Friday, July 27, 2007

Socialism = envy

ABC radio presenter Jon Faine asks PM candidate and ALP leader Kevin Rudd (via Andrew Bolt):

But then you have to do something about wealth. Do you increase taxes? What do you do about people making too much money?

Yup. Thats the ABC for you. And the ALP probably sympathize right down the line. Wealth is a problem that has to be tackled. Nobody stops to ask why inequality in itself is a bad thing !?

These guys are at the forefront of the politics of envy.

Socialism is an ideology built on envy, and has killed 100 million in the last century. It is still part of our mainstream political debate and discourse.

Bracks resigns ! Goodbye one thieving bureaucrat.. Hello another.

Steve Bracks has resigned for that oft-used reason - "family reasons". Whilst Steve was a fairly well spoken, polite and civilized man, I have nothing but contempt and disgust for his professional record as Premier of Victoria since 1999.

Somehow, the ALP got elected because of Jeff Kennett's so called arrogance and accountability issues. Since then, the ALP has spent tens of millions on its own advertising campaigns, on private jets and five-star hotels, on dozens of committees and investigations and reports and media monitoring groups, and has managed to grow the size of government into an absolute leviathan whose tentacles intrude into our lives more than ever.

The roads are patrolled and regulated at a ridiculous level now, where doing 43km/hr in some zones is a crime. The size of the public sector has doubled, and the number of people who work for the government apparatus at one level or another has surged. This creates a massive class of rent-seekers who depend on a big government that will continue to pour billions of dollars, at an ever increasing rate, into their clumsy and inefficient bureaucracies. At election time, this makes it very difficult for a small party that promises to restore liberty, property rights and reduce spending, because there are literally hundreds of thousands of individuals who receive privilege from the system the ALP has created. Public teachers, politicians, economists, police and traffic enforcement, policy advisers, public transport workers, hospital staff and nurses.

All of these jobs are not created out of thin air. They are certainly not driven by market demand though. They are created artificially by the stroke of a politician's pen, who seeks to gain publicity and win re-election. They are paid for by every tax-payer, and the cost massively outweighs the benefits of those jobs created. The tax system, after paying for massive administration costs (the ATO is 4 times the Australian Army in personnel, Centrelink is probably 20 times), distributes some money to what we believe are important jobs - police, firefighters, teachers and nurses.

But so much wealth is destroyed in the process, the result is a net loss. More jobs, higher salaries and better value would be provided by free markets and private firms than the status quo. We would have better hospitals in many ways. They would manage costs instead of gladly spending their annual budget. They would recruit only the amount of staff needed to serve patients, but they would recruit enough staff to serve and treat patients who approach them. Hospitals would compete against each other in terms of providing higher standards, and undercut each other to deliver best prices. The same applies for any complex institution, such as nursing homes, schools, tertiary institutes, police departments and emergency rescue services.

But we never got to see this benign market mechanisms work. People are barely allowed to keep enough of their incomes, property and wealth to pay for the basics - cars, food, clothes and energy. As we can see, the costs of energy are set to skyrocket thanks to the governments socialist environmental policy which has stopped private firms from increasing the supply of dams, drinking water, nuclear stations and cheap electricity.

Bracks never offered a single tax cut until this year when he made a token cut on stamp duty rates. The amount of GST collected and given to the Victorian government to spend has skyrocketed, and spend they did.

This is a textbook example of why big government doesn't work. This is what happens in times when the economy has been booming. Do we really see the slightest improvement in standards in police, health and education ? Or have we created an army of public servants who depend on the state to continue spending big budgets into "the system" ?

Private school teachers and private hospital staff have to earn their money. They must meet the demands of parents and patients respectively, in order to earn their salaries. Public sector employees only need to lobby the media, lobby political parties and convince enough people to vote for a party which will continue to throw money in their direction, no questions asked.

Forget the spin that the politicians put. The Liberal party doesn't fare much better than the ALP. Its not about good government, clever politicians or wise management by government at all. Its about the very size and scope of government itself. If the mechanisms of socialist government, big budgets and heavy regulation worked, our public transport would be punctual and not overcrowded, as well as not running unneeded empty services at night, our hospitals would be cutting costs and improving standards, our schools would be innovating and managing costs too, ambulance and police response times would have improved, and there would be no issues for households to obtain cheap and abundant water and energy.

