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Wednesday, June 23, 2010

Rudd is gone! Long live the Queen.

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Unsurprisingly Kevin Rudd has been discarded as PM of Australia, and judging by the profile of Julia Gillard, this will result in a back down on the Resource Rent Tax. If you are expecting a re-adoption of the Emissions Trading Scheme, I would not expect that either. Both were bad policy, and they will be dumped. Emissions count-down to 2013? That is just an interim number...both policies are dust.
But let's earn more about Julia Gillard....I've been living overseas, so I know very little about her. She comes across as a harsh high school disciplinarian teacher at first glance. A harsh face, but let's look at her psychology in more depth.
Andrew Sheldon

Tuesday, June 22, 2010

Is the media biased on the Resource Rent Tax issue?

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Perhaps Kevin Rudd has complained to the media companies that he is not getting enough fair play for his new tax. Maybe a bad tax was never supposed to have been heralded as the start of a new age. Phillip Wen from the Sydney Morning Herald has come out in defense of Kevin Rudd. so let us examine his arguments. Is the media biased in favour of miners? Rudd? Well, I would suggest to you that its hard to be on Rudd's side when you introduce such a sudden, arbitrary, discriminatory tax as the Resource Rent Tax. It is also poorly conceived. But let's challenge the arguments made in this article.

1. Xstrata has exaggerated the impact the tax will have on its operations, with talk of job losses and cancelled projects.
The reality is that a mining company makes money by assessing the feasibility of the project. When a government moves the goal posts in the middle of a game (i.e. After a miner has spent the money, or after a shareholder has bought stock upon certain assumptions), ought they expect the government to protect their rights rather than breach them? Is there a positive side to fascism? Only a deluded moral relativist would argue yes.

2. Xstrata was unbalanced in its disclosure of employee numbers when it closed the Windimurra mine in WA. i.e. It did not disclose the numbers for Windimurra, but not it is disclosing the numbers for its new mine.
I would argue that the mining company is obliged to act in the interests of its shareholders, and to do so in accordance with the law. It was a sad fate for the Windimurra workers. It was a strategic move by Xstrata to buy the Windimurra mine and then close it to support its other mine in Africa (I think?). This is business. If anyone is opposed to that, then an argument needs to be made to change the law. Hopefully it will be a logical argument, unlike the argument made by Rudd....which is based on gross opportunism and extortion. Clearly it is in the interests of Xstrata to re-examine the economics of a project when a government changes the rules. Even if they are bluffing, they are reasonable to use all arguments to discredit the government. It is my opinion that the mining industry is using concrete, pragmatic argument rather than ethical ones because they think that will have greater traction with the voters. I disagree, and I think the strategy can backfire because its money in their pocket. They ought to remember that after Rudd gives them a "super-kiss" he is probably going to give them a "Ruddy tax kick in the balls". That's right...Rudd has ruled out another arbitrary tax on other specific industries....but what's to stop another government, or him taxing all super funds...after everyone has placed all their savings in super...this is what happens with arbitrary don't know where you stand.
I would however argue that Xstrata did not treat Windimurra shareholders badly as "minority interests", but its a cloudy area of law. I challenged this issue at the time. Having acquired Windimurra, the company placed the project on hold. In fairness, it would have pursued the project if there was a great deal of money in it. Strategists could have seen this unfold. It was a good decision for Xstrata shareholders.

3. The Minerals Council of Australia is spending a reported $100 million on an advertising blitz against the tax.
What else can a minority interest group do other than to engage in a media campaign. Rudd is offering a 'welfare-like' carrot to voters in the form of a "super-kiss". It will take a well-funded campaign to overcome the appeal of this unethical tax upon miners and shareholders. Sadly, the nature of our political system provides a poor basis for reconciling political arguments.

4. The notion that the mining industry has used these tactics before to undermine the government's proposed emissions trading scheme, saying it would severely damage the coal mining industry, leading to big projects shutting down.
Quite rightly. The tax would have destroyed the industry. It would have placed the fate in the hands of unproven technology and subjected them to very high capital cost burdens to make the technology green. The biggest problem the mining industry has is the unproven nature of the 'anthropogenic global warming'. The most recent evidence supports the idea that variations in sunspot activity is the cause. There is good correlation between these solar flares and climate change. Satellites launched in 2006 will offer greater certainty in the next few years. The problem is that the 'liberal' media needs to defend its dire media statements about global warming. Their treatment of this issue highlights their lack of objectivity and their lack of scientific and critical thinking skills.

5. Research conducted by the Australian Conservation Foundation and the Australian Climate Justice Program last year found six companies - including Xstrata, Rio Tinto and Woodside Petroleum - made public statements on emissions trading that were not reflected in formal announcements to the stock exchange.
"The regulator did not pursue the findings, saying the companies made their statements at senate hearings, and were therefore political statements made with parliamentary privilege and not made in the course of trade and commerce".
Not only that, but from my experience submitting documents to the parliament, you are not supposed to publicly disclose the info. Why was this argument made? To make it look like the reporter had a story?

6. Xstrata's biggest shareholder is the Swiss commodities supplier Glencore, one of the world's largest privately held companies, infamous for its colourful past. Its founder Marc Rich, was cited in a 2004 CIA report for paying illegal kickbacks to obtain oil from Saddam Hussein's Iraq regime, in breach of United Nations sanctions.
In the interests of fair disclosure...just look at the track record of US foreign policy over the last century and ask yourself whether that is a fair critique. The reality is that companies have a far better track record than governments, which is weird because governments make the rules. Which can be difficult to interpret because, as we know, they are so arbitrary.
It ought also be mentioned that BHP and the Australian Wool Commission were caught up in the same type of scandal....but why would you smear all mining companies for a breach of US foreign policy. Is that the best this 'liberal' journalist can do?

7. The Construction Forestry Mining Energy Union is for the tax so suggests Xstrata is exaggerating claims.
Yep. I'd go to the mining industry for a balanced perspective on mining company ethics. The union movement were of course the extortion experts of the last century, so they love miners. Anyone remember the wharfies dispute in Wollongong.

8. Final point....the journalist concedes "But the concerns in the mining industry are real. It is not in debate that successful miners will take a hit to their profits".
Ask yourself what that does to investors. And the lost profits will be higher as prices rise. All those future 'opportunity losses' will be wiped off the value of mining projects and mining companies today. Is that share to shareholders in mining companies? Shareholders do not invest to lose.

9. Xstrata would favour overseas projects if the tax was implemented. ''Someone like Xstrata.
There is no question that this will happen. There will of course be some appeal to Australia because the infrastructure is already there and its close to Asia. Though there is iron ore in Asia, e.g. Indonesia, PNG, Bangladesh. Some of these countries were believed to offer greater sovereign risk than Australia, however Kevin Rudd has changed that with his arbitrary tax. In fact, it will be interesting to see if Rudd leads a resurgence of fascism around the world. Other governments could follow suit as he has given arbitrary 'fascist' taxation his 'Western government' approval. I don't even think that Obama could get away with that.

