Wednesday, October 19, 2005

Private & public evasion – a hint of double standards

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Integrity in government has long been a dream of mine, but nothing highlights my political rage more than blatant hypocrisy. We see this most clearly in the policies of the Howard government. Hear are several examples:
In response to the James Hardie asbestos scandal, the Federal Government is considering introducing a 10-year jail term for company restructures deliberately aimed at avoiding personal injury compensation. This is fine, but what about the gross evasions of government. Eg. Maralinga nuclear toll, stolen generation, and other public instances of evading public compensation.
The government has tightened rules under the Corporations Law to protect shareholders from dubious executive practices, but there what about the reoccurring incidences of tax evasion and fraud perpetrated by politicians over the years, with no law to discourage them.
Its great that accountability is being adopted, but why now, and why not universally. It stinks of political opportunism, and worse still, the draft bill is so weakly worded to be toothless for the following reasons:
Intentional avoidance could be difficult for prosecutors to prove in court
The bill applies to actions where "where an exceptional number of personal injury claims have arisen out of a company's action or product, and more claims of that nature are expected".
The bill would not apply if the extent of the future liability can be 'reasonably estimated'."
Under current law, claimants for injuries with long latency periods such as asbestos diseases (which takes decades to develop) miss out on a share of winding-up proceeds. It is proposed that liquidators should recognise these latent claims by establishing a trust fund based on actuarial assessments.

News Source: SMH.
Reason is the standard for debate.

Tuesday, October 04, 2005

Need for greater public disclosure

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In 2004, the US government & Congress passed measures or guidelines requiring private enterprise to adopt greater levels of disclosure, as well as tightening its capacity to act contrary to the interests of shareholders. The laws were intended to restore confidence to markets who were questioning the legitimacy of the profits earned by some of America's largest companies. The collapse of 2 'giants' - Enron and Worldcom suggested that this was no 'one-off'. On top of those breaches of public trust, the 'Big 5' accounting firms were called into question for conflicts of interest between their auditing and accounting activities. Apart from the presence of fidiciary duty, there was a clear need here to 'appear judicious', yet none of the 5 accounting firms thought it necessary to do that. That saids alot about business ethics....but it also saids something about community standards of prudential supervision that no one sought to break up these conflicting responsibilities. Clearly the reason is that the only people served by greater accountability would be shareholders, but they have no power. Even fund managers - as custodians of shareholders money - have little interest in redressing these issues since they get their margin anyway, and in fact collapses create buying opportunities if they are competent enough to pick the frauds. But shouldn't shareholders reasonably be able to access the information that fund managers have access to? Shouldn't corporate executives be obliged to release information to the market in a timely and honest fashion. I'm willing to bet the protective measures adopted by government will do nothing to change accounting standards in future. But my concern here is not corporate accountability, but public accountability. Whilst the politicians are busy adopting higher standards of corporate disclosure, accountability and compliance, where are the measures to ensure the same level of scrutiny of public enterprises.

Consider the following areas:

  1. Campaign donations: There is a huge conflict of interest between party contributions and public benefits for corporations.
  2. Treasury operations: The operation of the treasury and central bank are critical to any country, but often their activities are not open to scrutiny because of high levels of confidentiality. Voters should have a right to know the legitimacy of their currency. Consider that the Federal Reserve is not required to disclose its gold transactions. See Cleveland Regional Central Bank advice.
  3. Collusion: Why is the government beyond question over the integrity of its policy platform. Clearly opposition parties are not up to the task. This however speaks to the failings of the adversarial-style of party democracy. The problem is that centralisation of power always corrupts because vested interests can collude, and in the process entrench their political power. The question might be asked? Are oppositions incompetent or just complicit? I would suggest both depending on the issue.
Reason is the standard for debate.

- Andrew Sheldon

Solving economic problems

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The topic for this essay may sound very alarmist.... I'm talking about problems at a time when the global economies are booming. Housing prices and equities have never been so good, we have full employment and the poor nations of the world are growing. But how real is it.

In the wake of the internet bubble - Americans might have been asking that exact question. In the bear market that followed, critics were panning corporate executives that had conspired to defraud shareholders of wealth, employees of jobs and security for the sake of personal gain. A few executives have been found guilty under the Corporations Law in several countries. The Worldcom, Enron cases in the USA, Parmalat in Italy and HIH Insurance in Australia are testimony to the fact that its a global problem. The problem being global in its extent.

The governments in many countries have responded to calls to reign in such dubious accounting & management practices as they always promise to do, but executives always find new ways to evade such laws. It comes as no surprise that dubious conduct is often lawful, that executives in concert with their lawyers are often able to find 'technically' legal ways of evading the law. We must remember that the law and morality are not the same, though one might question why? Pragmatism is the short answer. Those people that write laws only do so to protect their own interests. It is therefore dangerous for voters to narrow their focus to their immediate self-interest, lest they suffer the repercussions of illegitimate acts by others.

Unquestionably the greatest threat posed to a society is by the agency that professes to represent them - the government. In the name of the 'common good', governments have rationalised a great many 'technically legal' breaches of morality for the sake of protecting their own interests, ie. Affirming their own power or popularity. Hitler, Lenin and Stalin are perhaps extreme examples, but less grandiose breaches of morality occur today, but since they don't attract the concern of the populace, they are marginalised and their impacts desensitised. People are no longer defenders of principles, because they no longer see principles as serving them. Consider that holding principles today is tantimony to holding contradictions. But rather than checking their premises, people are prone to discount their knowledge and resign themselves to the 'common good', choosing the 'safe mode' and going with the consensus. The manifestation of consensus thinking is entrenched vested interests and lower standards (expectations) of value. The implication is an erosion of principles and accountability, and a wider sense of disillusionment and cynicism.

