Rudd over-rated by diplomats

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According to the NZ Herald a WikiLeaks cable stated:

"Rudd ... undoubtedly believes that with his intellect, his six years as a diplomat in the 1980s and his five years as shadow foreign minister, he has the background and the ability to direct Australia's foreign policy".

This strikes me as irrelevant. The guy imposes huge taxes on industries because they make profits after 15 years of low prices. He wants to control the money. He is the worst form of intellectual parasite. The type that needs to be at the centre of the universe. This is not a question of efficacy for such a person, otherwise you don't join the public service. Its all about control. The arbitrary rules and regulations of the public service and government is the only place where this form of low-life can grow. That's why you don't find Rudd's species on planets with no life...he has nothing to live off.

I really think those diplomats were too kind. The notion that he is "abrasive, impulsive, a control freak", strike me as incidental to his ethical premises. Extortion of wealth from Australians who make a profit, and what about those who buy stocks after he arbitrarily decides to apply a huge industry-based tax without warning. The same can be said for Swan, Gillard and Ferguson.

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Author

Andrew Sheldon

Resource Rent Tax

Applied Critical Thinking | www.SheldonThinks.com

You have to love competition, right?

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The following article reminds me of the movie 'The Patriot' with Mel Gibson and Heath Ledger. Mel Gibson plays the role of a revolutionist, and in the Confederate parliament, he poses the question 'But why should I substitute a British tyrant 3000 miles away with one in my backyard'.

Its a good question...but that is precisely what one does when one accepts the initiation of force or coercion as a basis for political discourse. Which brings me to the question of the Australian federation, where you have two tyrants claiming a piece of your life, whether you are an investor or worker. The Australian government last year without warning stated that it was going to raise the royalties of minerals by 40% (aka Resource Rent Tax). This was after no consultation, and resulting in investors losing a great deal of value from their wealth.

Now we have the sorry situation of the states stepping in and saying they want their share of the 'spoil'. This is like two greedy colonial masters fighting over territory. The problem will of course end up in the High Court, where they will rule that the government had no business intruding in the affairs of the states. The Resource Rent Tax is a quasi-royalty, as much as they might dress it up as an income tax, and it is an attempt to steal wealth from shareholders, and now the states.

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Author

Andrew Sheldon

Resource Rent Tax

Applied Critical Thinking | www.SheldonThinks.com

An election statement from Fortescue Metals

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Here is a statement made by Fortescue Metals in the last week of the election. Since I support their efforts I will post the message here:

As the Federal Election draws closer, Australians remain deeply concerned about the impact the Mark 2 Super Tax (Minerals Resources Rent Tax – MRRT) will have on the Australian economy and our communities.

Unfortunately for all except the big three multinational miners, the construction of the Mark 2 Super Tax has been shrouded in secrecy.

The Mark 2 Super Tax is as equally unfair as the Mark 1 version, and the ability to model its affects, and in turn finance projects, remains debilitated by the lack of detail and transparency of the new arrangements. We estimate that the marginal rate of tax has fallen from around 57% (Mark 1 Super Tax – RSPT) to around 50% (Mark 2 Super Tax - MRRT) but this remains substantially above the 40% rate that is the next highest rate to be found anywhere else in the world, so will render the Australian mining industry uncompetitive in the global industry.

The changes in the new tax are biased against infrastructure providers like Fortescue, which provides third party access to other smaller miners, so imposes an additional handicap on companies’ ability to fund and construct their own infrastructure. We’ll become a nation that can’t survive without the Government teat. Also, Mark 2’s debt finance benchmark advantages large, multinational, companies with large balance sheets, as opposed to Australian mine development companies like Fortescue that rely on commercial finance to fund project and infrastructure development.

Government and the three multi-national, multi-commodity resource companies hatched a secret agreement that benefited them only. Those companies, and their associated industry representative bodies, were forced to sign secrecy agreements that prohibited them from discussing the Mark 2 Super Tax until after the election. Commentary with the media was banned. What could be so bad in that agreement with our Government that the Australian people are not allowed to judge it - until after they cast their votes?

I urge you to contact the editors of local, state and national newspapers in your state immediately to ensure our voices are heard during this important week for our nation. The following is an example of a letter you could send to your relevant media organisation.