10. "Tony Maher says that as with the lobbying against the emissions trading scheme, miners have to be kept accountable for the claims they make. ''It was corporate bullying then; it's corporate bullying now.'' "
Tony is a union its interesting that a journalist would quote him on a point of ethics about bullying or extortion. Geez, hopeless unbalanced media.

Congratulations Philip Wen, you have just won yourself a citation from the Australian Broadcasting complaint is currently being processed. Rest assured, based on previous experience, they come from your side of the political fence. Interesting arguments...pity your smear of Xstrata has nothing to do with 'ethical issues' involved. You seem to share the pragmatic concerns of miners....I wish someone would get to the ethics involved...maybe some of the regulators people studied some ethics. My guess is no.
Andrew Sheldon

Who is affected by Rudd's tax

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I think Kevin Rudd needs to get a better sense for who is affected by his Resource Rent Tax. It is not just a case of certain people carrying an unfair burden, but the arbitrariness of the action. Ought the cost of any administration be shared across the taxpayers? Why is one industry targeted?
Ought we have greater empathy for those less fortunate than us? Ought we care about justice? On this occasion there just happens to be some billionaires affected by Rudd's new tax. Some people actually trust their whole retirement savings in mining companies because commodities are like money. i.e. When the US government debases 'paper' money, tangible commodities rise in price. So mining companies are a great way to hang on to your wealth. This is particularly the case for gold, silver and miners of other precious metals.
This tax actually attacks the 'smart money' who know how to invest. So what hope is there for anyone from 'arbitrary' government if they make decisions like this, which would breach the spirit of the Senate, if that body actually worked in protecting the rights of the minorities.
Perhaps Rudd is gaining some confidence because of the strong iron ore and coal prices. The problem is that they are the Chinese-linked commodities which are vulnerable to the Chinese economy, and in the short term, also vulnerable to a stronger AUD. We have to understand that commodity prices in real terms are falling because of the debasement of currencies around the world.
Andrew Sheldon

Monday, June 21, 2010

Kevin Rudd has no empathy for taxpayers

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One of Australia's richest men has died in a plane crash a few days ago. Ken Talbot was a working class guy who turned bought some pubs into a fortune. By far his greatest legacy was the development of numerous coal mines in Queensland. Until recently he was the major shareholder and CEO of Macarthur Coal. He had amassed a billion fortune from developing coal mines in Queensland. He died in a light plane crash in Cameroon, West Africa.

He was also was in court in relation to kickbacks paid to a Queensland minister. Hardly surprised. Government extortion at a state level as well. Practical people like Talbot will pay in order to do what they love doing. They carry that burden. It gets to a point though where every one has to stop, and to be vigilant. The crap we accept from governments needs to stop.

A successful Australian dies and Kevin Rudd is conspicuously silent. Why? Well its clear. How much empathy can Rudd have for a guy (or his family) when you are busy conjuring up new taxes to impose on people to extort their wealth. Not much! He would look like an utter hypocrite if he extended his condolences wouldn't he?
He avoided that. Foreign Affairs Minister Stephen Smith 'expressed' the political rhetoric. It was and always will be about the money. Government as currently conceived is cynically about money. It is not about protecting people. It is about perpetrators (govt interests) and victims (any low-flying targets). No pun intended. Google is safe for now! At the expense of small business denied access to Google Checkout.
Andrew Sheldon

Rudd selective with the facts

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Kevin Rudd is keen for good press releases. His latest opportunity came with the signing of a number of iron ore mining agreements. Rudd used the opportunity to highlight the fact that the mining tax had not impacted the mining industry.
"Australia and China signed more than $8,8-billion of commercial and mining deals on Monday as a senior Chinese leader urged closer trade ties, in a sign that Australia's mining tax has not deterred investment". [Mining Weekly]
The problem with this interpretation is that China needs iron ore, and in the short term it has to come from Australia, and there is no question that a great deal of it will come from Australia regardless of any imposts Rudd imposes. The problem is that Rudd is encouraging iron ore investments in Indonesia, PNG, maybe even New Zealand (despite its remoteness from China) instead of Australia.
Another problem is that the $8.8 billion in investment, is all oil/gas and iron ore projects, where Australia has a strategic advantage because of tight supplies or location advantage. Basically, this is the problem with this tax. It says that if you identify an opportunity, and the government has the capacity to extort some concession from you, it will do that. It will 'arbitrarily' tax you UNLIKE the rest of Australian industry. Meanwhile Google is paying just 0.1% income tax in Australia because the Australian government has no power to extort Google, because unlike mining, Google has the flexibility to move its operations offshore.
I would also suggest to you that small business in Australia are being denied Google Checkout services in Australia because the Australian government wants to tax Australians through Google Checkout more than it wants to encourage Australian small business. More 'authoritarian' extortion. Fair tax you think? It was always about the money
No tax is fair by definition. Any charge which is involuntarily or does not relate to the value of services rendered is 'arbitrary' taxation, and that is slavery.
Retain some sympathy for miners and investors who have seen wealth destroyed in sectors outside iron ore as well, i.e. coal seam methane, gold, copper, lead, zinc, etc. These commodities entail little in the way of strategic advantage. Investors in mining services are in limbo because they do not know the implications of the tax.
Slowly we slip into 'arbitrary' fascism and unthinking, unprincipled people say nothing. Where will it end. It always ends with killing. First it will be political activists disappearing. Don't expect any international interest, as the same game is occurring in all countries around the world. This is becoming normal. It will end in civil war. The government will make a broader imposition in terms of its implications, and you will think 'enough is enough'. By then you will think where did it start. At what point did I allow my principles to slip away.
Frankly, I would prefer to have some empathy for the rights and interests of people, because I don't want to benefit from parasitism like Kevin Rudd. I will probably benefit from Rudd's actions since I have shares in a PNG iron ore company (MGK.ASX), however its not the point. One has to make a distinction between one's financial interests and one's principles, which ought to relate to human nature, not arbitrary ideas bounced around in Rudd's head, or even parliament, which is about as rational as Rudd. Morality is not a numbers game. The concept of a Senate was never a workable solution if there was no measure to ensure reason was the standard of value.
There is a moral issue here. Kevin STRUDD is a parasite with the most deprave values. Don't wait until the next election to tell him so. Australia cannot wait. Every day this tax is under consideration is another day of lost wealth for Australians, as the stock market slowly grasps the impact of the tax.
Andrew Sheldon

