Resource Rent Tax Australia | Tax Abuse | Carbon Tax: Burden of taxation

Monday, June 21, 2010

Rudd selective with the facts

Share |

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.

------------------------------------

Author

Andrew Sheldon

Saturday, June 19, 2010

Governments ought not be quasi-equity partners

Share |

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 screen....like 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.

------------------------------------

Author

Andrew Sheldon

Wednesday, June 16, 2010

Hogan's moral rights swept aside

Share |

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.

------------------------------------

Author

Andrew Sheldon

Monday, June 14, 2010

Rudd to make concessions

Share |

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 resources...so 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.

------------------------------------

Author

Andrew Sheldon

Friday, June 11, 2010

Replies to common misconceptions about RRT

Share |

This blog post is intended to respond to some of the misconceptions I have seen with respect to the proposed Resource Rent Tax.

"Mining creates the two speed economy, heating up the Queensland and Western Australian economies while leaving New South Wales, South Australia, and Tasmania out in the cold. This presents an impossible choice to the RBA of either tightening monetary policy and depressing NSW or loosening it and allowing QLD and WA to boom, along with the inflation and bubble problems that booms entail. This is exacerbated by the inherently volatile nature of the resources industry, where prices can soar during times of high global growth and plummet during slumps, leading to structural unemployment. But how do we prevent these mining booms from making a bubble in WA without exacerbating the unemployment in rough times? This is where the beauty of a super-profits tax comes in. The tax only kicks in during the booms, and leaves the industry alone when it’s down. This is fondly referred to by economists as an “automatic stabilizer”.

This is flawed reasoning….a blatant rationalisation. Higher prices for plant, labour and equipment to service the mining sector reflects excess demand, as opposed to inflation, which reflects a relative increase in money supply. Higher prices are needed to justify new capacity since China, India, Brazil and Russia among others were growing so quickly.

The challenges of Australia's East Coast are in fact a blow-over from the property market traumas, which has more to do with the VERY easy monetary policy by Liberals & Labor, plus the distortive First Home Buyers Grant and artificial escalation of land prices through zoning restrictions.

The best regulation of the Australian economy comes by way of the currency. If imports exceed exports the AUD falls. Commodity prices are denominated in USD, so there is a ‘natural balance’. The implication is that a super-tax is not needed for balancing the economy. In addition, its not the role of governments to regulate mine supply since they are not market participants. This tax proposal highlights their lack of understanding.

So the choice is being an extortionist or parasite on or over mining…I’d sooner advocates eat their own carcass.

"The mining sector also has a negative impact on other export industries. Mining has a significant effect on the AUD exchange rate, making it harder for our agricultural and manufacturing sectors to compete internationally. As these other sectors shrink, we risk becoming dependent on mining, an inherently temporary industry, as our only export industry".

This is nonsense. Food prices are just as volatile as minerals. The implication of this argument is that we should all retire, allow our currency to collapse so farmers can have an easy time. Mineral prices are volatile because of historically poor price discovery. Markets are getting better at forecasting future prices & responding to demand. We need to remember that high prices are needed to foster new capacity...in fact over-capacity is good because it results in development of stand-by mining projects ready to match future demand.

The mining boom’s effect on our exchange rate has made it much harder for our agricultural and manufacturing sectors to compete internationally. Manufacturing benefits from being able to import cheap raw & semi-finished products, which offsets the impact of lower prices for finished product. It also benefits from strong local sales, and the ability to buy/develop manufacturing capacity offshore.

Furthermore, our exchange rate is excessively volatile because we are a small country...one of the smallest with a free-floating currency and good sovereign risk rating, up until it was undermined by Rudd's new tax scheme. We are also a speculators delight for that reason. i.e. Carry trade with yen.

What will replace mining if we sabotage the industry. Look at the high unemployment in NZ for a sense of why NZ'ers migrate to Australia, and what the impact will be if we do the same. Mining creates few direct jobs, but look at the indirect impact.

"There seem to be hardly any credible economic arguments against this tax. The only cries I’ve heard from Abbott on this are that it will decrease the value of super investments and that it will force mining companies overseas".