Consider that in response to the corporate failures the government decides to increase accountability and establish new guidelines for corporate reporting. That's fine. But such practices have been going on for decades, and guidelines are endlessly side-stepped because they are arbitrary rather than based on principle. Arbitrary laws or guidelines are dogma that apply only within a narrow context. Only principles are contextual, and can be countered to prevent executives from side-stepping breaches. The reason that principles are not adopted as legally sanctioned guidelines is that - by implication - they would be universal. They would need to apply to government as much as corporate executives.

One need only look at the double-standard evident in the global society today - whether we are talking about Australia, the US, Britain or China. Laws are applied to the general citizenry with little restraint, but government officials are relatively free from such double standards. The governments of western governments in the wake of the Enron & Worldcom scandals have moved to improve accounting standards and to tighten disclosure regulations.... but look at the public accounts for governments. Not only are the acounts incomplete, often meaningless, unaudited, but they are often confidential or not collected. The government is without a doubt the most important organisation in every country, representing 15-35% of the each economy, yet they are surprisingly free from public scrutiny. There is no better evidence than this that the public's interest is not being protected, and that public officials are acting contrary to those whom they represent. An honourable representative does not ask for the trust of their supporters, and nor does he countenance it.

The governments of each most countries are guilty of perhaps the greatest crime that can be perpetrated against its people - the blatant & mass expropriation of wealth. For years they have done it by sanction of a 'cynical & unprincipled majority', but they have also perpetrated such breaches by stealth - though the 'theft of inflation'. It is a nonsense that western nations have not experienced inflation as any investigation of price levels will demonstrate. Western governments and their bureaucrats are party to the biggest, self-serving fraud ever perpetrated against productive people. Paradoxically, the theft is being perpetrated by 'doctoring the books', by using accounting and limitations on disclosure to conceal the facts from the general public.

This is not so much a mass 'conspiracy' as a mass evasion. Mostly its honest people just sticking to what they know, and being reluctant to get involved something so grand they could never resolve it. Its easier not to know the facts, easier to lower your expectations, easier to just pay up. Justice gives way to molevolence. "Who am I to question" is the answer to a question they never ask, to a question they don't want to hear.

People look at corrupt third world markets and think they are so backward. But the reality is that they western world is backward too, just less so. Its only 1st world by default. Like third world countries, people sanction corruption in their society by default, by not questioning the integrity of their institutions, by remaning passive. Decadence is as much a curse as poverty, for it is the institutional safeguards that make any society what it is - and can potentially undermine it. The integrity of western institutional stability is being undermined by the largesse and ineptitude of western governments. They are not conspiring in an act of self-interest, rather as an act of fear......the fear of being powerless or irrelevant.

Governments have the greatest power possible to mankind - the power of the moral sanction over other humans, the power to override his identity and righteous for the 'common good'. That is a considerable responsibility, and a dangerous capacity when that power is welded by unprincipled people. It is through its monopoly of the right of moral sanction that governments are able to tax, print money and sanction other organisations through state-backed sancitioning. That sanction is only as safe as the capacity of taxpayers to finance any resulting liability. The power comes down to the governments ability to raise money. That is a debt western governments are fully willing to abuse, and its a level of trust the public can scarcely afford to extend. There is not just the possibility of ineptitude and deception, its a forgone conclusion if history is any guide. There has never been a monetary standard which has not been corrupted by governments over hundreds of years.

Governments are able to achieve their deception through structuring the economy in a way that serves them. They need their allies to achieve their ends. Politicians count on 4 parties to preserve their self-interest. These are:
  1. Private Bankers: The banks are among the biggest beneficiaries of the public abuse of money. In the old days bank executives were able to cash in their shares prior to bank failures. In the advent of derivatives, banks need only off-load risky assets to third parties, paradoxically mutual funds managing household savings. Private bankers can get very rich in the process.
  2. Central Bankers: Central bankers have a different goal. By financing western governments expenditure, they are able to expand their job market, incomes and thus benefit from not just a richer treasury, but also an entrenched hold on government, not to mention considerable notoriety.
  3. Bureaucrats: The role of the bureaucrats is to make the government look good. Ministers are very careful about the type of public 'servants' they employ. They don't want recalcitrants, rather safe, subservient minorities who do as their told. Of course such loyalty doesn't come without a price - the price being life-time employment, generous retirement packages and tax benefits.
  4. Military & police: The military and police can be important for preserving government's power. As agents of justice, they hold considerable moral power, despite the fact that many police forces are tainted by accusations of corruption. Police forces go to considerable trouble to dispell those concerns, to downplay the extent of the trouble. But consider the facts: The police and military are secretive, open only to self-scrutiny and are well-paid.
  5. Big business: Corporate executives are another favoured party of politicians for several reasons - but fundamentally they have the capacity to make governments look good. Consider how. Executives create jobs that would otherwise go to another country, they have the credibility or prestige of belonging to a more impressive institution (read 'commercially profitable'), as well as the power to retrench and go home. This is why business is beholden to 'big business'. Big business also has the capacity to spend their way through recessions, whether on capital investment or on political campaign donations. Thats why it takes considerable pressure ('public opinion') for governments to act against public opinion. Rest assured that when they do, the laws they enact will be 'toothless', in as much as they will make little difference. In fact, often those laws are designed to fail, as they need to countenance vested interests. Big business acts through industry representation with a powerful capacity to serve their own interests. Clearly the most powerful interest group is the media. More dangerous still is a media with a large market share.