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Author

Andrew Sheldon

Resource Rent Tax

Applied Critical Thinking | www.SheldonThinks.com

AMEC-funded mining industry advertisements well-targeted

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My congratulations to the mining industry for creating a well-designed advertisement highlighting the various arguments against the adoption of a mining tax. Here is a series of advertisements here. I'm sure it will be a huge success because it highlights some of the many ways in which the tax will hurt Australians, and the unfair way in which the 3 major miners have acted to establish barriers to entry for the rest of the industry. The campaign by AMEC strikes me as far better orchestrated than that by the major miners Rio Tinto and BHP. Like I say - those larger companies are run by 'managers' not 'shareholders'. It makes a huge difference to their decision-making.

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Author

Andrew Sheldon

Resource Rent Tax

Applied Critical Thinking | www.SheldonThinks.com

Gillard offering green bribes

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Who could argue with green tax credits for business? Certainly business in general will love it. The mining industry will hate it because they don't get subsidies, they get taxes instead. The people will love it because they get to feel warm knowing there is a global warming crisis unfolding. Even if there is no global warming - its better to be safe than vulnerable. Right?

Actually wrong. The problem with politicians is that they appeal to the lowest, most vile qualities in man. Your lack of intellect. I can't blame fear because it is human nature to respond to fear. But it is how people deal with fear that concerns me, and it ought to concern you. There are several ways people deal with fear:

1. Evade responsibility - like shifting costs (taxes on miners) to others (subsidies on energy users). Complicated government only makes it easier for people to evade responsibility, because they argue 'Oh but I paid my taxes'...'sure but there is a net deficit between your payments and your benefits'. This is why big governments are a curse, and a lack of principle will ultimately lead small governments back to big. So we need a 'principled solution'.

2. Evade facts of reality - like business saying there is no real problem with no counter-argument, and then just thinking that they can use their political power to disarm government. It does not work. Higher taxes on miners is the consequence. Educate the unthinking or perish, and the issue is not solely taxes, global warming, democracy...it goes even deeper.

Let us consider the latest policy initiative by the Australian Labor Party. They are offering $1 billion in subsidies for energy saving initiatives for certain industries like hotels and commercial buildings. The problem with this is that business is already in the 'business of saving money', so if it was already justified, then it ought to have been spent. If it wasn't justified, or even compelling, then the expense ought to be deferred until better technology or process systems justify it.

Another problem is the tendency for government to shift the country away from broad market principles. It does this by enacting specific or 'targeted' industry policy which benefits some at the expense of others. This in itself causes a mis-allocation of resources. We also see the a plethora of funds going into a certain industry just drives money offshore, as local service providers don't have the immediate capacity to service these industries, and prices go up because demand artificially exceeds supply. The implication is that you get shoddy installations (as with the Home Insulation Scheme by Peter Garrett). Labor does not learn, and it doesn't because voters are indifferent to where their money goes....just as you would expect of any common slave with no control over their lives. P.S. Labor represents more slavery. Liberals represent 'steady-as-you-go' slavery.

So the next effect of this policy will be premature expense on energy-savings, a rush of money overseas (i.e. a higher deficit than there otherwise would be), but it will help convince a lot of liberals who don't think that they have a responsive party who cares. Oh, it will also result in thousands of more rules, another hundred specific exemptions, more legislation, more complexity. Because they are arbitrary policies no one will understand the implications, so there will need to be adjustments, more exemptions.

Gillard will however be able to lower population growth because there will be a brain drain of smart Australians overseas. She will offset this will higher immigration numbers. The paradox being that Asians escaping collectivism in their own country will find that they face more punitive laws here. They will however appreciate the nice beaches, cuddly kangaroos. Their kids in a generation however might wonder why they ever left. There are already a great many Australians living in 'undeveloped' Asia, and you might think its the pretty girls, but its really something more....its the relatively freedom from intrusive and arbitrary government. You no longer know where you stand when government arbitrarily imposes taxes and subsidies. Ask shareholders in miners whether they were warned about a tax on their investments. How does one plan for that? If you think this is good for your country....you don't read enough.

The positive aspect is that Gillard is not bringing forward the Emissions Trading Scheme. The whole concept will be dropped in 2013, when it is realised that it was never humanity, it was always solar flares driving the variation in the globe's climate.