Saturday, June 19, 2010

Governments ought not be quasi-equity partners

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One of the more unsavory elements of Kevin Rudd's Resource Rent Tax is the idea that government will end up with an 'quasi-equity' stake in the mining industry. i.e. The government will bare a financial benefit, but also an obligation. If this fascist conception does not scare you, consider some implications and examples.
1. Government is a public trust, and it assumes money powers without responsibility. Taxpayers will ultimately pay for any mistakes. Governments are notoriously bad at picking winners. More problematic is that this is not a 'stake' or commitment that the government can honour without screwing taxpayers (i.e. slaves to a pretense of voter representation) or once again undermining the sovereign risk of Australia. Simply the proposal by the government to expropriate wealth from miners has discredited the Australian government, and reduced our credit rating. If the government takes the next step and executes it will be worse. If you protect forward 10 years when metal prices go backwards, and the government is dealing with obligations it has assumed under its new 'tax regime', then you can expect it to dishonour the tax AGAIN.
2. Governments have a notoriously bad record of picking winners. Being a mining analyst, I see a great many examples. Collectivism is always the cause. Consider the coal industry in the 1970s. Coal prices were expected to go to $100/tonne. The Colombian government nationalised the company Carbocol S.A. They built a very expensive rail system and port to export15Mtpa of coal. The project was a monumental white elephant, which played a major role in undermining the future administration of the government. Coal prices went the other way, reaching a low of $20/tonne, and they stayed low for over 10 years.
Another example comes from Eastern Europe. Vulcan Resources was doing some exploration work there in the early 2000s. A Soviet geological team developed 14kms of underground development and never produced any gold. Why because it was a state-funded enterprise. This later example is already evident in Australia because the Australian government does not do the basic things well - like regulation of companies.
Regulation in the form of justice (as opposed to market distortion) is the proper function of government. The government ought to be making sure companies are accurately reporting and that CEOs pay consequences for misleading the market. These deceptive practices ought to be punitively dealt with, but ASIC doesn't because it 'does not have the resources'. Analysts are in the best position to report companies doing the wrong thing.
Several examples come to mind:
a. Gleneagle Mining - Shareholders were mislead as to the financial viability of their mine.
b. Matrix Metals - Shareholders were mislead as to the true mining costs, and were even lead to expect a 60% increase in output.
c. Bendigo Mining - Shareholders were fed a rationalised grade prediction model in order to 'keep the dream alive'. The project received hundreds of millions to find gold that will probably not be mined for years.
The mining industry knows these mining projects are duds. They are talked about over beers in the pubs around the country. The information however is not communicated to government. If it was the government would not act, because government wants to 'keep the delusion alive'. Miners know because they closely scrutinise many projects before they take equity. The government in contrast intends to take equity in all projects.

Imagine how frequent these types of deceptive schemes will arise if government is a co-partner. It is not the government's money, so you can be sure it will happen a great deal. I can picture Kevin Rudd with one hand on the wheel of a 50-tonne truck, and the other breaking a bottle of champagne to officially open such mines. It will of course looking great. But such projects will end up as white elephants.
What we have learned from the 1960s is that Japan was able to create a lot of supply by seed funding mines in Australia, Canada and elsewhere. We can expect the same from Chinese enterprises, whether the Chinese state enterprises or steelmills. The Australian government ought not to be carrying the risk. There are factors which are not even on their radar ice ages, and other natural disasters. Natural climate variability...never mind the myth of anthropogenic climate change. Price predictability is notoriously difficult beyond a few years. Add to the fact that most price levels in the current market are exaggerated by government intervention in the market. For example, copper prices rose from 68c in the late 1990s to $4.00/lb in 2008 primarily because of government monetary stimulus in the USA. The same trend for other metal prices. Who knows what will happen when government powers are restrained (as they should be) in future years.
It will ultimately be the taxpayer who pays. I personally think Kevin Rudd developed this policy after going to China. I suggest Kevin Rudd is impressed by China. Being a career bureaucrat, he knows nothing about economics and finance. He looks at China...all the development and the 8-12% growth and he thinks this is what authoritarian government can achieve. In fact, China is growing at these rapid rates, not because of public administration, but in spite of it. The real reasons for Chinese ascension is:
1. Dual economy - Foreign enterprise is offered far better terms than local business. This is why a lot of Chinese domestic investment is channelled through HK and Taiwan, to get state concessions. Foreign direct investment is overstated.
2. Market disequilibrium - Markets are not in equilibrium. The sudden opening up of China in the 1990s allowed the mass migration of millions of Chinese farmers to the city for factory jobs. The mass over-supply of workers for factories was good for foreign investors.
3. Strategic market appeal - China is a huge market with very competitive costs. It was essentially a USA in the making, but without the values of the USA, at least not explicitly, though maybe it will ascend to a level where its respect for individualism in 50 years exceeds the USA. It will probably come only through revolution, with middle class Chinese forced to fight restless and envious rural farmers not getting the same benefits. Might this trend undermine Rudd's forecast for mining or metal prices?
4. Lack of regulation - China is the wild west. There is regulation, but its not as developed or enforced as the West, so it is thus less restrictive. This is a boon for honest and dishonest business people alike. Maybe this is why Chinese people prefer to deal with foreigners. Higher prices and more honest business practices. We have this idea that China is an authoritarian state, but effectively Rudd is more authoritarian than the Chinese premier because he has the 'force of law', whereas in China the level of compliance is far looser, and open to bribes.
Rudd presents a greater threat to liberty than Chairman Mao because he professes to be a champion of freedom. His conception is a distortion...which ought to be apparent after reading this blog and my politics blog. At least Chairman Mao was a consistent practitioner of his philosophy of self-denunciation.....Rudd is a pathetic, inconsistent, pale hypocrite who waited until he had power before he unleashed his true character...or lack of it.
Andrew Sheldon

Wednesday, June 16, 2010

When philanthropy is a dangerous concept

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Money is power right? Well it depends? But if we accept the governments are not debasing it by printing it too quickly, and other people recognising the value of it, then it certainly has power. So what is the impact of giving it away?
Recently some of the world's billionaires got together in the USA to discuss the topic. Bill Gates and Warren Buffett were calling upon the billionaires of the world to give the bulk of their wealth to charity. There are of course good reasons for them to do this and associated benefits:
1. You cannot take it to the grave with you.
2. You can give it to your children, but in so doing you might be denying the value of developing a sense of efficacy for your children. The same is true for any benefactor.
3. There are people whose basic needs are not being met
4. Better having successful business people giving than politicians taking.

