I try to be optimistic about life and the future, really I do. But I find myself agreeing with this assessment that we’re heading for another economic depression.

Let me lay this out step by step, in terms so simple that hopefully even a bureaucrat can understand how this works:

1. Poverty is the natural state of mankind. No food, no clothing, no shelter. Unless we work constantly to create wealth in all its many forms, we slide back towards poverty. When we talk about our ‘economy’, we are actually talking about our fight against poverty.
2. In order to not be in poverty, every human on average must create more wealth than they consume. To break this down further, on average we must do enough work every day to account for all the ‘work’ we’ve consumed in the form of food we’ve eaten, fuel / energy we’ve consumed, clothing we’ve (slightly) worn out, the house we’ve (slightly) worn out, etc. Only if we create enough value to replace the value we’ve consumed or destroyed do we become wealthier with each passing day.
3. Redistributing wealth does not create wealth. Taking X dollars from Peter to give to Paul does not help humanities fight against poverty, in fact, in hinders it. If instead of being GIVEN money (value) for no work (no value), Paul had to do some work (create value) in return for the money, then the overall state of mankind would be better than it is.
4. Every ‘redistribution’ is a lost opportunity to create wealth.
5. Every dollar given to someone who has not earned it (created value in exchange for it), was taken from someone who now gets no value in return for their money.  AND this ‘gift’ has also stopped the recipient from needing to create value in order to consume value (eat, drink, have clothing and shelter). It’s a double-wammy to the wealth of mankind. No value TO the person taxed, and no value created BY the person on welfare.
6. When governments tax, they rob their nation of wealth by redistributing money from one place to another in return for no value exchange.
7. When governments print money (‘Quantitative easing’ etc) they reduce the value of the money already in existence by diluting the value of the country / economy by more dollars, but without adding any underlying value to it. This means that the money people were given in return for working (and creating value) in the past is now worth less, meaning they have less value to show for their work.
8. When governments start throwing money around and thereby make it easier to make money by pandering to the government rather than providing value to the public, you soon see entire industries spring up which make lots of money but add no value to mankind. Ie, they contribute nothing to the fight against poverty.
9. With every value-less transaction, individual / national / global wealth is harmed. Markets become badly distorted as there is no longer an incentive to do something useful for mankind, but rather an incentive to game the system for the quick money, regardless of any underlying worth to what you’re doing.
10. Regulations also have the same effect, where people now can have an entire career just advising companies how to comply with regulations. That job creates no underlying value, no member of the public would ever willingly pay for that service or see value in it, but it’s part of the ‘cost of doing business’ and millions of such jobs exist around the world.
11. Sucking up to government becomes so lucrative that lobbyists become highly paid specialists whose sole job is to convince government to throw more money away on more valueless transactions for the benefit of their paymasters.
12. Those lobbyists are very good at what they do, and you end up with huge government subsidies, for ‘renewable energy’ for example, which mean that the cost of energy (including the subsidies which may not be visible on your power bill!) skyrockets, meaning that we are paying far more for the same amount of power, ie, we’ve spending more of our value to get less in return. And this principle can be seen in thousands of different ways across the economy.
13. Because all this money spent worthlessly is first being taken from someone who earned it, (or being funded via borrowings which will hurt future wealth creation, or via inflation, which hurts savings from past wealth creation) productive members of society find it less and less worth their while to actually keep working and creating value, and productive members of society start looking for careers sucking off the government teat, and others give up altogether and take government ‘benefits’, where they get paid for doing nothing. In both cases, these people go from being net wealth creators, to net wealth consumers.

All of this simply brings us to where we are right now. All of the above has already happened, and more, and we’ve reached the point where more than half of Australian households receive government benefits, where a huge percentage of the ‘workforce’ create no value but rather are employed to keep regulators happy, and those that are productive are punished via taxes and even driven out of business by how hard it is to earn an honest living in Australia today.

Thing is, as people become less productive, and more people become TOTALLY non productive, it isn’t long before eventually ON AVERAGE, people are consuming more wealth each day than they are creating. Mankind are becoming poorer, not richer, with each passing day.

We have now reached that point in Australia. Our standard of living is at a standstill, and our cultural expectation is that it will get worse. This is entirely obvious and predictable, and a natural outworking of taxes, regulation, and a government that loves spending money.

It is also being made far FAR worse by the central banks, but that’s another story altogether.

Bottom line is this: Mankind SHOULD keep on getting wealthier, pretty much forever. We’ve proved since the industrial revolution that we are more than capable of, on average, creating more value than we consume, meaning we can leave value to future generations, and live ever-better lives in the process. The trouble is, most people don’t understand how this has happened… and so they see no danger in the regulatory state, in ever increasing taxation, in creation of money out of nothing, for no value.

When I say that our future is Greece, I’m not being sensationalist. In fact, if we don’t stop our current trajectory, our future is Venezuela. Yes that seems a long way off right now, but the economic data for Australia, and the economic outlook for the planet, is really really ugly and should be ringing a lot of warning bells.

If our standard of living has peaked (and the data tells us it has), it’s not because people aren’t working hard enough, it’s because what they’re working on (on average) isn’t creating lasting value. You can work 60 hours per week for 40 years and not add a scrap of value to the fight against poverty if you’re a government employee (with a few exceptions), regulator, lobbyist, or any one of a bunch of other ‘occupations’. So unless we see a radical shift in government spending and taxing patterns, and see the government shed a whole bunch of unproductive jobs, and see the government repeal a whole bunch of regulations that consume time and energy but add no value to mankind’s fight against poverty…. then this is just the beginning.

And like a roller-coaster, the climb up towards greater wealth is a slow, steady, tough climb… but the run to the bottom as we destroy our own standard of living is a fast ride.

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