The most pertinent argument is the fact that the tax proposal and possible execution have caused great loss of wealth to investors without any warning. Mining sector investments embody assets valued on the basis of future earnings. The upside has been trimmed, and thus their net present value (NPV) cut accordingly. The types of governments that perform such actions ought to be recognised as fascists.

"The share prices of mining companies may take a small hit, but because they’re only hit with the tax when they are making large profits, they should still maintain relatively high share prices. If anything, the tax will help stabilize their share prices at a stable and consistent level of growth".

Investors buy mining stocks despite the VERY High risks...those risks are offset by commensurate attractive gains, which are often already moderated by govt taxes, existing resource taxes, infrastructure demands, exploration costs, pre-mining, high costs. Take away the upside and investors will buy government bonds, which do not create wealth. Shareholders don't buy shares for stability, they buy risk-free bonds for that. Rudd and his supporters lack a basic understanding of finance. I might add that Rudd has increased the risk and cost, so now we need a higher return, so he should reduce the tax rate now.

"The offshore outsourcing argument doesnt make any sense at all when talking about the mining industry. Labour intesive jobs, like telemarketing and computer programming can be moved overseas, but our soil cannot be moved. So long as Australia holds such a large share of the world’s minerals, mining companies are going to continue to mine on Australian soil".

Yes, for some commodities the Australian government has the power to use extortion to tax miners because they can't move their mining projects (i.e. tax). Should they be allowed to tax you higher because your company cannot post you overseas. Should Google pay just 0.1% tax and miners 53% because they have no choice. Sounds awfully like slavery.

"The finite nature of resources means the price is going to keep on going up and up in the long term, until eventually we run out of it all".

Actually the long term trend in metal prices is down. This is mostly due to competition and productivity gains from ever-more efficient mining practices. It will rise for a few years because of the insatiable demand of China, India and others, but supply will respond. Metal prices will be higher if the government applies the proposed imposts, and that will flow through to higher finished product prices. But it will not be an efficient allocation. Metal prices were down for 12 years before they rose. Mining is not always profitable...so it may well be a protracted drain on the economy. More importantly, no one is served by governments making commercial decisions. Remember when the NSW state government locked itself into expensive power contracts.

Resources are not really finite since resources are conditional or contextual. It depends on price. If there is a demand, they will be found, whether in lower intensity consumption, recycling or lower grade deposits, or even substitutes.

"The tax is to pay for the stimulus package, and consider this a perfect example of counter-cyclical fiscal policy. It is wholly appropriate for our government to spend in the slumps to hold up the economy and save in the booms to reign it in".

This is of course the wonderous Keynesian economics which is failing us because politicians have no self-restraint. i.e. The governments of most Western countries are indebted at the end of the current 20-year protracted cycle (1988-2008). Australia is slightly better (just 60% public sector debt of GDP) paradoxically because of mining. Thank you miners. We love you so much, we thought we'd kick you in the teeth for the risks you take.

"I am worried that this tax is being used to fund other government expenditure and it might make Australia’s budget particularly vulnerable to fluctuations in global demand. Do you think this tax will make any future GFC-style loss of revenue (causing a budget deficit) more likely or more severe?"

Good point. The govt wants to opportunistically lock in some of the gains from China & India demand expansion. The problem is that no market expands as you want, so the Aust govt is taking an investment gamble. More importantly, it is adopting the policy relatively late...the boom started 10 years ago. Once again miners & shareholders will pay if he gets it wrong because he will AGAIN chop & change his arbitrary tax.. Investors will just ignore the sector. Australian mining depends on foreign capital. If we don't use foreign capital, projects don't get funded, as Australian fund managers would otherwise be over-exposed to the resources sector.

Source of these posts comes from http://thebrisbanite.com. Amended for brevity.

