Western politicians too weak to confront voters with cold truth on debt, says Woody Brock
The West’s politicians should confront their populations with some harsh realities about debt, including their own financial profligacy and run-away use of credit beyond their means, says Woody Brock, one of the most prominent American economic analysts.
Speaking at Syz & Co’s conference for its Oyster fund range in Budapest today, Brock said “people are not as dumb [as politicians think] – everyone I speak to understands the situation about debt.”
Brock has founded Strategic Economic Decisions, a firm providing financial and economic analysis to industries such as asset management.
The current mire is not just Europe’s problem, it is America’s as well, he added.
But he doubted elected leaders would speak plainly about the problem, or resolutions to it, “that people have spent too much money [like] undisciplined children.
“That might be what people actually want to hear, but our politicians are terrible leaders.”
He said America’s president Barack Obama (pictured) should explain a past generation of Americans, including his own, had spent too much on credit, and they should say so.
He said the West had built up indebtedness making promises that hit the next generation – “destructive promises without representation”.
Unless the West’s debt problems are tackled, the democracy we are used to “carries in itself the seeds of its destruction”, and bond markets would “nudge” Washington by sending up Treasury yields over coming years, to force politicians’ hands.
At that point, he said, laws would be passed stopping governments making promises that harm future generations.
“The major problem [in Western democracies] is the government must be the extended family” in providing support to elderly citizens, commitments to whom Brock described as a ball-and-chain around the society’s ankles.
However, the Western democracy is not the only one with its own downfall inbuilt – State-led democracy such as in China and Russia also have Achilles heels, in the form of corruption.
The leaders are so entrenched in corrupt ways, he said, that they end up being unable and unwilling to give up power – witness Robert Mugabe in Zimbabwe. They turn from political leaders to “thugs” that fear for their safety after persecuting so many countrymen.
“Corruption is also the enemy of innovation,” he said, and would not tolerate creative minds such as Bill Gates or Steve Jobs.
For such reasons, Western democracy is better equipped to repair itself from states such as its current malaise, he said.