The problem I have with this style of promotion is:
1. It tends to make a virtue out of giving - not of creating. In that respect I think we lose sight of the gift of capitalism and the underlying value of self-interest. These people I think are looking for some sense of 'social pride' which I think communicates a dangerous message.
2. These business people were good at some commercial endeavour. Might it be possible that when it comes to social policy, they are really bad. I just look at how governments deal with issues of morality, public policy, and the idea of them channelling their money into welfare is really dangerous, given the prospect of inefficient investment. It is scarier than emissions trading schemes and other community minded projects. I need only refer to my Parenting blog, where I commented on Bill Gates ideas of parenting. Do you want him bestowing mis-education upon the poor? If the choice is 'instead of government', maybe its not so bad, but I caution. You tend to expect a bureaucrat to be should also expect the same of business leaders. After all, its common for a business person who ventures into a new industry to lose money.
The problem with welfare is that there is no 'profit-loss' when you stuff up. There is only the greater incidence of crime when Bill Gates teaches us that wealth is not created, it grows on the trees outside the Gates Foundation for Bad Advice.
There is a problem with this program on the level of might actually drive us towards fascism. Always count on unthinking business people to do that. How pray tell? Well, every collectivist tyranny in history was lined with good intentions. In this scheme there is the risk that these business leaders will make a virtue out of generosity....which is fine if generosity is something you do from a position of efficacy and material surplus. But if they are saying 'selfishness is bad', we need to give more....then I say these 'captains of industry' are ethically deprave....that they do not understand their own motivations. The inherent problem is the social ethic which considers production selfish, but philanthropy as 'virtuous'.
I thought the decision of these two men to give their money a logical thing to do at the end of their lives. If they make a virtue of it, they will give me reason to repudiate that praise because they will have done far greater damage to our society. Wealth is created by self-interest, not renouncing your mind or material wealth for the sake of others. If we make a virtue out of giving, we will end up extorting wealth from people for the sake of some misguided wealth. Who am I kidding - we already are!
More problematic however when business does it because they would otherwise be creating more wealth, sustaining the growth in productive capacity which is the engine of the US and other Western countries. My concern is that Bill and Warren will flood the UD V6 engine with crappy fuel.
Andrew Sheldon

Hogan's moral rights swept aside

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The successful prosecution of the Australian film icon Paul Hogan and partner 'Strop' Cornell highlights the dismal state of justice in the world. From the facts presented in the media it appears that Hogan was prosecuted on the basis of tax evasion. Hogan maintains that he did not know the basis of his tax affairs because he did not personally deal with them. i.e. He had a plethora of accountants, etc.
As far as I am concerned I do not expect honest responses from 'tax evaders' on such matters. When the arbitrary force of government intends to impose unreasonable burdens upon you, I think you have no other way to respond than with lies. Fear is the proper response when reason is not the standard of value. If the mob come to your door to kill your daughter, you do not respond 'Third door on the right'. You tell then anything to get rid of them.
So what is the standard of value? Well it is of course its a pretense....based on the premise of the 'common good'. The common good has however been defined by the parliament, and we all know what credible advocates of morality they are. Politicians do not lie to protect values they have 'earned' (unlike Hogan), but in order to evade responsibility and accountability. I am quite certain no politician has earned the right to extort wealth from Australians. The political system is a game we always lose because it comprises two 'non-combatants'. i.e. Liberal-NP and Labor. Not long after federation the two parliament coalesced into two parties. Contrary to the policy rhetoric, where they espouse a belief in competition, these two parties are intent on destroying all prospects for competition where it suits them. i.e. Even poor prospects like Pauline Hanson. You might ask why politicians, who are supposed to be 'moral agents', can justify such actions. The reason is simply they are not what they are supposed to be. Why would you accept the system? Even if you concede we need government? Why would you not stand in defense of those wronged by 'the system'? Why would you legitimatise that system. I don't. I don't vote, and I will continue to challenge the legitimacy of this system. The government publishes the number of registered votes who do not vote despite it 'being compulsory to voluntarily select between two non-combatants'. That's right, you are forced to make a choice. i.e. You are forced to give legitimacy to a system which is illegitimate. Why? To preserve the status quo, to preserve the entrenched interests of the two political parties. It does not publish the number of people who are not registered. Don't legitimatise the system. A better vote is non-participation. Better still would be to actually empathise with true victims of injustice (in accordance to some objective standard), as opposed to pretenses.
I think the problem with Paul Hogan's case is that he argued that he did not know what was happening, when in fact he should have repudiated the moral foundation of the political system. In fairness to him, the judiciary is as much a creature of pretense as any other government institution. It was perhaps a big ask for an actor & producer to identify the true nature of our political system, and he has so much more to lose financially, but you would think legal counsel ought to be able to provide such advice. Perhaps moral conviction would be stronger if more in the public displayed some. It starts with a question for the tax office:

"By what moral right do you purport to expropriate the earned wealth of others".
I have yet to hear any rational defense to this question. The 'betterment of society', the 'common good' or the 'good of society' are of course the standard answers. For logicians however, this response is not very compelling. What constitutes the common good?

When we adopt the 'common good' as a standard of value, we become a nation of perpetrators and victims. We hate those who have money, and we lust after with a sense of entitlement for that which we did not earn. In the process we ignore the reasons why some fail and some succeed, and console ourselves that a bad system has preserved 'stability' at the sake of a few, but in the process we have denied ourselves something much greater - the opportunity to achieve greatness. We have also disparaged those who have succeeded in deference to our own self-indulgence. Ask yourself if individualism or fascism is advanced by such a system.

The tax office of course comprises a group of parasites who will never amount to anything - not even their parents estimates. They are the unthinking 'plodders' who depend upon the wealth and productivity of others. They are not just middlemen - but middlemen who create nothing, add nothing. We cannot even attribute an efficiency to them because the loopholes in their systems have made the tax system more complex than it need be...except it needs to be. An arbitrary tax demands an arbitrary justification, which compels people to find loopholes, which demands counter-loopholes. So you need 5 specialised accountants rather than your own common sense. This is the 'efficiency' that the tax office has extorted upon the population. It happens because they have this 'arbitrary power'.
That is not the extent of the implausibility of the 'common good' concept. In these pages I develop additional arguments for why the current political system is a variant of fascism.
Andrew Sheldon

Tuesday, June 15, 2010

Dr Ross Garnaut's views on the Resource Rent Tax

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Judging by the paper released by Professor Ross Garnaut the Rudd government did not consult widely before it adopted its proposal for a Resource Rent Tax on all minerals. Garnaut makes the argument that:

"If the Resource Super Profits Tax had been announced on May 2, 1990, the community would have been able to put it in that context". (p.1)
The reality is that the community should not be deciding taxation policy because it established an uncritical basis for policy development. These are intellectual issues and they should be determined by intellectuals. Reason ought to be the standard, as opposed to the government imposing its will upon a minority (i.e. miners), using the carrot of some concession for retirees. The broader interest of the 'common good' does not legitimatise taxes on miners. Taxes ought to be fair.... meaning they ought to apply to users of the services finances by the taxes. The role of the Senate was to protect the interests of minorities. The concept has been quashed by amalgamation of the parliament into a two-party duopoly.