Bracks has destroyed wealth for 8 years. The Liberals refuse to identify the problems with big government. So the only choice is to support the party of small government - the LDP.

Thursday, July 26, 2007

Rudd is full of hot air and empty promises

This guy is promising to tackle the "housing affordability crisis" now. First he's promising to put massive efforts into controlling the planet's climate, now he thinks he can change the subjective valuations that millions of individual Australians place on property ownership. Whats next, a promise to cure cancer ?

“One of the great challenges we face here is that if you are a young person, in particular localities around the country are asking the question ‘am I ever going to be able to get into the housing market?’,’’ he said.

“And Mum’s and Dad’s, sometime silently, in conversation with one another and absent the kids, are saying how much are we willing to shell out from the money we are saving for our retirement to assist our kids into the housing market first up.

No Kevin. Its not we. Its not the ALP who faces a problem. Its not the federal, state or local government that faces a problem. No single individual is delegating that responsibility to you.

Some young people may face that problem. They are free to form purchase agreements between property owners in any area, at any price that the 2 parties accept. They are free to bid at auction up to the price that they place on the value of the property. It may be a problem or challenge or sacrifice for them, but the best way to deal with this is for buyers to communicate, trade and deal with sellers via the free market.
“… In enabling first home buyers to get into the market we have got to realise the fact that many are beginning to despair about whether they will be able to do it and many are looking at how they might get assistance from their families in ways in which perhaps we didn’t in earlier generations.’’
Why do I have to realise this ? Its not my concern. I'm not being exceptionally selfish, but this is a realistic and pragmatic approach to life. People have to worry about their own problems and issues because they are best positioned to deal with them and resolve them. Home buyers are the ones who actually know where they'd like to live, how much they can afford, the size of home needed !!

Even if you pretend that it is your concern, you are only posturing. You aren't willing to put your own money out, you are only threatening to steal more of our taxes and redistribute it. And of course you'd earn votes in the process.
As a first step, Mr Rudd said that a Labor Government would create a single housing research body - made up of all three levels of government, industry, the Reserve Bank, academics and researchers who could supply comprehensive data about all aspects of housing.

''We want the best brains around to get the total data picture right,'' he said.
More bureaucracy and government largesse. What a buffoon ! He still thinks it is perfectly dandy to just grow government above and beyond - all you need are some clever brains or good management. Are you suggesting Comrade Stalin or Chairman Mao didn't have the best brains around ? Far out, this guy needs a history lesson. Socialism fails again and again, producing disasters, shortages, famines and misdirected investment, not because of stupidity or bad management, but because the whole concept of bureaucracy and big government was flawed from the beginning.

The ALP are nothing more than a bunch of meddling, thieving bureaucrats seeking to create more publicity and election coverage. What the hell are you going to do, throw even more money at first home owners ? All this does is inflate house prices further. Why not stop collecting stamp duty from property transfers, shut up, and stay out of our lives ?

The same message applies to the Liberal party !

Tuesday, July 24, 2007

The role of the ACCC summarised

A great comment by Terje Petersen on Catallaxy, summarises just how this whole antitrust and competition watchdog nonsense works:

Ways to justify government intervention:-

1. If prices are low call it preadatory pricing.
2. If prices are stable and consistent call it collusion.
3. If prices are lower in some places than others call it a lack of proper competition.
4. If prices are cyclical (eg petrol) call it evidence of price co-ordination. And make accusations of greed since the price co-ordinaters are so mean as to put prices up at precisely the moment when demand is strongest.
5. If alternate suppliers are plentiful refer to the excessive consumer choice as confusing and inefficient.
6. If alternate suppliers are few then call it market failure.
7. If profits are high call it exploitation.
8. If businesses are failing call it wasteful and complain about job loses.


The advocates of government intervention have an endless supply of justifications. The stew is always too hot or too cold and never quite right.

