Who is Responsible for our Economic Welfare?

This is a guest blog post by John Wood who lives in Darlington, Australia. It is excerpted by permission from a longer piece by John: “Financial Sustainability: Staying Solvent in an Insolvent World.” 

I believe the responsibility for our economic welfare is ours.  Not our neighbours. Not our employers. Not our communities. No; not our families. Especially not the Government’s! As the second decade of the new millennium begins, many seem blind to this law of life.

Shifting the burden of responsibility for our financial welfare, in full or in part, to someone else, increasingly to the state, has become so prevalent that there are few if any in Australia who are not receiving some form of government assistance, handout, pension, subsidy, tax break, grant, benefit or concession. We are all part of the problem as we are of the solution. There are those amongst us who are sick and disabled and unable to care for themselves and should and must be provided with food, clothing, shelter, transportation and community if we are to be a compassionate society. But that said, way too many who do not fall into this unfortunate category, and who can care for themselves, are being suckled by the state to varying levels.

Governments, because they want to be re-elected, are terrified that we will not accept and/or handle well the drop in our respective standards of living which will inevitably occur when the economic corrections fully manifest. Whether as a result of the positive intentions of a sound government to assist rectifying the imbalances in our economy (there are zero indications of this being likely in Australia), or if there remains no stomach for taking those decisions then the correction will occur when a critical mass of bubbles burst. This process cannot be stopped and it is time for us to stop kidding ourselves it can be manipulated forever by Governments and Central Bankers.

Unfortunately in Australia, as seems to be the case the world over, whoever wins government is the party that has convinced the majority that they will best take responsibility for our individual, collective and corporate welfare. They have reassured the voter that their specific benefits will continue with the promise, or at least the hint, of more to come but implicit; “with our party, you are in safer, wiser, more prudent hands.” Time and again we are complicit in electing the laws of life illiterate but media appealing to govern, and thus moved with each election ever closer to the day of financial reckoning when we will wake up in the middle of a financial pickle of unprecedented proportions.

There is no political party in Australia that I know of with sound money credentials. None!

Without common sense money understanding, having enlightened social, environmental, health and educational policies are all ultimately in vain. We must have them to sustain ourselves in a total sense but the big bucks they cost are being squandered in wasteful welfare.

All parties demonstrate a commitment to ever increasing taxpayer funded financial liabilities and through those policies to increasing deficits and eventual economic collapse. You see; expenditure cannot exceed income. It is not possible no matter how much we wish it were otherwise. Even countries finish up broke when the country’s costs exceeds its income. And the end result: people destitute, desperate and determined to do anything to feed and care for their family. That is the societal climate for the emergence of powerful leaders promising the world but providing totalitarian regimes in exchange. History shows us this is what happens. These autocrats emerge from either the left or right of politics in such bleak times.

So there we have it: worldwide; expenditure is exceeding income at individual, family, business and government levels. Australia is galloping in that direction having squandered the once-in-a-lifetime opportunity of the Chinese driven commodities boom (bubble) to set aside and save hundreds of billions of dollars or more for the rainy days ahead when real needs for welfare are likely to be enormous–widespread needs of the like most of us have never experienced. But the coffers will be empty. The societal consequences, as touched on earlier, will be dire.


  • Pay off borrowings as our number one priority; sell non-income producing assets to achieve that outcome. Except, if you knew enough to purchase gold, keep it even if it halves or more in value, as your sound money insurance policy. It will recover and become the most valuable means of exchange.
  • Consider selling your home and renting. Unpalatable as that option is to most Australians; it might be the most economically wise decision you ever make. Housing prices in Australia are still in a bubble and will drop much further.
  • Seriously slash your expenditure (cost of living). Examine all outgoings and cut all but the essentials.
  • Save and invest in companies providing essential goods or services such as food and energy for dividends or interest – not capital appreciation – it’s likely there won’t be increases in asset values (housing, stocks and shares) for years or possibly decades to come as has been the case in Japan, once an economic powerhouse but today an economic invalid. Successive Japanese Governments have employed all the poor practices I have outlined earlier and it has only been the historic saving ethos of private citizens that has kept Japan afloat. The government has now squandered all of those savings and I am left to wonder what will happen now.
  • Be ultra-prudent and conservative. Live well within your means to ensure that your income easily exceeds your outgoings. Cut waste to the minimum. Change from consumption thinking to conservation thinking.
  • Go further and reduce your so called ‘standard of living’ until you can easily live within what are likely to be your much restricted means. Do this irrespective of your present economic state. Shift from an expensive suburb to a cheap one. If retired sell up and move to a ‘dying’ country town were housing is good and dirt cheap and you will be welcome. Extreme? Maybe! But it may save your economic bacon by eliminating your mortgage or if you don’t have one creating money to invest in sound income producing assets.
  • Save like there is a tomorrow and that tomorrow maybe bleak. The art and discipline of saving for a rainy day has been lost on more recent generations. There is plenty of information around to explain how to go about it but get started today.
  • There are web sites that expand on the ideas in this piece that are easily found if you are interested. Start doing your own research.


My prediction for the near, medium to longer term (2 to 5 to 20 years) is that at the very best we are in for a long, protracted economic winter. At worst, a deep depression of the 1930’s variety that will take much longer to pass as a result of the massive accumulation of debt and lack of savings.

For many it may be too late. I trust it is not too late for you and that these words make sense. Take action today. Tomorrow may be too late.

John A. Wood is a noted entrepreneur and consultant, the founder, former CEO and chairman  of Fleetwood Corporation. In 1993, after retiring from Fleetwood, John founded the Philosophy of Living Centre, Australia. This Centre coached and mentored business leaders and later evolved into Dimension 4 Consulting of Perth.


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