive and inadequate food supply meant that gardens more often were for growing salad and vegetables not just for flowers and recreation.

So how have we got to the situation that with an international crisis on energy prices and inflation the present generation (at least quite a few of them) seem to think that the first action needed is the government to help them out. Whereas older generations would first think to cut back on unnecessary items: luxuries such as extra holidays, or any holiday, celebrations, or even new clothes. Make do and mend was the order of the day. Many would try and earn some extra money by an extra job, or working more overtime. Neighbours would help neighbours, and friends would be helping where they could.

The problems with looking to the government for everything in a crisis are manifold. Firstly it puts the government in too much of a powerful and responsible position and secondly it reduces community and family responsibility. It also usually means that taxes are higher or the government takes on extra debt to pay for the measures they put in place. This then results in extra bureaucracy with rules and regulations, and in the case of government debt continuing interest payments out of tax, and any repayment landing on the accounts of future generations. All of which is negative. Even worse is when a government prints excessive amounts of money which results in future inflation.

It is said that when Ludwig Erhard freed the controlled prices to flexible market prices in war torn postwar West Germany the American Military Governor feared terrible consequences if government controls did not continue. Erhard said ‘I know my fellow citizens and Germans will work!’, Erhard was right and the German economic miracle was born.

When hard times come human action is best not government controls and taking on every problem. Governments can look after the weakest in society but not everyone. Surely the terrible failures of communism and socialism taught us that truth!

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