If these are the vested interests, then the question has to be asked, who are the sacrificial lambs. There are 3 types:

  1. PAYE Salary Workers: The contemporary salaryman is the hardest worker but gets the least benefit. They are often under-paid, get few tax deductions and pay tax up-front.
  2. Small business: Small business is cherished for its autonomy, but its alot of work. Ever wondered why they struggle to get government to remove excess red-tape? Its because politically they don't matter. They often go out of business, rarely make campaign contributions and they don't employ a great many people workers. They are staunchly independent, so they are politically poorly organised. Farmers are perhaps the most powerful lobby group in many countries because many city folk retain a 'rural identity' or sympathy, but otherwise farming is of declining importance in most countries, and its power is quickly being eroded by big business interests as they consolidate productive capacity. Big business (including big farmers) are better connected and organised than 'small farm' lobbyists.
  3. Unskilled workers: Unskilled factory workers have historically been very powerful because they were organised into unions, manufacturing was an important income earner, and they were effective in harnessing community sympathy. That was before 'unskilled' jobs moved offshore to developing countries and unskilled workers moved into service industries. That loss of power saw big business break the unions through government legislation. The unionists deserved it because they were hedonistic in their demands.

The last 3 vested interest groups are likely feeling pretty secure after record rises in property prices and tax cuts prior to the last election, but consider this - the good times will not roll endlessly. The current boom is not sustainable, but is the result of public largesse. The greatest culprit in these 'money illusion' stakes are the Federal Reserve Board (USA), the US government, and their counterparties in China, Britain and Australia. Really any central banker should know better, but people don't like to be critics. But eventually when the credibility of these institutions comes into doubt, there will be alot of criticism. The encumbent governments will loose power for a decade, but nothing will change, irrespective of how much soul-searching will be done.

But these last 3 vested interest groups represent the best opportunity for greater accountability in our public enterprises. Why? Because they have good reason to be frustrated and because they represent the bulk of any population, albeit they are important only is so far as they raise their expectations, have a representative body to unite them, they are able to articulate a clear message, and are able to gain support among other competing interest groups. Clearly they have to change their tact.

Their greatest opportunity lies in identifying the future fallibility of this bubble economy before it happens. There will eventually be a collapse in housing prices in the USA, Britain, Australia and China, which will likely be precipitated by high oil prices. High oil prices are blamed for 90% of the recessions this century, but the truth is - they are just the symptom of the underlying problem - a lack of accountability in public administration. We can go further and identify the structure of modern democracy as the problem. Irrespective, those public administrators and politicians that are supposed to earn our trust, are in contempt. How can they defend such a gross contradiction? How can they reasonably apply increased disclosure upon executives of private enterprises, whilst ignoring public administration. Its not so long ago that public adminstrators were breaching public confidence. eg. The Pyramid Building Society in Victoria, Australia, as well as FEMA in the USA (of Hurricane Katrina fame). Where is the accountability? The absence of accountability points to a deeper flaw in our political system. The answer is not that these 'forgotten' poorly represented vested interest groups expand their influence at the expense of other groups, rather that 'reason is the standard' - not political pull. That is the subversion that needs to be avoided.
Reason is the standard for debate.

- Andrew Sheldon

Tuesday, September 27, 2005

The morality of corporate compliance

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Western corporations operating in the third world often face a conflict of values in carrying out business. Examples include the following:

  1. Congo: Anvil Mining complies with a government request to transport troops, despite the dubious morality of the action.
  2. Myanmar: Some French companies have sought to explore for oil in Myanmar despite the military junta in power violating the rights of its people.
  3. China: Yahoo and Microsoft have censored words like "democracy" and "Dalai Lama" from the Chinese version of their blogging software.

There is no argument that in these countries that the freedoms that we take for granted in the west only partially exist or don't exist at all. The question is - Are corporate executives obliged to act by western moral or legal standards in foreign markets? The answer is - No! Even where there is no threat to life. It would be understandable if executives complied with the existing government directives if company life or property was threatened. But in the case of Anvil, it provided vehicles which allowed the government to apprehend suspects. If a government is so reprehensible, then the western government should prohibit western companies from dealing in these markets in a way that benefits that nation's interests.

What are the practical benefits of sanctions?

Western governments have been applying sanctions for years with dubious results. Sanctions applied to Myanmar have denied local people of prosperity and forced those countries into the illegal drug trade. Part of the problem is that these sanctions are applied at a time when these countries have no money to buy foreign goods. Also its pointless to apply western standards of morality when they are not supported by the citizens of the country. Part of the reason that statist regimes exist is that the population has no better idea than government. Tyranny is part of their way of life, and they are just as prone to support the efforts of one tyrant to replace the encumbent. By preventing trade with these countries we are likely denying the local population the opportunity to develop their own defense:

  1. Commerce allows the flow of ideas, evolution of higher standards or expectations by way of comparison with the westerners they interact with, and thus facilitating personal growth. The Burmese nationals need to get their understanding from westerners because they will not get it from their government.
  2. Commerce can finance government,

What if the proceeds of commerce are expropriated by statist governments? The reality is that western governments similar expropriate wealth from their citizens, so there is nothing new about that. Its not valid that cutting off their source of tax revenues will actually help Burmese nationals, or move the country towards democracy. On the contrary, a statist regime lacking external finance will be inclined to be more repressive, and seek to finance itself in more desperate ways. It can only increase the extent of repression.