------------------------------------

Author

Andrew Sheldon

Wednesday, June 9, 2010

What ought the mining industry do on the RRT

Share |

To date I have been very critical of the mining industry peak bodies because their strategy for fighting the government has been 'highly counterproductive'. So what ought they be doing? I would suggest many of the answers are contained in this blog, but let us summarise:

1. Historical perspective: They need to educate Australians about the historical significance of these moves. The increasing shift away from Common Law to Statutory Law has resulted in an increase in arbitrary, often which is opportunistic, as opposed to based on any coherent principles (like Common Law).

2. The nature of fascism: Fascism is not simply mass murders and goose-stepping Nazis, it is really more about coercion and arbitrary power. The death squads came later. Nazism was the result of an intellectual decay. The Western allies squashed the Nazis, but they did not eradicate the cause...which was collectivism, i.e. Subordination of the individual to the state or the collective. We are moving towards China and North Korea.

3. Tax in perspective: They ought to be comparing this tax to the nationalisation of the Venezuelan oil industry and Zimbabwean white farm holdings, and the Saudi oil industry. This imposition ought to be compared with previous government actions, e.g. The Stolen Children Generation, etc. No joke! This is serious.

4. Cost of the policy: They ought to be talking about the higher sovereign risk attached to Australian (household) debt thanks to Rudd.

5. Legacy of financial mismanagement: They ought to be attacking the Liberals & Labor for their combined financial complicity with the EU and US governments in facilitating the current financial crisis.

6. Secession of WA: The secession of WA from the Commonwealth is an extreme measure, however it is an extreme act...so well-justified. A comparison ought to be made with the Boston Tea Party in the USA.

7. Enlist all business: They ought to be trying to enlist ALL Australian business in their camapign to eradicate this tax, as other sectors will be targeted next.

8. Enlist the governor general: They ought to be complaining to the G-G about this unprecedented act of expropriation. This tax is contrary to the spirit of the law.

9. High Court action: They ought to be taking action in the High Court to have this idea set aside or ruled upon as unconstitutional. A lot of other law has been enacted which is likewise unconstitutional. This policy is in breach of the spirit of the Senate, contrary to the 'reason as the standard' basis for parliamentary debate, and the provisions for 'good government'

Basically I am saying that the miners need to mount a combined conceptual-concrete policy which will thoroughly embarrass the Liberal-Labor government. Don't just single out the Labor government, as we were left with a Labor government because of the moral indifference and fascism inherent in the Liberals. I see no difference.

They ought to abandon their prior strategies of pragmatically arguing that Australia needs a strong mining industry, attacking the banks because they pay less tax, etc.

If the mining industry needs a ethicist to argue these points for them...they have my email.

------------------------------------

Author

Andrew Sheldon

Non-conceptual mining industry a problem

Share |

The problem in the mining industry becomes ever-more apparent with the following quote by Gina Rinehart, of Hancock Prospecting. Forrest is right to imply that they are communists (or fascists), but listen to her struggle with concepts...

"It's very difficult talking to Treasury officials who don’t really have non-theoretical concepts [of how the mining industry works]."

Concepts are theoretical. I don't think its a case of the Treasury not understanding mining. I think government has been moving in this direction for years...the mining industry is so concrete-bound that it is only waking up to the problem because the Resource Rent Tax is being considered. This is not the first imposition...it was not long ago that the government was looking to impose a 'green tax' based on the greenhouse scandal. That issue will probably slowly disappear with the recession....as science shows the global warming was always a natural phenomenon.

We need to get the mining industry thinking more conceptually...and long range. It starts with business, as they are really the defenders of freedom in the Western world.

------------------------------------

Author

Andrew Sheldon

Thursday, June 3, 2010

The problem with lobbyists

Share |

One of the great problems with the way lobbyists deal with government is that they lack the integrity they need in order to win arguments. The implication is that they make a less than convincing case. The problems which I observe is:

1. They are condemned by their own contradictions

2. They are condemned by their moral ambivalence

Nowhere is this more true that with respect to business people. I mentioned on another post my conversation with a business CEO. He's great making money, but then making money is not so much about thinking. One of those great fallacies is that if you can make money, you are worth listening too, or you must be good at everything. Its the same logic which has Australians appointing sporting heroes to intellectual roles like 'chairman of some commission'. They are supposedly defenders of Australian values. Ha.. Of course sports people should not be precluded...but neither should these people acquire the position of saints.