"The Great Crash raises fundamental questions about the capacity of contemporary Governments of democratic capitalist countries to implement policies in the public interest that are contested by powerful private interests". (p.2)
Interesting in raising the issue of the financial crisis in the USA and Europe, he is totally obtuse on the cause of the financial troubles in the USA. Does he (like many) attribute it to bankers, or does he acknowledge the role of governments in enabling the bankers; most particularly the easy monetary policy of the Federal Reserve. Yet he seems to attribute the problem to meddling private interests. Are not politicians supposed to be the agents of morality given that they have a monopoly on the use of force. A capacity that ought to preclude the 'initiation' of force.

"The governments of democratic capitalist economies “face a constant war against almost unlimited financial demands on the state by citizens and lobby groups...”.
This strikes me as a total misdirection on his part since it was the government who initiated the tax on mining without any consultation. Not that consultation would help because ultimately coercion is unethical whether a thief gives you a warning or not.

"The essential reason why Australia is faring better is that we went through a couple of decades in which our policy-making processes were opened up for a while to influence from an informed and independent centre of the polity. This allowed the building of support for reform in the national interest, against the private interests that received benefits from the unreformed system".
Nonsense, we are doing better because the Liberals curtailed government spending. The momentum of the economy was buoyed by the minerals boom from 2001-2008. Gaunaut leaves no ambiguity about where he stands. He is a complete collectivist, as one would expect of a bureaucrat and academic. He states:

"I am saying that the Australian Government has taken a position on the basis of advice of people of knowledge and standing, that asserts some hard propositions about the national interest, at the expense of some private interests that exercise considerable influence in our polity". (p.3)
The problem with this is that the public interest ought to be considered in a framework of rights. If society gains at the expense of minority elements in the community, then we do irreparable harm to the interests of all people, both in terms of their economic interest and their psyche. I would suggest to you that publicly funded bureaucrats have no interest in such issues because a concept of rights is the antithesis of their publicly-funded existence. So for Garnaut any action against minorities is justified, even if it breaches the interests of certain interests. The problem of course is that at some point in our lives we all constitute a minority, whether its in school, the corporate work, as parents, taxpayers or foreigners abroad. Are we not inclined to expect a more intelligible, principled framework, so we know where we stand. I think it matters little whether we have 1 minutes notice or 1 year. The majority or those who represent it, ought to have no pecuniary interest in the property of others, unless there is a question of protection of counter party rights...lest we become a nation of perpetrators and victims, always picking off the weakest minority group who has no natural advantage. I have already mentioned that Google pays just 0.1% income tax in Australia, by shifting its revenues offshore to Ireland. Garnaut states:
"Australia is a country that must make its way on its own, outside the monetary and trade and
economic blocs of the North Atlantic, in a democratic capitalist world in crisis". (p.3)
This is an increasingly unrealistic expectation when you are talking about romantic, commercial and political relationships which are increasingly global. What is required is not political isolation, but engagement on the basis of some intelligible standard, i.e. Where reason is the standard of value....where reasons rather than 'numbers' or kickbacks are the standard of value. The world is in crisis precisely because of Garnaut's style of moral relativism.

"What is important is that this time, on this subject, we demonstrate that we can still discuss policy proposals with clarity and rigour, listening to interested parties, with their words having influence according to their content, and not according to the cruder instruments of political influence that accompany them".
This quote highlights Garnaut's economic ignorance. How can we discuss policies based on coercion without recognising the influence of arbitrary policy on private interests. Investors have already lost money. The present market capitalisation of a mining stock is a function of its future (taxable) earnings. Any question of increasing those taxes is going to lead to a destruction of wealth. Why should any politician or bureaucrat have that power? This is a particular concern when they seemingly are indifferent to its impact. He appears completely oblivious to the sovereign risk issue as well. Clearly he sees any private interest as antagonistic to his 'common good', whilst any pursuit of the common good is noble irrespective of its impact or underlying motivations.
He then makes a comparison between the removal of subsidies from the car industry under the Button Car Plan with the current predicament. Clearly he misses the principle involved; that is that industry in general ought not to support an unsustainable and dependent industry. Now, the mining industry ought not to be supporting retirees. If we want to raise super provisions, we need only to reduce the market distortions by government in Australia (i.e. First home grants scheme) and abroad (US Fed monetary policy) in order to reduce their intervention in the economy. Any investor in the market takes a huge gamble these days trying to read the arbitrary whim of government and central banks. Supply & demand no longer drives the economy. The prospect of the Fed flooding or sterilising money supply is the sole distortive measure.

"An accepted ideal in any system of taxation is that it should as far as possible be “neutral”. The ideal of neutrality is that, without good reason, the tax should not alter decisions on investment, production or trade". (p.4)
This would have been a nice ideal if it was established before any tax was even adopted. We might ask the legitimacy of any tax if this proposition is to hold true. The reality is that - if you accept arbitrary taxation - it is a nonsensical proposition because change intent on achieving a "neutral outcome" could only result in a more complicated tax system. Unsurprisingly, this is exactly what we have. Its great for the bureaucrats. The practical implication however is that taxation is readily loopholed by corporations trying to reduce tax, which precipitates amendments to tax legislation, which is intent upon correcting old mistakes, but it only succeeds in creating more flaws in an already bad system. Of course capitalists are blamed, but no one reflects on the immorality of the system.
He then launches into a defense of his proposition by considering the economic rent. The problem with such economic analysis is that it is divorced from context. Why is economists so bad at predicting market behaviour? Its because economists don't understand human behaviour, so they look at some aspect of markets, and drop certain pertinent considerations. Academia is not served by their isolation from the real world. The idea of collecting a salary from the government irrespective of the 'grounding' of your research is a solid basis for economic rationalism. We see the same in all the humanities. We would not see it in medicine or engineering. So expect academics to develop animal rights which are based on some conception of utilitarianism and 'empathetic (human-like) animals', climate change models based on uncritical 'tragic' computer modelling that fails to consider the impact of the sun. Academics were not passive responders to these issues, they actually drove these issues with the help of politicians and the media.
He argues that economic rent as revenue has a lower economic costs than other forms of taxation. That might be true from a relativist perspective, however its hard to accept if its part of an arbitrary taxation system which is destined to result in greater levels of taxation. A simple low-percentage transaction tax would be far cheaper. It is however not the issue, since public administration hardly provides much incentive to reduce the administrative cost of taxation. It is simply too easy to increase tax rather than change the system.