The reason that western governments don't want to support tyrannies is that prospect that they might pose a greater danger by virtue of gaining more power. This can occur because:

  1. They develop or acquire nuclear weapons
  2. They resort to drug cultivation to finance their administration
  3. They engage in mass murder of citizens

Statist regimes pose other problems as well:

  1. Politicians feel compelled to do something about the callous deaths of people in these countries
  2. Politicians are reluctant to engage in military action unless there is a clear defence or commercial benefit
  3. Politicians are more likely to take action if there is a refugee displacement issue, eg. Refugees washing up on their shores.
  4. Politicians are more likely to take action if there is a local ethnic community in the western nation fighting for the welfare of their fellow citizens

The reality is that no country becomes a democracy overnight. It took the West 400 years to achieve their current values - and they are far from perfect. It is a little precious to expect the third world to embrace democracy overnight when it tries to force democracy upon them. You cannot expect to establish a stable democracy if there is no respect for rule of law. Respected or feared leaders are a precursor therefore to democracy.

Its compelling for the west to support 'liberty' campaigners, but the values of these zeolots do not embody the values of the general populous. Opposition needs to be repressed before it can be encouraged to grow. As long as the people's expectations are higher than those of government, it will factionalise the population. Repression tempers demands.

Western democracies tend to hold democracy on a pedestal - but democracy is not necessarily a value. It is itself still collectivist - in the sense that it makes little difference if your government has a 25% or 75% popularity if they are acting immorally. Reason is ultimately the standard that needs to apply, and whilst it cannot be forced, it needs to be encouraged. Nothing grows without first creating the right environment. Its noteworthy that it was British (and other imperialists like Germany & France) that established the tradition of repression and authoritarian government in these countries. These imperialists repressed local opposition for the sake of securing their colonial trade and military interests. The Burmese junta has done the same. Unlike Britain - they are holding no political contradiction, but they are holding a more fundamental contradiction - the belief that there is any efficacy in repressing personal liberty.

Reason is the standard for debate.
- Andrew Sheldon

Sunday, September 25, 2005

The achievements of George Bush

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George Bush is by no means the least popular president in US history. Strangely the President is very popular
in his own country, but not so outside it. His popularity stems from:

  1. Communicating a simple message which evokes the shared Christian values of the electorate
  2. Values-driven: The President has steadfastily dealt with issues that other presidents would often walk away from.
  3. Leadership: He has been able to lead on a number of issues. eg. Free trade, third world debt relief, anti-terrorism
His unpopularity stems from several issues:

  1. Mismanagement of political crisis and natural disasters reflected poorly on him as leader - or at least on his capacity to delegate effectively. eg. Hurricane Katrina & the Iraqi War
  2. Lack of strategic direction - There did not seem to be a strategy in place for Hurricane Katrina or the Iraqi War
  3. Financial mismanagement: Under George Bush the US public and private debt burden has blown out

Perhaps the greatest legacy of the US administration under President George Bush Jr will be his efforts to:

  1. End the debt spiral for 28 of the poorest global economies
  2. Fighting terrorism
  3. Contributing to the freeing up of trade - this remains work in progress

Some of the credit for this progress - primarily the free trade agenda - should go to the media, whose journalists have supported this. They have been better advocates of complex intellectuals more so than Bush, who hasd fumbled in his message.

Third World Debt Spiral

The US government is urging the G8 Group of Nations to carry 70.2% of the debt relief program that would remove the $US42.5 billion debt from the world’s 38 most heavily-indebted countries. Most of the debtors are located in Africa, with their debts owed to the World Bank and other agencies. This is an important issue because debt repayments are a considerable annual burden on these countries. It seems likely that these governments will need to adopt some conditions if these debts are to disappear. Research??

Trade Reform
Bush has made a pledge to abolish tariff and farm subsidies that distort international trade, but only if other rich nations join him. France is likely to reject the ‘opportunity’. Bush has argued that terrorists have fed on the anger & resentment towards the West for preserving such policies. But really there is more to it than that. The WTO Accord reached in late 2001 achieved trade liberalisation, but the agreement exempted agriculture to ensure a consensus would be reached. While the US is trying to get Japan & the EU to join his pledge, the Bush administration has opposed sugar imports and retained subsidies. The WTO also ruled that its cotton programs cited by Brazil breached guidelines. Regardless a lot of US grain farmers are already successfully competing in global markets.

As far as rhetoric is concerned, John Howard has done more to progress global free trade, since Australia has liberalised markets in key markets which will prove the viability of opening trade without decimating farming sectors. This progress will provide the evidence for other countries to go further. Australia has reached FTAs with Singapore, New Zealand, Malaysia, Thailand and the USA, and is working on similar agreements with Japan and China. Australia of course has the benefit of being a small market, offers disease-free agricultural product markets and less competitiveness than the Third World liberalisation. These FTAs could then be a precursor for more or less free trade.

Reason is the standard for debate.

