Who pays the piper?

My children are Gen X. They are very concerned that the price of electricity is rising rather rapidly, to the extent that they might have to go easy on the air-conditioning.

I'm too old to be a baby boomer. I am, I'm told, a 'Builder'. On reflection I think that's a good thing to be, and an accurate description.

Control of things in general is passing from Gen X to Gen Y, and neither generation has a lot of respect for us Builders. But we Builders know two things that they don't.

Firstly, There's No Such Thing As A Free Lunch (TANSTAAFL). Secondly, the bill may be deferred, but only for forty years.

The question is "Who pays the piper?"

For the benefit of Gen Y, the instant gratification you apparently desire may not be accompanied by an instant demand for payment, but there is a cost, and it must be paid. The bills you are currently being asked to pay are in large part for services rendered in the 70s, some time before you were born.

You can't really understand the GFC unless you understand the political programs instituted 40 years ago by the Carter administration. That's when it became a good thing to extend credit to people who couldn't be expected to pay the bill.

In Australia 40 years ago, it was time for Gough Whitlam. He initiated a massive change in the way our government spends its income – spending on infrastructure was replaced by spending on social benefits – from about 80% / 20% to 20% / 80%, if you look at the figures. When the Whitlam government collapsed into financial scandal and chaos, we elected Malcolm Fraser to rectify the situation, but he didn't, he exacerbated it. Subsequent governments have carried on the tradition.

Alexis de Tocqueville, visiting America in 1831, wrote "The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money." Could that possibly apply to Australia?

To pay for all the goodies we were now coming to depend on, new sources of revenue needed to be developed, as tax increases were too unpopular. One good way was to require our public utilities to pay dividends to the government. So they cut back on the money they were spending on infrastructure to pay dividends to the government. The government could blame them for any increases in the price of electricity, water and so on, and continue to buy our votes without any increase in tax.

A very effective political solution! Unless you understand TANSTAAFL and the 40 year repayment rule.

So electricity prices are on the rise! Surprise, surprise. The major element in that rise is the need to catch up on our infrastructure. We haven't been paying much attention to the need for new power stations, have we!