He adds that "Many Australians would add that the recovery of mineral rent from the companies to which rights to mine have been allocated for the community represents a move to more equitable distribution of income, in a way that has lower economic costs than other measures to promote distributional equity". (p.6)
This is not a reasonable argument. You cannot leave open the moral question of whether 'common good' questions are legitimate without analysing them. I would argue that:
1. The idea of recovering rent from miners is morally benign if it is small and the tax is known before the mining company commits to a project area, i.e. Exploration title. Any time thereafter is too late because the market will have attached a value to those project interests. Thereafter shareholders suffer an unfair loss from the application of the tax.
2. Where is the logic that says that income redistribution is a desirable quality. Studies of psychology will establish that ethical redistribution models based on coercion are destined to fail because they establish a moral legitimacy to parasitism, or a culture of risk aversion, and entitlement. Economists will not consider those factors.

Garnaut on page 6 discusses the 6 forms of resource rent tax. In so far as there is no moral requirement that such taxes relate to use of resources which government has any claim to, or to the extent that they do not have any relation to any service voluntarily used by a mining company, any such rent is illegitimate, and ought not be levied. Perhaps the most compelling reason for economic rent comes from cost recovery for any work performed by governments. i.e. Geological investigations by the state department of mines. This ought however to be a state tax, and it ought to be based on user pays principles. Any use of mineral rents to fund welfare and government are really schemes to avoid accountability by government.
There is some appeal to the idea of "competitive bidding for a fixed fee for leases", however I would argue that such a policy is fraught with moral relativism since it is probable that governments around the world will align their revenue objectives so that there is a neutral impact on miners, so instead the burden would be carried by consumers of end-products.

"A disadvantage of the Brown Tax (BT) is that it entails the greatest risk to the government". (p.9)
The implication is that the resource rent tax is a burden upon government. There is the prospect that government is taking a 'market or commercial' position, and the implication setting up taxpayers for further claims when governments get it wrong by erroneously forecasting future prices, and thus expected revenues. Another concern is the difficulty of understanding the tax; particularly for foreign investors. Smaller funds will simply avoid Australia because of their lack of resources for understanding the 'unique' Australian market. It could be argued that small funds will outsource funds managers to local fund managers; but others will simply go to familiar markets like the USA and Canada.
This paper needs further consideration with respect to the mechanisms of the tax, however I will stop here, so this post is confined to the ethical considerations.

*IMG source. Wikipedia
Andrew Sheldon

Wesfarmers joins RRT opposition

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Wesfarmers has joined the fight against the government's Resource Rent Tax. It is in the process of mailing a letter repudiating the tax on the basis that it will undermine the cashflows for which it made the investments, and that this would result in a significant fall in earnings. There is of course nothing wrong with the argument, though it could be more comprehensively argued. The good news is that Wesfarmers support broadens the number of shareholders who will be exposed to the views of mining companies; though I am not convinced their views are so well argued. See article in the SMH Online.

The reality is that Rudd was always taking on a very powerful industry, and he had not really thought out the implications of his tax. He made the mistake of listening uncritically to his bureaucrats. It seems that even Dr Gaunaut is distancing himself from the tax. See this lecture. I want to deal specifically with his arguments in my next post. Basically I will go through the whole paper and identify all the apparent contradictions.
Andrew Sheldon
Resource Rent Tax Australia
Applied Critical Thinking |

Strategy for mining industry - part 2

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The first issue that miners need to do is to identify who is on their side, and who is simply going to contaminate their objectives, whether in the short or long run. For this reason I am identifying a number of additional strategies for the miners.

1. Divide into 'manager' and 'owner' CEOs because your political interests are very different. Owners are in the same position as shareholders. CEOs of large corporations like BHP and Rio Tinto are essentially 'politicians', or managers with little interest in the interests of shareholders. If they fail to discredit the tax, any option incentive will be repriced I suspect. i.e. force majeure provisions in their employment contracts.

2. Adopt principled arguments as opposed to relying on pragmatic 'good of society' type arguments which really only play into the hands of politicians and the welfare lobby. The argument ought to focus on the importance of property rights to preserve personal freedom, but actually also to enable a guilt-free happiness, as opposed to the repressed lives most Australians are living, which I expose on my blogs. Highlighting philosophical arguments will avoid cynicism, but they need to be well-argued.

3. Hire about ten highly skilled creative filipinos to do emotion and thought provoking online campaigns which are capable of being passed around like on online social network channels like Facebook, You Tube. e.g. Rudd focused, mining tax focused, appeal to justice, highlight the problems in the justice system. e.g. A short film, a documentary on RRT, jingle, ebook for distribution on political angle, but also one focused on RRT. A Comedy - caricature

4. Branding strategy - bumper stickers for cars saying 'No mining tax', and give it a distinctive colour like bright blue. Offer free to people in shopping malls.

5. Andrew Forrest should read my open letter to the Governor General, then go visit her. One has to acknowledge however that the appointee was chosen by the PM, so how's that for independence. Perhaps she has her own mind. :) Only one way to find out.

6. Dedicated website for info. Use share registry info to educate all mining industry shareholders about this tax. All arguments for & against the tax ought to be placed on this site. Also place full page advertisements in the newspapers. Do this also in London, as its a centre of mining finance.

7. Provide a free 1800 number with recorded message of the problems with this tax, and details on how they can get more information. e.g. Mail out for elderly people, or emails for the young. Philippines call centre is useful for this.

8. Attacking government policy on both sides - The ineffectiveness of Senate, the amalgamation of politicians into a two-party duopoly, the lack of effectiveness of the democratic system based on representation, where no 'real' representation is really possible. Its an ill-considered myth which leads to psychological repression.
Andrew Sheldon

Monday, June 14, 2010

Oppose the Resource Rent Tax

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There are many issues on which I don't agree with the Liberal Party, and the same can be said for Michael Darby (Christian); however we are both opposed to bigger government, and most particularly stupid policy like this Resource Rent Tax. If you would like to register your opposition, you can do so on Facebook.
Andrew Sheldon

Rudd to make concessions

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There is a suggestion that Kevin Rudd is about to make concessions to miners over the Resource Rent Tax. The reality is that Rudd's leadership is in jeopardy, regardless of whether he gives in on the Resource Rent Tax (RRT) or not. There is probably enormous appeal in appointing Julliard Gillard, the Deputy PM. I forget her exact name...but she has the punitive look of a school teacher.
She will be appealing for women. I suspect the Labor Party will want to spring her on the Australian electorate at just the right time. i.e. Not so soon that she can cause embarrassment, but not too late that people will be suspicious of her capacities. The question is - has she been tested?
Ultimately representative democracy is a farce, and you will get another bad representative of your political interests.
Anyway, what concessions might we expect from Rudd? I want to make the following points:
1. Rudd should not use taxpayers money to compensate miners for any scheme it adopts. There is no justification for denying rights for one group, and then compensating them with money extorted from taxpayers in general.
2. Rudd should acknowledge the wealth realised or created by miners, whether through acquisition, exploration or retention of mining rights. No mining company ought to be worse off because of any changes it makes.