- Andrew Sheldon

Wednesday, September 21, 2005

The benefits of 'real' tax cuts

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Indonesian President Sasilo Bambang Yudhoyono has pledged to reduce corporate and personal tax rates to stimulate higher levels of investment. The Indonesian president has recognised the contribution that tax cuts have made to some of the emerging growth economies such as:

  1. Turkey has achieved real economic growth of 7% between 1985-89 and 9% in 1990 after lowering the lowest marginal tax rate from 40% to 25%, and the top marginal tax rate from 75% to 50%.
  2. South Korea recorded growth of 9.3% between 1981-89 are adopting tax cuts and expanding the range of tax deductions.
  3. Ireland was the fastest growing member of the OECD in the 1990s after it reduced taxes

Some tax cuts are more real than others. Consider that the US government offered tax cuts but neglected to cut spending, in the process burdening the country with a large public deficit running at 6% of GDP annually. The Australian government’s tax cuts made little contribution to the economy since they merely gave back to private citizens what inflation-inspired ‘bracket creep’ had taken from rises in nominal income. In contrast to the real gains made in the Turkish & Irish economies, the expansion in the US and Australian economies was the result of easy monetary policy and cannot be sustained.

The argument then should be - if tax cuts are a burden on economies - why not replace them with user-pay fees on services provided by governments, and allow citizens the choice as to whether they need them. Who could argue with that policy if they are so critical 'public goods'.

The facts for this article were derived from the Japan Times, though I’ve taken it upon myself to present the article in a better context. The original article suggested tax cuts are always good….an over-simplification.

Reason is the standard for debate.

- Andrew Sheldon

Wednesday, September 14, 2005

Fascists in Western Democracies

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When people speak of fascism their mind goes back to Hitler and racial tyranny and instances of invasion by one country by another. These are not events that we attribute to 'modern' western democracies. There are no doubt peace activists who might criticise Bush & Blair for being rogue militarists, but what undermines these critics is that they share the same ideological roots as those they criticise. They are in fact the opposite side of the same collectivist coin. Just as its reprehensible to violate the rights other other people (or countries), its equally reprehensible not to defend your own rights, or those of your nation. They are the pertinent values, but are they being meaningfully applied in this context.

The problem is that standards for civilisation are set by the modern democracies. Tyranny grabs hold of the small pockets of the world that western nations are not interested in. By default neglected countries become hostile ones.

The US has demonstrated its capacity for turning around markets. eg. Consider the role of the US in making Japan possible. Japan, and to a lesser example HK and Singapore, were Asian countries that learned by example. South Korea, Taiwan, Thailand, Malaysia saw the success in Japan and wanted a piece of it. The same lead was provided in South America by Chile. Is there an opportunity to establish a similar precedent in Africa? Perhaps that is Ghana...but there are no stand-outs. There are several countries doing well.

The problem with this 'leading by example' was that it was based on a pragmatic desire to catch up to the western by a narrow economic measure. If one looks at Japan, its a hollow victory when you consider the way in which the society is structured to sacrifice the interests of the individual to those of the government and corporations. There is a hierarchy and salarymen and housewives are at the bottom. This hierarchy extends pervasively through the whole of society, whereas in western nations its a concession made by voters who begrudgingly accept their middle class guilt. It does not permeate all of our time. We are for the most part concerned with our own lives even if we rationalise otherwise. That does not mean what we pursue is necessarily in our interests. In nations where values are considered subjective, its inevitable that people would slip up in any of the following respects - by not acting in their self interests because:

  1. Failing to understand the nature as a human being, eg. What they accept as their cognitive tools, eg. They might regard emotions as equally valid as a cognitive tool as rational theory, or they might accept evasion or decoupling from negative thoughts as acceptable, and to this end they can be supported by peers, with a similar interest (set of values)
  2. Hierarchy of values distorted by negative life experiences
  3. Priorities that reflect a distorted sense of life, eg. A sense of scarcity rather than abundance
  4. Poor definition of values, wich undermines their integrity

All these issues are important because they are the foundation upon which fascism is based. Hitler was not created in a day, and he did not exist in a vacuum. He was the product of German philosophical thought that permeated that culture during the 1800s, with intellectual influences like Hegel and Immanuel Kant, which undermined the efficacy of reason as a tool of cognition, and elevating passions, emotions and its corresponding ethics of self-sacrifice.

Looking at society today, these 'dangerous' foundations are evident in our society. There is no conspiracy to introduce socialism or any variant, the political direction of any economy is just people acting as they please, often with little thought to where they are going. The dangerous signs are evident when you analyse events, so lets consider the following in Australia.

Roots of collectivism in Australia

Australia was established as a colony in 1788. From the beginning prosperity did not come easily since the colonies struggled to introduce crops that would grow under the conditions. These hardships necessitated that public-funded governments would carry the burden. Australia was not as fertile or well-plenished with water as the New World (USA) and certainly Australia did not have the early successes with tobacco, cotton and sugar that the USA had. Moveover the hardship in the USA was carried by African slaves, not as with predominately free settlers in Australia. More importantly, the US was established largely in opposition to the tyranny of British monarchy, whereas Australia embraced it. The US had alot easier path to developing export markets with Europe, whereas Australia was far more remote. These early experiences entrenched the values of the 'nanny state' taking care of the citizenry.

Eventually prosperity came because Australia found a niche supplying the Old World

So what have we learned in the modern era. Well by default, the Conservatives in Australian politics have been able to stear the economy towards liberalisation - a global trend stimulated by Margaret Thatcher in the modern era, but really it was purely pragmatic benefits of wealth creation that gave it the momentum, and its been an 'alliance by stealth' between governments, the media and 'big business' representatives that has entrenched this trench, but purely for self-serving objectives. By delivering on wealth creation for those that mattered - big business since their investments determine where jobs are created, incomes are boosted and spending is undertaken. That has brought prosperity, but not without victims.