Basically in the debate over the Resource Rent Tax - business leaders will be their own worst enemy. They will fail to recognise that government has a number of benefits up its sleeve:

1. Moral monopoly - they are perceived to act in the public interest - this presumption has to be breached.

2. Moral legitimacy - there is an expectation that what the majority of Australians want, or their representatives want, is

The problem with business leaders is that they actually cave into this folly. It is inappropriate, a blatant flaw with representative democracy, that miners appeal to the Greens Party for resolution on this issue. It is suicidal! Why? The Greens would be happy to see the mining industry implode, and they are going to do a deal with them? Go figure. The miners need to attack the legitimacy of the system. Why should a minority party be able to extort some political concession from the miners? The same is true for majorities. Extortion or coercion ought be banished from the parliament...after all that is why the miners are in this problem. Yet, here we have the miners selling out to Greens. They are conceding an 'own goal'. This is why we end up with fascism...because the 'productive' class of society, the wealthy cannot think. They keep offering concessions. They concede the most precious thing 'principles' to people. Some business people never had principles, but others simply have no respect for objectivity. They tend to be goal-orientated by nature, running business systems in a way that makes the least impact on their bottom-line. The problem is they tend to be short-range thinkers in this respect, and very concrete. This makes them practical people in the short-range, but when it comes to politics, they concede too much.

The Resource Rent Tax is an ambitious action for the Rudd government to make. Kind of courageous decision for Rudd...but then I guess its the desperate type of decision you make when you are a loser confronting an election loss. But he's the most powerful person in the country you say. How can he be a loser? The reason is that he is not convinced himself. He needs to control your life to feel 'almost human'. Such is the life of a middleman too scared to act. He has to charm his way into his wife's money rather than make his own. No doubt she was impressed by his power. Women love manipulation just as too many lack self-esteem.

Well I guess 'collectively' men have a lot to answer for in that respect. If we are going to have leaders with principles, first we need to elect people with principles. If you place any of your existing candidates on a TV screen, and you shine a UV light on them, all you will detect is 'liar'.

------------------------------------

Author

Andrew Sheldon

Miners cancelling projects by the dozen

Share |

The Rudd government's plan to expropriate wealth from mining sector investors is the most opportunistic grab for cash we have probably seen in the last 100 years. Oh, there was an attempt by a Labor state government to seize the private property in the name of the public good in Parramatta a few years ago. That issue when to the High Court. Clearly this issue is heading in the same direction.

Rudd is clearly dividing the country on an important issue. It is a surprising issue. One would have hoped that we would have developed a respect for people's property centuries ago, but because of the intellectual ambivalence or inefficacy of a great many Australians, the prospect of individuals or governments stealing wealth from others is just controversial. We might have some sympathy for a person without moral guidance, if they resorted to stealing, then we might appreciate their 'grab for cash' in order to feed themselves.

The problem is that such arguments are not about 'needs' trumping rights (or wants), but about the litany of non-thoughts, non-decisions which manifested in that person needing to steal. Why did he become a thief when he could have become a productive person. No positive influences. So what type of role model is the Rudd government when it seeks to expropriate the wealth of Australians, and why is it opportunistically stealing this cash after just having passed through one of the most glorious market conditions the country has ever seen? Its not even short for cash. This is all about power over money. Rudd is not content to marry a multi-millionaire, he has to extort a thousand more besides. Legally of course. Its a fine line under fascism. All you have to do is offer the 'appearance' of a concession to enough voters, and they will sell their souls for some short range benefit. The strategy is old - divide and rule. This month the target is miners. In a few years, the Rudd would have diminished the ego of Australians by another quart, and the extent of their repression would have sunk another decibel. The number of productive members in society would have shrunk another 0.5%, and tax receipts will need a kick up to help all those extra cases of mental illness and anxiety that have been added to the cues because Rudd and a litany of other political middlemen have offered 'carrots' to those who did not deserve them, and effectively bludgeoned the productive people in this country.