At this point I want to challenge the idea that governments should be able to assign, own or grant mineral rights to miners on behalf of the people. I see no problem with this conception if the role of the state is to facilitate development of infrastructure, or other facilities which preserve and fund the administration of mineral resources. The idea that government should use mineral resource taxes or 'rent' for welfare is abhorrent. The problem with it is that it actually is a form of extortion. The practice does not become ok even if government gives notice because:
1. Governments ought not to be supporting people with welfare, as they are actually modelling unhealthy life strategies of dependency, reliance on others and parasitism.
2. Governments will quickly use the rationalism that miners have a choice to corner the market, in the same way that MPs created the illusion that we have a choice by amalgamating into two parties. Don't you think we would have more choice if parties did not exist.

There is nothing wrong with the notion of public ownership of long as any money raised is distributed on a 'user pays' principle. I acknowledge that a lot of the wealth realised by people like Hancock Prospecting was probably only realised by them because of nepotism, incompetence of others, and that they hardly had to do any exploration to realise such huge wealth. But that wealth generation was realised under a system they did not design. Having realised it, the government should not be able to reclaim it....under the rationalisation that they are going to help Australians. Rationalisation. Its the same extortion that Hitler would have used. i.e. extort from a group for the benefit of the collective.

I suggest that any public funds might legitimately be used for funding defense, but the approach to the issue ought to be well-conceived. There ought to be no impact on existing wealth owners. i.e. Perhaps any tax would be recouped only after the share price of a company recovers to its previous levels at which the tax was applied. The problem with that I guess is that you place a limit over the share price, so it actually never gets there, until some shareholders take a long term view. That takes time. Not an easy issue to resolve. Why not just drop the whole idea. I'd be more inclined to reform the whole concept behind the existing tax.
Andrew Sheldon

Friday, June 11, 2010

The anatomy of a tax cheat

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First we need to dispense with the question - What is a tax cheat? Common practice is to define a 'tax cheat' as a person who does not pay their tax. In fact this is an unreasonable 'smear' definition since most people minimise, avoid/evade taxes because on some level they are against them, whether they don't support either the concept of taxation, the methodology with which it is collected, the efficiency of its distribution or the underlying premise that their lives ought to be subordinated to the collective will. No choice you think? That is a different posting.
There are a significant number of people who don't believe there is a legitimate reasons for the imposition of taxation. They ought not to enslave people to achieve their values. In a democracy, we can consider this to be 'the tyranny of the majority'. Really it makes very little difference whether a tyranny arises from a minority or majority, coercion is not the basis for resolving conflicts. i.e. It is the origin of conflict - a lack of respect for the interests of others. It arises due to desperation for survival, a lack of empathy or self-respect, that one would undermine another's rights or values in order to satisfy some personal pretence for legitimacy or validation.
In the following dialogue I will demonstrate an example of a person who lacks self-respect. The forum conversation starts with an American who is interested in migrating to Australia. I weigh in with some critical feedback. My statements are in blue, the counter-parties are in red (for communists).
"Australia has the same fascist politics as America, in fact we are worse. But its a nice place to be coerced, abused and to pretend you have political freedom. Some people go to the beach to quash their anxiety, but because of the universal need to work, most simply repress any feeling of anxiety, and engage in unthinking love and social discourse.
Enjoy your stay. Let me save your time. NZ is worse. There is no escape, so I guess you're one of the suckers who is not going to change the system, given that you're a 'runner', so I guess you are a repressor".
[In fact he might not be a repressor. Given that he is leaving, he might simply not have the intellect or the time to identify the nature of the problem in the USA, or to appreciate that Australia is probably as bad].

A different forum poster weighs into the a new contributor:

"You poor repressed thing you. I'll be sure to dodge the fascist death squads when I go to the shop. And you can be sure that the next time I feel some anxiety....I'll go to the beach".
You missed the point because you don't think. Please explain if you have rights why PM Rudd has the power to apply a new arbitrary tax on the mining industry, which has already cost investors in mining assets dearly. No warning. Perhaps you misunderstand the actual nature of fascism...
1. Initiation of force - wrong whether by government or private persons
2. Arbitrary rule or action - wrong because government has the moral sanction of force

You're decision to move to a beach is have a choice between immersing yourself in the water to wake yourself up, or burying your head in the sand.
Another characteristic feature of fascist regimes of a concrete nature since you are poorly versed with ideas is the use of price controls. The First Home Buyers Grant was such a scheme. Now you say...what about all those people who cannot afford homes? Ask yourself why homes are so expensive...because land development and sale is arbitrarily regulated by government. i.e. One of the least populated countries in the world prevents you from buying subdivided land. Why? To keep taxes high since land taxes are based on the value of property, which is kept artificially high by such restrictions.
PS: I suggest you look up the meaning of repression. By drawing attention to an issue tends to preclude me from being a repressor [....unless you can show I am a rationalising].

"That's the silliest thing I've read for a while, are you confusing Australia with Austria?"
Really? You are a classic case of repression. You say things are silly, but you present no argument. Convey to me please my contradiction. Please point me towards your beacon of freedom in Australia....perhaps the unfairest tax system in the world? Miners pay 54% because they can't escape persecution, meanwhile Google pays 0.1% in Australia, so they can pay 10% in Ireland.
Arbitrary rule. Persecution of those who pay the most because the federal government cannot catch the others. What of the property owners in Parramatta, who had their property expropriated by the NSW Labor state government so you could have a nice facade at the train station.
Please enlighten me. Maybe you ought to start by defining what you consider freedom.

"You have a very nice way of distorting the real meaning of fascism with your poorly driven semantics. By your example, there is no real thing as freedom".
Actually it is the conventional definitions which are very poor. They are poor because they are concrete-bound. They fail to convey the nature of fascism. Why? Because most people don't understand the nature of fascism...which is why we are destined to drift towards it AGAIN! I could use a better (more fundamental) word like 'collectivism', but it entails no value judgement or association with fascism, which is ultimately considered the cause of the problem. The problem is people don't make the abstract connection, so I use the world fascism.
Please define freedom for me. There are two basic definitions:
1. Rights which are an imposition upon others rights, e.g. Your right to an education which is an obligation on others to teach and finance it.
2. Rights as a protection from [the initiation of] impositions or coercion.
Clearly I support the latter. The former is a contradiction. Nothing semantic about that. I'm still waiting for an answer to my previous arguments.