TALK ABOUT JOHN HOWARD - peace activist deported, Pauline Hanson, political processes, emergency powers

But lets not forget our own ethical principles whilst we are sending troops to the Middle East to defend theirs. Why are we fighting there? Why defend values without explaining why you are there, without providing any explanation. At the same time the Australian Attorney General Philip Ruddock has deported the American peace activist Scott Parkin, of Houston, Texas because he participated in a recent protest against US energy company Halliburton, whose commercial interests benefit some members of the US executive. He has not committed a crime, and what risk does he pose by opposing war or highlighting threats to good government. This is on top of the arrest of Pauline Hanson.

Not finished

Reason is the standard for debate.

- Andrew Sheldon

Sunday, September 11, 2005

Comments on "Fahrenfeit 9/11" Movie by Michael Moore

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This was perhaps the most ill-balanced piece of smeer I've ever seen, but nevertheless one can not discount all the information provided. I make the following comments:

  1. Bush as an executive: Bush is evidentially a lazy president, but then the role of president is not to do the hard work, but to make sure he gets it done. Maybe by his standards he is doing an adequate job, not by mine. I dont mine him playing golf if he's an effective leader.
  2. Performance on terrorism: Bush cut funding on terrorism before 9/11. Its unfair perhaps to attribute this directly to Bush since the decision would have been made by subordinates. He might never have read the documentation. It was the first instance of terrorism in the US, and there have been none since.
  3. Relationship to Bin Laden: There is or was an inappropriate relationship between the US government & the Saudi Bin Laden business interests. Having said that - the conflict lies with George Bush Senior - not the current president. As a former president he is entitled to view military intelligence, and its plausible that it couild be passed on to Saudi interests - for the sake of personal 'business' interests. Of course you'd hope for national patriotism, and accountability. Is it there? It seems not when you consider that some 1444 Saudis were allowed to exit the US without restriction - without giving any evidence, without being questioned. Particularly this was important because this flight hosted 41 members of the Bin Laden family. Today some Bin Laden members retain contain with Asama Bin Laden. Of course, it has since arisen that 14 of the 19 terrorists were Saudis. It has to be appreciated that partly Asama was likely anti-American because of the Saudi-US relationship, and that would take on a personal dynamic as far as his family.
  4. Integrity of the President: Its critical that the President of the US has alot of integrity. Thats not apparent when George Bush Jr breached insider trading rules by selling about $850,000 of shares in Harken Energy Corp, of which Bush is a director, prior to that company announcing a $23mil loss. His legal counsel later became the Ambassador to Saudi Arabia (according to Michael Moore). Was he lying? Its a strong possibility. Is he loose with the facts? Its a possibility.
  5. National Conflict of Interest: It is important to recognise the importance of the Saudi relationship at two levels: Financial - The Saudis have invested $8600billion in the USA, equal to about 6% of the NYSE market capitalisation.
  6. Leadership: It took President Bush 2months to get troops on to the ground in Afghanistan. This is perhaps an unfair criticism. Whilst the US might have lost the surprise, its better to optimise planning to ensure the safety and strategy. Particularly since many are critical of US strategy and vision. Its a valid point though that there is a conflict of interest with Bush Senior & Cheney as directors of Halliburton & Unocal. Though one would think there would be a whole range of interests fighting over these issues, such that there would be accountability. But clearly the US administration has done a poor job dispelling those concerns.
  7. Congress hypocrisy: Michael Moore approaches congressman, inviting them to send their children to Iraq, as only 1 congressman has a child in the war. Its a cheap stunt. Its not the role of any parent to assert want career direction their children should take. Congressmen tend to be wealthy, and their children have options. Military life is generally a career choice for people with no options - the poor. It was thus cowardly of Michael Moore to ambush these congressmen. Also more money is spent on protecting US military by utilising the latest technology than any other country, or any prior war. Far fewer people are being killed in the Iraqi War than previous wars. Any loss of life is regretable, but the value is worth it, if there is a consistent & well-articulated strategy to achieve a 'foreign policy' objective. The US is laxing in this respect.

The movie was a depictation of facts, yet it was poorly researched and a heavily biased historical record. It starts by asserting that " '9/11th' was the worst attack on US soil" - but what about Pearl Harbour - that was on a far bigger scale. A legitimate comparison would look at the difference is lives lost and the real (after inflation) cost of damages.

Michael Moore is guilty of hypocrisy as Bush is guilty of laxed integrity. Both are modern-day mediocrats, mediocre and media-philic. Both want their rays of stardom.

As far as what should be learned from the movie:

  1. People should be pushing for greater levels of accountability in government, just as Bush has adopted corporate governance laws. Why is government exempt from such laws.
  2. The US administration lacks integrity and a clear purpose. These are qualities not just lacking from the US administration, but a great many of their people - the populous whom elected them.

Reason is the standard for debate.

- Andrew Sheldon

Friday, September 02, 2005

Western attitudes to China

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A divergence of thinking appears to be developing between the conservative Australian (John Howard) and US (George Bush)-led governments. Bush wants Howard to work on pushing China to universal values. Howard saids the relationship is not just opportunism. Howard saids he sees it as building on the things they have in common, and not being obsessed with the things that make them different. For Howard, values and power are separate. In contrast, Bush will only allow countries that share its values to have power in Asia.