We owe the productive class in any country a great deal. We do not honour them by expropriating their wealth. The reason they evade taxes, the reason why your claims exceed your generosity, is because you did not earn the right to enslave them. You never will. It is an indefensible principle. Your justification that the 'common good' trumps the individual is an illusion long since dispelled. You are not convinced because no one has appealed to your better interest at the level which you need. There are two arguments:

1. Self worth: There are those who argue that personal self worth is intrinsic or unconditional, and those who argue that its conditional or earned. This debate is mostly conceded to the collectivists or socialists. There is a great deal of rationalism here and equivocation. Right to life should not amount to claims on others rights.

2. Cognition: So long as people think cognitive efficacy is based on intuition, the collective will, there will be no chance of achieving any sense of mental efficacy, and thus no prospect of anyone retaining self-esteem.

Kevin Rudd is undermining the intellectual capital of this country. The foreign capital which will find over markets is just the start. Australia's brightest minds will head offshore. They already have. There are already a million-odd Australians living abroad. They have left the 'lucky country'. I dare say, most of them did it for the money....a very concrete reason. Rudd has given them a more compelling reason....a desire to find a country where thinkers and achievers are valued, and not bludgeoned, both financially and intellectually.

If you want an example, of what life under Rudd will be like, look no further than NZ. NZ very much lives under Australia's shadow because it cannot attract skilled people. It therefore has problem with business starts. It therefore has to substitute departing skilled NZ'ers with semi-skilled imports from Asia with collectivist values. The problem with collectivism is that its indulgent and non-intellectual. They are the basis for simple jobs like waiting on tables. They are not the values which underpin business. To be fair to these migrants, they are the best in their country. The implication is that there is a brain drain from Asia, and then we have 0.5 million NZ'ers in Australia. This is a brain drain as well. They are not just chasing money, the underlying values are different.

NZ is not a country you would associate with aspirational values. The aspirational ones leave. This of course concentrates the parasitical souls who think it is acceptable to renounce responsibility and live off the efforts of other people. As parents, we know that life is about teaching kids the consequences of their actions. Its also why we don't spoil them. If we spoil them, these cease to value, they cease to achieve. Only humanity, the 'conceptual animal' possesses the stupidity to do that. Animals cannot afford it, no species can afford to renounce its only self-worth...its too fundamental. That is what Kevin Rudd is doing, by giving people an ultimatum between:

1. Perpetrator - if you support or suspend your judgement about this Resource Rent Tax

2. Victim - loss of wealth, loss of efficacy, disempowerment, brain drain if you allow the Resource Rent Tax to be adopted.

This is not a single issue...it is a principle that has to be grasped. The line should have been drawn not at some arbitrary point, but a principle - respect for property rights. This breach was made possible by the judiciary which sanctioned the enactment of arbitrary rule. This was a departure from Common Law, which is based on principles. When 'the people' allowed that, when the judiciary allowed that, government became capable of anything. Now we have a plethora of publicly-funded spineless academics advocating far worse. Yes, miners are forced to support a whole industry which because of their concrete-based thinking, will end up destroying them, or punishing them offshore.

The problem is that governments around the world are reducing the standards of value all around the world. There is no where to find. Eventually the internet transactions will be taxed. Google on 0.1% tax rate in Australia...it will have no where to hide. Google I think pays a 10% tax in Ireland. Not in future. There will be a litany of new regulations to stop it. And you will support this new tax or law because its in your 'narrow', 'concrete' interests. You will give no thought to the more abstract principles involved. By that point the number of intellectuals will be a fraction of a percent.

Basically there is not going to be anywhere to hide. You can confront the parasites in your government, or you can confront the parasites in Asia, where you might be compelled to live because money goes further. The problem is - they know you have money. The paradox is that they want to get out of their country. There is literary no where to hide from arbitrary government. On forums, I warn Americans coming to Australia or NZ of their false hope...they have this expectation that they can escape the parasites in their government...there is no where to hide. These people have to be confronted.

------------------------------------

Author

Andrew Sheldon