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Author

Andrew Sheldon

Resource Rent Tax

Applied Critical Thinking | www.SheldonThinks.com

Tyranny of the minority - this time its the miners and their investors

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This election ought to be a referendum on the rights of the minority. Unfortunately neither party offers much in the way of credibility on this issue. The rights of the government to impose its arbitrary will on the people goes unchallenged. For years now I have highlighted the lack of consideration given to regulation of small listed companies, including miners. Basically the government does not provide ASIC with sufficient resources to regulate disclosure and market manipulation, so the small companies, which are easiest to manipulate are rife with such practices because they are illiquid, with a small number of shareholders. The issue arises because of control of information. The problem arises because the number of shareholders affected is considered too small.

This is why the government, after announcing the proposed Resource Rent Tax, only dealt with the largest corporations. e.g. Rio Tinto, BHP and Fortescue Metals. It has failed to deal with the plethora of other prospective mining companies with iron ore resources under various stages of development in Australia. It actually involves a huge number of coal and iron ore projects. The number of investors in small mining companies is also huge. I suggest the government is undermining the impact that their shareholders can make. Consider that you hold your shareholdings in BHP (more probably) through a superannuation fund. Many mum's and dad's however like to invest in smaller stocks, and with so few resource funds at this end of the market, most moms and dad's invest directly in these companies. The implication is that miners will be able to send out criticism of the government policy just prior to the election. That is a pretty powerful marketing.

I personally don't like these companies having that type of unaccountable power. But its justified by their cause, and its the basis of our incredibly silly political system. There ought to be no need for small mining companies to lobby separately from the majors. There ought to be no need for large miners to lobby separately from all other companies. This is the result of arbitrary, segmented, rule. This is what we would expect of the Nazis. Divide and rule. Having won over the major miners, the government thinks it will win against the small miners because they have less power. I think they are making a strategic plunder! Stupid system.

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Author

Andrew Sheldon

Resource Rent Tax

Applied Critical Thinking | www.SheldonThinks.com

The mythology of democratic-based freedom

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Please debate me! In my last post I raised the prospect of rising fascism in Australia, and in fact all Western countries. Its not a new phenomena, its just that the prospects are becoming increasingly intellectual, and not simply economic. Society will tolerate certain inappropriate actions by government. But things get to a point where people's minds are being subverted, and fascism is allowed to escalate out of control without repudiation. The reason that there is no opposition is because the minority which might oppose it have no recourse to prevent it. This is the case today with IMF Australia being prevented by a government agency from obtaining certain information from the banks. This of course is not the end of the story. IMF can take the matter to the High Court to overrule ASIC, however this does not preclude the government from legislating to prevent any recourse.

The reason why I am calling for debaters is because I think just simply dismiss my assertions with little regard for my counter-arguments. So I open the opportunity for readers to debate me if they disagree.

I raised this issue in my local philosophy club. I think I left them worried. Certainly I left them thinking. I am the only one in the group under 55yo. Most of them are retired. One of the objected to my suggestion that democratic outcomes were arbitrary. Her argument was that when all stakeholders come together you get this lovely 'compromise'. The problem with a compromise is that its a departure from logic, and other people's capacity to comprehend or accept your argument. This is a problem because its justification for not seeking a consensus. Its justification for not reasoning with people, but simply imposing decisions upon them. i.e. How do you compromise with a thief. He comes to your house and demands at the point of a gun his right to your property. You say: 'I can't afford to lose these things'. He says 'OK, I'll compromise. You can retain half'. Maybe you accept his offer because he has a gun. But might you also think, that is not good enough because it is in-principle my property. You might get lucky, but so long as reason is not the standard of value is the extent to which you have no rights. But you know that because government does not wait for you to donate money to finance its activities, it instead imposes taxes upon you.

If someone is making an assertion, and you have the right to participate in the discussion, the process only has utility if your opinions have standing. It is not enough that they read your comprehension, they need to recognise its objective validity, or debate its invalidity with you. If they don't, then there is no prospect of reconciling ideas, and life becomes one of imposition, coercion, victimisation. This is therefore not a regime for freedom from oppression, democracy becomes a forum for legitimatising it.