Wednesday, July 18, 2007

Great Global Warming Swindle reviewed

Last night I finally watched the ABC's version of the Great Global Warming Swindle. It was edited down to 55 minutes, and it even came with an ABC disclaimer before the show saying that the views expressed within were not those of ABC management. It was also followed by Tony Jones flying to London to interview Martin Durkin in a very aggressive manner.

Despite the ABC treating this as very controversial, and trying to smear and tarnish the names of some of the people involved, I do think this show is very convincing and very powerful. It brings some balance to the hysteria, and shows that there should be a lot more skepticism before we come to the conclusion that governments need to regulate human activity with the aim of curbing CO2 emissions.

Many eminent scientists were involved and quoted. They were not just doubtful, but they were highly critical, of the MMCGW (man made catastrophic global warming) thesis. Most interesting for me was the devastating take-down of the UN's IPCC as nothing more than a corrupt political body which does not represent scientific consensus. There have been fair criticisms of some of the science and graphs involved, perhaps this detracts from 2 of the points raised in the film, but all in all, there were a good 7 or 8 major points raised that seem irrefutable. This stands in stark contrast to Al Gore's film which made 15 or more wild claims and all were easily irrefutable.

Monday, July 16, 2007

The ALP doesn't understand markets

Kevin Rudd, and his socialist Industry Minister, Kim Carr, are again showing some very strong hints that they plan to further regulate and assert government control over some very important and sizeable Australian markets.

Kim Carr is threatening to ramp up protectionist policies and the euphemistically named "industry assistance" for Australian car manufacturers.

A Productivity Commission review of the phased reduction in tariffs is due next year. But Mr Carr said an independent review of the state of the industry was needed now because the assumptions that underpinned the 2002 policy had changed …

The Labor Leader, Kevin Rudd, repeated yesterday that he did not want to lead a country that no longer manufactured anything, and “making things means still having a viable automobile industry in Australia”.

(hat tip: Catallaxy - which points out that the Productivity Commission is indeed an independent body)

Kevin Rudd continues to hint at a groceries watchdog, as well as increased government monitoring of petrol prices. These two markets are highly competitive and form a huge portion of the Australian economy.

Rather than focus on the specifics, I will leave my readers with this quote from John Jewkes "Ordeal by planning" which I feel best summarises the ignorance and mindset of the ALP when it comes to markets and prices (hat tip: Diogenes Lamp).

Something has already been said about the morbid fears in the minds of many planners about the true operation of the price system.

In the last analysis, the planner’s attitude towards the price mechanism may arise out of a feeling that such a mechanism deprives him of some part of the gratification of exercising control…

Most planners are obsessed with the need for price stability. A price is essentially an indicator, by reference to which producers and consumers regulate their action…the stability of general prices is impossible if specific prices cannot change in order to bring about readjustments within the economic system.

The planners feel that when price changes take place, that something is going on for which they are not responsible, that the economic system is playing queer tricks with them.

Whenever I see a political party attempting to tamper and regulate with markets, I will describe it as authoritarian and meddlesome. After all, they are interfering in transactions that would have otherwise occurred between 2 consenting parties.

The Liberal Party do more than their fair share of meddling. Why do the ALP feel the need to out-do them in this respect ?

Wednesday, July 11, 2007

Kevin Rudd's barking up the wrong tree

How else could I describe Kevin Rudd's election promise to investigate the pricing of groceries and further empower the ACCC to monitor prices.

Following Labor's assault on the petrol companies, the Opposition will today announce it wants the competition watchdog to launch an inquiry into the prices charged by grocery giants.

With fruit and vegetable prices increasing by 15 per cent in the past three months, Labor is attempting to capitalise on what it believes is the underlying anxiety of voters who feel they are not sharing in the benefits of a buoyant national economy.

This policy reeks of economic ignorance, stupidity, authoritarianism, and I would have to agree with the treasurer Peter Costello who described it as a bit of attention seeking and a massive media stunt.

The idea of having an a competition watchdog and regulator is unjustified. The ACCC is supposed to investigate anti-competitive behaviour and pricing in any industry. But what exactly is anti-competitive ? How do you know if a retailers pricing was determined by:
1/ real world inputs: supply factors, events, changes in the business environment, perceived risks, a sales strategy, changes in demand, exchange rates, interest rates etc etc...

or ...