Both leaders have a legitimate position since there are several issues to consider - both moral and strategic:
  1. China has made considerable progress shifting towards a modern free market. Market structures are changed by governments, but the values of the participants change more slowly and only implicitly. A great many Chinese still live in rural areas. They have more entrenched collectivist values and are thus prone to view east coast capitalism negatively - in terms of wealth disparities.
  2. China holds alot of US debt. Coersion by China might well result in a threat to repudiate that debt.
  3. Militarily - both countries are in a stalemate - neither willing to test the other. China could only move on North Korea.
  4. The Industrial Revolution that swept the 1600s Western World took 400 years to take hold, yet the US is expecting the same to occur in China in less than 10 years. It takes time for values to change.

Howard`s response seems somewhat mypoic though.

Reason is the standard for debate.
- Andrew Sheldon

Saturday, August 27, 2005

Australia`s extreme Muslim Constituents

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The Australian government has asserted that Muslim extremists should leave Australia if they don`t accept that Australia is a secular state and that its laws are made by Parliament. See the Japan Times `Australia tells radical Muslims to depart Oz` (25th Aug 05).`If these are not your values, if you want a country which has Sharia law or a theocratic state, then Australia is not for you`.
Fair enough - but who is Australia for. I would suggest that the general populous is very disenchanted with the political process. They have little respect for any leaders. Why? Because they are self-serving, alligning themselves with political parties to shore up financial support. That does not ensure political integrity - but rather graft. Sure its not the form of corruption we see in the Philippines or Indonesia, but there is always a connection between money and power. Why? Because governments are given the power to intiate the use of force, just as a tyrant uses power to gain a value.

As long as Australian citizens have no recourse to question the law of the nation, governments or politicians will have a free rein. High court judges can play on the fringes of unjust laws by rationalising their interpretation of the Constitution, but really its the constitution that needs to be questioned. Its remarkable that we are helping the Iraqis design a constitution....but equally remarkable that anyone would consider a 200-500year old document as pertinent to current society. Values and knowledge have grown greatly since then. Whilst there is a certain stability in the status quo, there is a certain lunacy in the nation that the current system works.

Reason is the standard for debate.
- Andrew Sheldon

Thursday, August 25, 2005

The merits of gun control

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Despite my advocacy of small governments, in recent years I have become sympathetic to calls for gun control. I`ve not seen the Michael Moore film, since I`m confident it offers no insights.
My rationale for supporting gun control rested on several arguments:
  1. Lynch mobs: Ownership of guns should entail responsibility. Guns should be licensed, and licensees should be obliged to secure them safely in their house. They should be trained in how to use a gun, etc. Its argued that the role of police is to protect citizens. Just as dangerous as law-breakers are vigilantes that claim to speak for it where it lacks.
  2. Practicality: In what sense can gun ownership be said to be practical. For a gun to be a useful tool for self-defence, does it not need to be accessible. If its readily accessible by the licensee, then its likely accessible by others. eg. In a glove box, boot of a car, study of the house. If they are under lock & key, they are rendered less accessible. By the time you find your gun, the assailant has prevailed and stolen it from you. By comparison, policemen come in pairs rendering an attack less likely, and the activities of the assailant more easily traced.
  3. Tool: There is a compelling case that saids if guns are outlawed - why not kitchen knives. Its a reasonable point. Guns do offer a great degree of psychological power, since it would take several knife stabs to kill a person.
  4. Guns: If there are fewer guns, then there is a smaller prospect for murder & armed robbery. This argument needs to weigh up the counter-arguments for preventing opportunity vs preventing breaches of rights. Are there more neglectful, unsafe and unscrupulous users of guns, or are people generally safe and reasonable? I am reminded of the phase `Evil prospers when good men do nothing`.....or might that things carelessly.
This has been my rationale in recent times, but then the Libertarian Party in the US counters with the following statistics:
  1. If private gun ownership poses a threat, and gun ownership is rising, why has violent crime declined in America over the last 20 years? Since Liberals believe gun control reduces crime, why is violent crime declining? This is an over-simplification since it might well be due to other factors. eg. There has been an economic boom over the last 25 years making people less desperate. Availability of guns is just one issue.
  2. Do guns kill or save lives? Michael Moore saids that over 11,000 people die each year because of guns. He is impartial because he doesn`t discuss how many Americans have been saved by their guns. Regardless, I can`t say I`ve ever heard of any case of guns saving lifes. But it is likely to make criminals more cautious. But private gun licensees are only interested in saving their own lives, so don`t expect them to serve the general public - and nor should they.
  3. Why is the murder rate in England rising, since there are severe gun restrictions place? The answer to these questions are never so simple. Its conceivable that any number of issues could be the cause. eg. English borders are likely alot more porous than the USA, perhaps there was already an inventory of guns in the Irish economy? 

The only legitimate reason I can think for people to hold arms is if established nation states (say California) opposes the other states form of government, and sees the disparity in values as justifying the use of force. The notion of any individual fighting for the preservation of his rights is counter-productive because it cannot be argued that force will aid the situation, unless its his immediate survival.