An example was the call for submissions for human rights. My submission was not accepted because it did not meet the arbitrary standards of the Committee. Nevermind, I never thought it was going to serve any purpose anyway. It was always going to be a facade. The reason why a clergy was appointed was to give the process the 'appearance' of legitimacy, i.e. The church has the traditional high moral ground right? Well, less so I guess since the child molestation issues surfaced, but still the church has residual credibility which they do not deserve.

Another example was the uranium call for submissions. In this case, the government choses to acknowledge your contribution on some trivial or incidental way, like my assertion that 'there are 3 uranium mines' in Australia. This is expected to warm my stomach, to make me feel like a proud Australia. i.e. Like having your photo in the press. On the contrary, it made me feel like these people have utter control, and this process of parliamentary inquiries is really a rhetorical side-show.

So why is the parliamentary process and such processes which involve stakeholders inherently flawed? The reason is that participation is nothing but part of the story. Unless there is a requirement for opponents to challenge your assertions, then truth is not going to be established, one way or another. You cannot trust people to have empathy for your interests because they will argue that some other group will suffer greater loss, so they have more standing. It ought not to be a political vote. It ought to be a principled and rational outcome, which leaves all parties responsible to the extent that they had responsibility, and rewarded to the extent that they earned their concessions. These outcomes are best achieved by markets.

Take for instance the issue of tax? Its hard to say whether miners will pay more tax or less. They have a lot of power, but that is only advertising power. They need a moral argument to roll the government, and given everyone thinks 'rights' are entitlements, they will need to pay more taxes to pay your superannuation. There is of course competing principles here:

1. Your right to a public rent for the use of natural resources

2. Their right to know the outcomes before they invest. i.e. It would be unfair for them to be taxed at the proposed rate in those cases where they have spent money in support of those projects.

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Author

Andrew Sheldon

Resource Rent Tax

Applied Critical Thinking | www.SheldonThinks.com

The intellectual decline of the business sector

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The Australian government is threatening to adopt a new Resource Rent Tax. In protection of its interests, miners are saying things like "You will stop us creating jobs" - the government is saying 'we will create more". The miners are saying "But we pay more tax than the banks", the government is saying "Not according to our calculations". The government is saying 'resources are a public asset', the miners are replying 'we already state royalties'. Resources are of course regulated by the states, thus if the Federal government takes a cut, it will undermine new projects, which will undermine the State tax receipts as well. Not that WA or Qld will have a shortage, but they might appreciate the excess, and certainly other states will be missing out.

All this political 'energy'. Sometimes I think the world is just not worth all the effort. Some people seem just not worth the effort. But what else is there to live for but to complain to various interest groups, to get the best possible outcome. I frankly would prefer the mining industry, as useless as they are, to retain the profits rather to witness the frustration of governments falling over themselves to waste the money. I still feel this way, even after the following dialogue with a mining industry executive over the last few days. It goes like this.

1. Soliciting interest in Resource Rent Tax issue

I raised the issue of the Resource Rent Tax issue, suggesting this would be a huge impediment to the Australian economy, and would ultimately prove to be another unsavoury move towards fascist. I also suggested that on these issues the mining industry was its own worst enemy. His reply was supportive and positive:

"What we are seeing with Rudd and co is indeed fascism. They believe they know what is best for us all and that they can have a command economy. This is much worse than the Whitlam years which were bad enough. I don't see how anyone with half a brain could be anything but sceptical about climate matters. The miners do not present well. We are dealing with really evil people in Federal government just now. I will copy this to .......... who will be interested in what you are up to. They are very much "on the case" of this latest taxation proposal, as they are attacking the ETS".

Ok, we have established that he is politically correct. My concern is here that any effort has to display integrity, otherwise your argument falls apart. I am a bit disappointed with my reply to him because I should have taken more time writing it. I am overwhelmed by all the things I am trying to achieve, so I often tend to under-invest in important points...but this was my reply in part...The problem is I tend to presume or hope that I will be having a dialogue with people who have healthy self-esteem and a primary respect for facts. In fact, I get defensiveness and vulnerability...and I must admit I did not put my best foot forward.