2/ if a price is determined by a companies executives thinking that they have some kind of monopoly / duopoly power within that industry, and therefore they can raise prices well above "cost" and "reasonable profit levels", at any moment and sales will remain unaffected ? Or that the a large firm isn't trying to be a predator to the competition and lower its prices below "cost" to capture the market and destroy smaller competitors ?

An outsider can't tell the two apart. Entrepreneurs and business executives have a lot of factors to consider on a daily basis. How do you know exactly why a firm changes its prices ? Exchange rates, commodity prices and the cost of most inputs change on a daily basis. You have to factor in shipping and freight, storage, security, staff, I.T costs, marketing costs and you start to see there is a whole universe of factors that affect prices. The ACCC won't be able to determine if petrol prices or grocery prices are unreasonable.

Whats more important, is the fact that in free society, there is no principled reason to fine or penalise a company for setting whatever price level it pleases. Not one buyer is forced or compelled to purchase an item against their will. Millions of Australians grumble about petrol and grocery prices, and Kevin Rudd is trying to tap into this sentiment to help his campaign. But everybody is free to reject a price and look elsewhere !

In a free market, predatory (below cost) pricing leads to losses and monopoly pricing (well above cost) leads to less sales and smaller market share as your customers flock to your competitors.

These are both very harmful to a company's survival in the long run. You don't see firms do this in a competitive market. They have to compete and maintain market share to survive. But this is only the case in a free market. Sometimes the entry costs are prohibitive. And in every case, government sets barriers to entry - registering a business, obtaining licenses and permits etc.

Even Coles and Safeway already have massive competition. Fruit shops and independent grocers, butchers, fish shops, Aldi supermarkets and more. If Coles and Safeway were ripping people off, then they wouldn't be as successful as they are today and they would see sales drop off.

Kevin Rudd is barking up the wrong tree. He should look at the role of central banks around the world who have been recklessly inflating the supply of money.
Australian monetary growth has been thoroughly irresponsible. From March 1996 — John Howard’s electoral victory — to April this year currency grew by 95 per cent, bank deposits by 166 per cent and M1 by 150 per cent.
Kevin Rudd isn't the sharpest tool in the shed, and no ALP politician will ever clue on to the role of money and the effect of fractional reserve banking by central banks around the world. He could do us all a favor and just stop barking.

UPDATE: A couple of website polls tell us more about certain audiences than this issue. At the Herald Sun, some sanity prevails in a poll titled:
"Do you think Mr Rudd's plan will keep prices low?"
Yes: 21%
No: 78%

Over at the asylum on Spencer St, The Age readers were asked the more fundamental question: "Should the consumer watchdog monitor grocery prices?"
Yes: 88%:
No: 12%

A whopping 88% think that it is a necessary role of a government bureaucracy to monitor prices. So few people understand markets and the mechanisms involved. So many people have a cynical view of markets. So many people remain fans of big and intrusive government. Sigh...

Monday, July 09, 2007

Ron Paul gains ground in the presidential race

My blogging duties should be resuming shortly, now that I am back home and I slowly catch up on recent news.

A big congratulations goes out to Congressman Ron Paul, whose 2nd quarter fundraising has brought in a total of $2.4m, and he has now surpassed John McCain who is suffering from a major slump and lack of support. Ron Paul still has a long way to go, till the2008 primaries and after that, to raise the kind of funds needed to run a serious presidential campaign, but is making outstanding progress:

Paul's cash on hand puts him in third place in the Republican field in that important metric, although he is well behind leader Rudy Giuliani, who has $18 million in the bank, and Mitt Romney, with $12 million.
Ron Paul is without doubt an internet phenomena, with the 2nd highest number of Youtube subscribers:
  1. Obama - 5,186,833
  2. Paul - 2,092,246
  3. Clinton - 733,453
  4. Romney - 669,455
  5. Edwards - 572,384
  6. Brownback - 468,432
Nothing sums it up better than this quote:
"I think people have underestimated the number of people in this country who are interested in a freedom message," says the Republican congressman from Texas, who has strong libertarian leanings.