Reason is the standard for debate.
- Andrew Sheldon

Plight of Australian farmers

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In Australia we often heard about the plight of farmers. Through the 1980s farmers achieved high prices for their product, and were encouraged to take on high levels of debt to buy adjoining properties or to finance expensive farm machinery. In some sectors like wool, wheat and milk, market prices were historically regulated, so the farmers understanding of market trends, cycles and unpredictability was probably not the greatest - though they can`t claim total ignorance. The reality is however that they acted in good faith. In many cases, farmers say they were talked into taking out expensive loans and derivatives contracts, products with which they were unfamiliar.
The question is - What responsibility do the bank`s have when selling these products? Capitalism is a wonderful system if there is an attempt to understand the customer - empathy as opposed to seeing the customer as purely a `profit target`. Business ethics starts with company executives. Sadly executives are just as blind as governments, customers and employees. Ethics (or the broader issue of philosophy) is not raised in schools and thus is seldom taken up in university.
Should there not be a responsibility of the farmer to understand the products he buys. Yes, but how does a farmer or anyone know if he knows everything? But the same question applies to the bankers. Did the bank executives or subordinates take legitimate steps to protect customers and understand their product?

The plight of the farmers is however mostly the result of falling commodity prices. Commodities have fallen in real terms for decades, and that trend is only likely to change in the short term when demand rallies. Farmers did not understand that trend, nor could they anticipate the adoption of protective tariffs and subsidies by the world`s largest industrial economies to shore up their farm sectors, resulting in the dumping of agricultural commodities on global markets at prices well below local production. If farmers are loosing from subsidies, then our manufacturers must be benefiting by not having to carry such imposts. So why isn`t our manufacturing sector more competitive? If they are benefiting, why is there no scheme to recoup their `winfall` and redistribute to farmers? Why is there no effort to apply punitive imposts upon those governments that profess to have free markets, yet distort market prices for the sake of their own farmers. Their strategy demands that our government have some strategy. Sadly there are measures, but its on the premise of charity or subsidies rather than justice. This establishes an ugly precedence, resulting in farmers seeking protection of their industries and looking to governments for solutions. This is all contrary to effective market mechanisms. A market is only as effective as its participants.

We see the effect on their psychology at a protest meeting in Gloucester, NSW. This community is largely better off than most because it has witnessed the rapid growth in coastal property prices as city retirees sell out their properties for rural lots. But these people are looking for government`s to respond, and certainly responses are warranted, but there is alot farmers can do. Why do Australian farmers insist on growing farm products in markets where they can`t compete, where their labour costs are excessive, where they are not able to generate the productivity gains to overcome those higher wage costs. They make a virtue of their hard efforts, but to work hard for nothing is not noble - its stupid unless there is the promise or expectation of long term substantial gain.

Not all Australian farmers are loosing money. The great majority of production comes from the higher capitalised farms with larger equipment and larger acreage. Those farmers struggling to make money are working long hours, have smaller farms that have tighter margins. Some of these farmers do OK because they are have supplemental off-farm income, eg. A wife or children working in the local town. There is nothing wrong with this strategy if it works for them, but there is no justification for these people to blame the markets. Their unwillingness to change reflects their unwillingness to incorporate. Profitability is an option to them - but they need to make a choice - either:

  1. Passive strategy: Rationalise their farm investment by amalgamating with neighbouring farmers, ie. By accepting a stake smaller stake in a larger farm
  2. Active strategy: Sell their farm and invest in Chinese farm production.
  3. Retirement: Sell the farm and invest the proceeds - in farming or elsewhere.
There is no necessity for Australia to be a farming nation - there are plenty of poor countries who will be able to do it cheaper. Farmers can however capitalise on their natural resources by investing their money and skills in these countries. The mining industry has displayed such flexibility - why can`t farmers? When did farming become an intrinsic elment of culture to be enshrined. Is that is the way - it will by necessity be in museums.

Not all food imports and substitution of our exports is the result of Asian supply. NZ has emerged as an important compeetitor because of its weaker currency and lower production costs. It really doesn`t matter. Its a market reality. NZ is not a protected market, and in many respects Australia production is subsidised. Australia offers subsidies for environmental maintenance, water, etc. Water is too cheap in Australia given its scarcity, which also means a great deal is wasted on low-value production because too many farmers have invested in lifestyle rather than income. Eventually these `water credits` will go to the highest bidder - vineyards and cotton farmers - producers of higher value output. These sectors of the economy are booming.

The reality is that Australia can compete in a great many agricultural sectors - generally the high value sectors, or those where food cleanliness and preparation are highly regarded. The message for farmers is that they have to move towards:
  1. Higher value export products
  2. Niche high value products
  3. Packaged food preparation

Traditionally farmers have lived autonomously, and displayed no applitude for working with their fellow men in a corporate environment. They are inclined to be head-strong and stoic, but there are just too many factors they can`t control. The reality since the late 1980s is that farmers are largely price-takers with seasonal surpluses driving prices down, allowing buyers to set prices. They have even resorted to downstream investment in raw supplies to keep prices low and to improve product quality. Farmers need to amalgamate and perhaps even move up the food chain to form relationships with restaurants and food distributors. Sadly because of their culture - the mainstay of which is inept people & negotiating skills - they are not prepared. Farmers have not responded to the increasingly sophistication of farming by learning a broader range of skills. Those that have - prosper eventually - usually at the expense of those who play the `victim` card with government - waiting for hand-outs. Global food retail groups are trying to reduce their product costs, and undercutting rival suppliers with in-house brands.

Australia remains highly cost-efficient in broadacre farming areas like dairy, beef, lamb and several grains, as well as some seasonal advantages. But NZ, Sth Africa, Sth America and China have emerged as significant competitors since Australia`s currency rose due to mineral exports. China is pinching NZ`s markets, so NZ is taking ours under the FTA agreement. Australian cost competitiveness is trailing NZ by 30% - let alone other competitiors.

- Andrew Sheldon

ConvinceMe.Net - Anyone up for a debate?