2. Going slightly off track

"You mentioned that Rudd was bad, and I agree, but if it was just Rudd I would not care because he would be replaced within a year. Howard's First Home Buyers Grant is an example of government over-stimulating the economy for its own advantage. Its no better than India's price controls. Rudd then 'doubles up' when he joined the roulette table. This is more serious because it is a succession of political failures which reflects upon a poor system. Representative democracy is a 'false promise', we need a consensus based democracy where reason is the standard of value, not arbitrary vote buying, concessions, extortion. Certainly we need to remove the duopoly if there is to be good policy".

He probably didn't have a problem with that. The problem I have with it is that I am trying to educate him because I lack confidence in people's ability to grasp ethical principles. My 'defensiveness' comes after years of treading softly around people's egos....well their presumption of one. Its the next section where I should have worded it better.....I've altered it slightly to remove a personal reference....as this is intended to educate not disparage.

3. Establishing ethical framework

"I don' think ...... was selfish. This is a flawed conception amongst the general community, including business. Philosophers never challenge it; they assume it. That it is moral to serve others. Its the ethics underpinning socialism and fascism (Hitler: You are nothing, your nation is everything). Capitalism is selfishness - 'trading value for value'. But people stop there. Integrating with that moral concept is Masalow's hierarchy of values, and Rand's theory of values. The issue is not just that you act in your self-interest, but that you possess a coherent framework of values, so you 'know what constitutes your self interest'."

4. Fixing up my mistake

In fact philosophers don't so much assume it, they rationalise it. It is however probably my attempt to personalise it where I went off track....and condescending. Hmmm... well I actually don't know how to breach this topic without making people feel vulnerable, but sure as hell this comment did not help. Kind of embarrassed to disclose it, but in fairness to the counterparty..... I was trying very hard to be conciliatory...like stepping on stones to avoid bruising his ego...but on reflection I did a bad job of it. Really bad :( Unsurprisingly it had the opposite effect. I really ought to proof read this stuff. My comment was - some context missing:

"Very healthy I'm sure, but to the extent that your moral standard is 'perhaps superficially' altruism (non-selfishness) is good, then you might be placing yourself in a moral conflict as well, and perhaps carrying some guilt for that. You are selfish, and you should be proud of it, though I might suggest being tactful about how you present that knowledge. There is a difference between being altruistic and generous. Your success has met all your needs, so you are in a position to be 'generous'.
If you identify it as Rudd's moral high ground, you are actually living or affirming Rudd's conception, the conception of 2000 years under pre-science religion. If you can appreciate that, then you might appreciate the battle miners have is not political, its actually in the fields of epistemology-ethics. Miners tend to be a pragmatic lot like yourself".

Well - poor grammar to be sure, though mostly correct. Its just poorly argued. I might add that my dubious efforts to convince a business executive that the business community cannot win (and has not won) a battle against government by fighting at a political level. It has in the process conceded the realm of ethics, values and ideas to government. But it goes further because wealthy CEOs around Australia are - from a longer term perspective - shooting themselves in the foot by failing to support ideas which provide them with an ethical defense as well as a 'pragmatic' one because ultimately they cannot win the political contest without a moral code. Since most CEOs are mere managers, then ultimately the cost is being borne by shareholders. The reply was the following:

"I wish you well with all this but frankly I don't have time to be engaging in this sort of analysis. I truly wish you luck in putting the blow torch to the belly of the government but could not give a stuff about a lot of the other matters to which you are applying your superior intellect, eg. what is "selfishness" or what isn't. I believe I use the word correctly, end of story".

The implication is that CEOs and all Australians are financing the enemy. They pay taxes which are used to fund academics who are attacking their best interests. The government also uses its tax dollars to develop new taxes. Consider the following papers:

1. Paper 1 - The theoretical or ethical justification - It argues in essence that we need to turn away from selfish rationality and embrace cooperation and reciprocality. Anyone who has a sound understanding of markets, psychology will recognise that cooperation is selfish, its simply a broader perspective of self interest that incorporates others needs. This is what I was trying to communicate to the executive above. i.e. We give to get. If we don't get we stop giving. We initiate giving because we trust the counterparty. If we don't have trust in them or the process, then we don't initiate. This does not dawn upon academics because they feel compelled to provide a rationalisation for altruism. After all how are they to they justify living off expropriated wealth if they do not have the values to support the 'common good'. Their flaw goes even deeper than the CEOs. Alas, we will all pay the price.

