Rather than ending the plunder that is the welfare system, the Rudd government has simply rearranged the pieces, with an extension of mandatory income management across the Northern Territory. Noel Pearson, director of the Cape York Institute, has hailed this as a "historic leap" into a new era. These reforms supposedly promote responsibility and encourage people to find jobs but unfortunately is nothing more than the usual conservative-style reform: a change in the benefits formula that is supposedly better than the current system when the real solution is to phase out welfare completely. The welfare system harms the very people it is supposed to help (harm might be the wrong word here - giving someone something for nothing does him a favour from his point of view) by inducing them to avoid doing the very things that will help make them 'un-poor' such as learning how to interact with society through employment, learning skills or trades, saving some income, being responsible for themselves and others, and so on.

"In regard to the colored people, there is always more that is benevolent, I perceive, than just, manifested towards us. What I ask for the negro is not benevolence, not pity, not sympathy, but simply justice. The American people have always been anxious to know what they shall do with us... I have had but one answer from the beginning. Do nothing with us! Your doing with us has already played the mischief with us. Do nothing with us! If the apples will not remain on the tree of their own strength, if they are worm-eaten at the core, if they are early ripe and disposed to fall, let them fall! ... And if the negro cannot stand on his own legs, let him fall also. All I ask is, give him a chance to stand on his own legs! Let him alone! ... your interference is doing him positive injury." - Frederick Douglass (1817 - 1895)

Indeed. We have meddled in the affairs of indigenous Australians for long enough and look how that has worked out. I think it's about time we tried something different, heed Douglass's advice and give them a chance to stand on their own two feet.

Update 30/10/2009: Apologies for the previous chart - an honest mistake was made and the GDP figures used were quarterly and not annual. This has been fixed and the charts below are accurate. This does not change the essence of the story - although it is not as bad as first thought it is still a huge problem! If you received the FLASH update before 1500 AEDT please download the correct version here.

Talk about a welfare state!

What is going to happen when resource prices fall? Who is going to support the economy?

Unfortunately, the nomenklatura will attempt to dig themselves out of this hole by increasing government involvement in our lives. And who is going to support a move to more government? Why, the significant and growing portion of the country who, as Mises said, rely on the government to provide "...thousands and thousands of people with safe, placid, and not too strenuous jobs at the expense of the rest of society."

When China stops picking up the bill and the party ends we are going to have one hell of a hangover!

The term 'CUB' has been floating around Australia (in particular in Western Australia courtesy of the mining boom) since early 2006 and refers to a type of young, white, mainly working-class male. They're generally uncultured, uncouth, poorly educated and are ostentatious with their money, easily falling prey to slick marketing.

I came across an article in the West today which was sympathising with a 29 year old tradesman who had recently been made redundant. He fit the 'CUB' definition perfectly, he: was earning up to $1,700 a week prior to the crisis; has no education; married young; has children; and has multiple cars and a large 4-bedroom house. He is now employed in the fruit picking industry at $550 a week.

The article went on to blame immigrants for "takin our jobs!" when hard working locals should have them. The glaring flaws in that argument aside, the real question is why does this guy deserve our sympathy? During the government-created boom, he was living the high life, far above his means. He splurged on cars, tvs, holidays and much more and now has to bear the cost of that lifestyle. It's a painful slap in the face, but there's no reason that hard-working, prudent savers should have to foot the bill and bail out the 'CUBs' for the same reason that the banks, auto-makers and other failed companies shouldn't be bailed out. Doing so would further send us down the welfare state road by removing yet another incentive to act responsibily: personal losses (free health, free education, welfare benefits, child bonuses, housing bonuses...the list goes on: all of them discourage individual responsbility).

It's time to start living within your means. Real savings are the only road to prosperity, wasteful consumption is nothing but a destroyer of wealth. Plan for the future, don't spend all of your savings and then beg (or in the case of bailouts, take) from people who planned for the inevitable storm and lived within their means. People aren't 'doomed' to be poor: it's a life choice. In the free market there is profit and loss, removing the loss side of the equation has disasterous consequences for both businesses and individuals. Let them live with their choice, through the good times and bad.