"Oh how beautiful, someone who still believes that there are such rights which protect us from coercion or impositions. The only way to enforce those rights is through impositions and coercions, so it is just as coercive as the former. You call Australia fascist whilst missing the irony that you have the ability to do so".
I believe I am arguing that there are no such rights, but there should be, because the alternative is some degree of fascism or 'collectivism'. Any tolerance breaches a principle which enables only more.
The reason we live in a fascist society is because under 'representative' democracy the values of a single person, or non-substantive minority do not matter. The government therefore has no reason to listen to me because the media are a pack of liberals who don't. Even if by some miracle I was published, I would be discredited, misquoted or smeared as an irrelevancy. And I would be by the intellectual values of contemporary society. I would be in the minority. That is fascism - 'the tyranny of the majority'. The system does not work. The Senate is not working. The High Court seldom works, and too late.
In fairness to you I could have been clearer. By 'rights as protection', I mean that force should only be used by government as a defense measure. They ought not to initiate force. This was my original argument. If you want to get more fundamental. I am saying that values ought not to be gained by force. i.e. A person who protects their wealth does not seek to gain from others by force or fraud...the thief does.

Not true. The only way to take away all forms of governmental coercion is anarchy, but that just leads the way to individual coercion, which is far worse.
I did not suggest taking away all forms of coercion. I am saying that the only morally legitimate role of government is the protection of legitimate rights. Of course I support police, common law, courts, a military force, and even the instruments for regulating markets, so long as their role is protection, and not violations of rights, i.e. distortions of markets, which lead us to the current recession.
The logic of your point would be true, if I was arguing government ought to have no coercive powers, but I did not make a case for anarchy.
Think about it. Would you allow someone to take your kid without due process/reason/objective legislation (i.e. court determination).

But you argued that the government was fascist because it had coercive powers. You can't then say that the government is allowed some coercive powers without accepting the fact that that too would be a form of fascism, by your earlier argument. And then, you also have the argument of what constitutes a 'legitimate right', since for all people, their opinions differ on the matter.
Actually I argued above that government arbitrarily initiates use of force. That is the basis of fascism. Actually I can argue that...if I can base it on more fundamental values, i.e. A Theory of Values. I gave you a snippet of that. Fortunately, you are arguing towards fundamentals. You allude to the fact that there needs to be some sense of objective truth. Which I believe. Everyone at some level does, which is why they accept that science has some legitimacy. It is also why they don't walk in front of speeding cars.

I disagree that it is an arbitrary use of force. Our government basis its laws and regulations on the desires of the majority of its constituents. It's the basis of the Westminster system. You may argue that it would be a 'tyranny of the majority' but that is merely hyperbole, because if it were a tyranny, who is being terrorised?
I am not suggesting that all govt coercion is arbitrary, just some of it. Voluntarism or negotiation are important elements of accountability, even if they are the last measure through the court. The legislative process was created I believe with the expectation that it would achieve reason as the standard of value, but there was never any assurance or protection that it would. Implicitly the High Court, which is implicitly supposed to hold reason as the standard, gives arbitrary statutory law greater standing (than Common Law) based on the argument that its the democratic desire of people. Really people don't know, or reflect on such issues.
Why is democracy based on coercion? Because it does not seek to reconcile differences of opinion. Instead politicians make concessions. e.g. Senator Haraldine takes a kickback for Tasmania in exchange for Telstra privatisation.
The majority is almost almost destined to be wrong because they are passively represented by non-analytical people, who seek 'numbers', not principles based on fact. Of course they cannot avoid the most self-evident concepts, but they are not judicious in their scrutiny or analysis.
You think its not tyranny because you concede. You accepts its outcomes. But on some level everyone is frustrated with government; its just that few people choose to understand why. The reason is that they have no reason to believe they can make a choice. The tyranny arises because you have no effective choice about that. i.e. If I decide the tax system is immoral, and I choose to renounce my support by not paying. There is no negotiation where reason is the standard of value. I go to court, and the judge says 'the law is....'. I argue points of law. He decides the will of the majority is more important (i.e. statutory law), so my fate, and the fate of any individual is subject to the 'tyranny of the majority', irrespective of the validity of my arguments. Maybe he gives me a soft sentence, as is customary in cases where the law is considered outdated. There is the prospect of course that the judge might take an interest in my whole philosophical treatise if he hates the legislators, but there is a dim prospect of him investing the time. Its too much of a stretch. The flaw goes back to 1100AD, so the Westminster system has little standing with me.

The only other option is to base actions of the will of the minority but then I would argue that enforcing the status quo on the majority is just as much the basis fascism.
This is a false alternative. Your choice is not simply between being a perpetrator and a victim. There is a choice of being a trader, the same basis upon which you participate in voluntary agreements, i.e. By way of contract if specific and careful protection is required, but more importantly, a system where reason is the standard of value. Democracy is only legitimate if its consensus based (not representation) because reason must be the standard of value. Whose reason? Everyone's....with objective reality the final arbiter. Just like for science and the court system.

There needs to be a healthy mix of objective views but the majority of beliefs tend to be subjective, for example, one's belief on abortion is subjective, one's belief on economic is subjective and the fact is that there are no objective truths when it comes down to those situations, there is ONLY opinion. Most 'truths' as it were, tend only to be a basis, not definite.
I agree, most people are subjective, but what do you expect when:
1. Objectivity would cause you moral conflict, manifesting in anxiety/anger or repression/cynicism.
2. Government is the highest level of organisation. If reason is not the standard of value, it conveys a certain 'impracticality' to 'being real' and the practicality to faking it. Of course society as a whole cannot fake reality, as it confronts it in ways like reduced productivity, slower growth, financial crises, etc. We are forced to wake up at some point. It can take generations, e.g. Sweden. It will be the same for Brunei and Norway when they run out of oil & gas. The problem is people accept democracy because we were born into it. People don't trust a new conception. Galileo was killed for his efforts.
3. Rationality alienates you from people in society. Most people by accepting 'subjectivity' are undermining their cognitive development, and thus their respect for facts, and in the process diminishing their self-esteem. They can impress friends by a relative standard, but it does not 'mean' the same. They will therefore shoot the messenger or whistle blower who holds truth above perceptions.

If you analysed the issue of abortion and economic theory, you would find objectivity. You don't think there are patterns of behaviour to those issues. I don't want to deal with these specifics because that it going backwards. I'm trying to break you down to your basic philosophical premises. We started with politics, then ethics, then epistemology, now we are discussing the most fundamental values (metaphysics) - the nature of reality - objective or subjective. I kind of have you 'caged' and you want to jump from the 'metaphysical' bath water into the 'political' sea. You can do that...if you want to choose those philosophical set of implications.
You can explore these issues at my blog I am a writer. My blogs are poorly developed argument because they are unedited, but I deal with a plethora of issues in the media.

This issue seems to have winded up. Credit to the guy for his 'relative' honesty. Most people would not debate me to this level of philosophy. They would either me smearing, or more commonly simply walking off whilst cursing me. Occasionally people threaten to beat me up. :)
Andrew Sheldon

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