2. Paper 2 - The practical or political execution - Treasury report on the Resource Rent Tax

It is rare that you will find a report by industry defending itself. If you do its likely to be about how many jobs they create, exports they generate...tax they already pay. This is amusing...they make a virtue of paying tax (i.e. sacrifice). This justification comes from Adam Smith. It was a novel idea back in the 18th century, however its time to develop a theory of values. Hehe. Rudd must be laughing "Allow us to make you more virtuous, you haven't sacrificed enough though". The industry is too busy making short term money to worry about their long term enslavement. I have no doubt that Hitler had the same easy path to infamy. I might add that, just as people only start worrying about kids when they start breaking laws, so the community only starts worrying about their government when it starts killing people. Rest assured you will not miss the first few hundred. The US only complained about political killings by its 'ally' government in the Philippines after they killed over 600 political opponents. I guess it could be argued those dissenters were collectivists, but by no measure is the Philippine government defenders of freedom. The Church was one of the last to end its support for Hitler....just as it was one of the last to acknowledge child abuse. All these philosophical perspectives - apart from mine - has one thing in common - a lack of respect for truth (or the facts of reality).

Remember however that owner CEOs have more invested than 'manager' CEOs, and yet these people are not really stepping up. People like John Talbot (Macarthur Coal), Andrew Forrest (Fortescue Metals) and a great many others have a great deal more reason to adopt the right strategy. I think one of the biggest problems with capitalism is the fact that 'managers' control the assets more than owners. It ought to be good reason for people to invest in 'owner' companies. Though they also present risks since society is structured on the wrong ethical principles.

Some will be critical of my interpretation because its just one man. He is surely not representative of the rest. Well I will let you know how many others step forward. As Dr Phil says "This is not my first rodeo". Incidentally, his psychology is underpinned by the same ethical conflict. I don't expect any. Not totally their fault. Their education system is the same as yours and there is great practicality in being "goal-orientated". But you need a breadth of knowledge to see around corners.

Perhaps the bigger issue is that this guy probably loathes me more than the academics who he is obliged to finance because of government-instigated tax expropriation. They live off his 'enslaved hide', but I guess I took something more valuable to him than money (which he has plenty of). I took away his pretense of cognitive efficacy. Not that he is an idiot. He is a smart guy. Just he is not mindful of what is important. Ethics. Not that he's criminal...just he does not have an explicit appreciation of his values.

So what do I need from such people? Credibility certainly. A good argument gets you so far. Under the current political system; reason is not the standard of value. But how do you get people to listen when you have no authority. Frankly I don't want power, I just want government to renounce its coercion. I don't need money from these people. Unlike the bureaucrat and academic I can support myself. Of course I'd love to be able to fight a High Court case to defend liberty, but honesty that is for people who have greater diplomatic skills than me. Ultimately that is the biggest aspect of making money these days. Friends with shared goals and values. I can't say not being validated with endorsements or praise by others is a little frustrating, but ultimately I guess its a hard slog and I've not earned it. My people skills are not there yet. Frankly I can't be bothered, so hopefully there is a diplomat among you who will carry that torch. I will however chisel away at the coal face hoping that someone will be burning the stuff at the surface. More probably it will just rot, just as there were unused stockpiles of product in Stalinist Russia rotting....waiting for some customer.

Ok, I apologised to the executive concerned for my condescending manner....which was actually not intended, since I respect the guy. He responded...

"No problem and no apology required. You are trying to achieve a good outcome and have good values. I do admire that. And you have tenacity which is great".

This leaves a question in my mind...is he just being polite/diplomatic, or does he really mean it? I think he means it because he is the type of guy who speaks his mind. This prompts me to ask - am I good in a selfish way, or an altruistic way, since I think selfishness is good, and he thinks it's bad. By that I mean selfish in the 'principled' enlightened way. I also think he is selfish, but in the guilty, apologetic, conflicted way. Mixed economies persist because good men do nothing....well nothing to reconcile mixing of values. Enuf said.

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Author

Andrew Sheldon

Resource Rent Tax

Applied Critical Thinking | www.SheldonThinks.com