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Weekend reflections

May 25th, 2008

It’s time once again for weekend reflections.Feel free to write at greater length than for a standard comment thread. As always, civilised discussion and no coarse language.

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  1. Smiley
    May 25th, 2008 at 12:29 | #1

    I’ve been re-reading John Ralston Saul’s “Voltair’s Barstards�. This book is packed full of jems. But the one I just have to quote is this one from the chapter titled “Of Princes and Heroes�:

    …Self-discipline has not been seen as a great virtue by citizens of the West over the last few decades. In the 1950s and 1960s, it was popularly assumed to be a preference of the Right, and this misapprehension remains in the political debate. But nothing could be less disciplined than the New Right, with its romantic mythologizing of freedom, equality and individualism in order to obscure such practical policies as the legalization of dishonest speculation through financial deregulation. The New Right is even more undisciplined than the liberal middle classes…

  2. Smiley
    May 25th, 2008 at 12:30 | #2

    Sorry that should have been “Voltaire’s Bastards”.

  3. May 26th, 2008 at 08:54 | #3

    Thanks, Smiley. I have used it in order to begin to flesh out the page candobetter.org/neo-liberalism/about.

    Have you read Naomi Klein’s “The Shock Doctrine”?

    I can’t believe I seriously allowed myself, for so long, to entertain the possibility that so many free market ideologues actually believed the claptrap they were peddling. I guess they had a great joke at my expense.

  4. observa
    May 26th, 2008 at 12:29 | #4

    Smiley and Daggett are correct to point out the dangers of creating a fantasy constitutional marketplace(CM) by allowing well paid suits in central banks to bastardise the currency by printing monopoly money that has inevitable consequences. While our Govts may enjoy the easy fruits of raising taxes by stealth by such shady behaviour for some time (the vagaries of demographics and the propensity of Asians to fund such pyramid schemes notwithstanding), eventually those chickens come home to roost with sub-prime busts and now the Reserve strongly advising the Rudd Govt not to spend those funny money surpluses anymore. Furthermore, while most of us may occasionally enjoy the thrill of trying to own Mayfair and Park Lane with hotels, we largely realize this is a children’s game with Monopoly money, rather than real, adult, forgone consumption and investment. That adults in the private or public sphere should always play the real investment game with the latter is the salutary lesson for us all here. That should be the golden rule for any CM we devise to operate under the overarching umbrella of our currency. No doubt we are all avid Austrian fans in that respect at least, as we all watch the funny money of a decade trying to find its proper exchange worth with real commodities right now. Well may we say God help working families (or should that be Australian families now?), because nothing will save these central bankers now.
    Special thanks to Smiley and Daggett for pointing out that imperative in designing any new CM from the ground up and speaking of that you’ll recall where I left off last week in recounting that journey-
    ‘Total reliance on carbon taxing has some powerful attractions, but not enough to win me over. Nevertheless, a useful exploration to help decide upon the direction of the next step, whilst discarding a popular but misguided one.’
    As much as AGW is an absolute imperative for many now, it is too singularly focussed in outlook, to the point of obsessive. It sadly neglects the importance of biodiversity and the inexorable inroads of our current CM into our natural environment. That environment must have not only the market forces to prevent its continued destruction for our wants, but the CM to halt and push back against it and even reverse that impact. True countervailing economic power. Without that, our natural environment is doomed to an ineffectual rearguard action by the well intentioned whims of Govt and individuals from time to time. Good luck National Parks and Wildlife and the John Walmsleys in that regard. To that end, we must add general resource taxing to carbon taxing (really CO2 emission equivalent taxing under consideration here) in order to strike that balance.
    There are essentially two main reasons for taking that next step along the road to an ideal CM. Firstly we recognize the inherent need for it in the emotional hot button response of banning plastic shopping bags, or what I might describe as picking losers in what is really a losing CM presently. Why pick on plastic shopping bags? What about all the other packaging we cart home with the shopping, not to mention that Gladwrap, Garbags, kitchen tidy bags and the like, as well as the disposable lighters, ballpoint pens, razors, etc, etc. Where will picking losers ever stop, we may well ask ourselves. Well much of it may stop(especially the economies of scale that boost it) when the inherent cost of using new resources extracted from our shrinking natural environment, is more truly reflected in the price of such items. Recall again no income tax, no GST, no stamp duties, payroll tax, etc, just the flow through cost of its replacement carbon and resource taxing in all new manufactures. No impact of taxation whatsoever on existing manufactures, which should aid in the recycling of them as the cost of the new rises accordingly. That and what Robert Pirsig describes in Zen and the Art of Motorcycle Maintenance (and perhaps you should all ride motorcycles at some stage), as the quest for quality over quantity. Raise the price of the new and you will inevitably cause quality and longevity to become paramount. Secondly there is now the problem of ownership of the resource base rearing its ugly head with the likes of SWFs eyeing the Billitons, Fortescues, Rios and Woodsides eagerly. The opportunity for transfer pricing here is obvious, not to mention the increasing economic rent to any current or future owners. Taxing resources generally at the point of extraction, obviates this growing problem (largely jurisdictional).
    Now sometimes on revisiting such paths, the explorer recognizes the need for having chosen a horse, rather than a camel for a particular part of the journey, but unlike real intrepids, that need not be to one’s eternal regret. That said you’ll have to take on faith for the time being, that the horse really needed here was also to include land use for resource taxing purposes. As I recall it was that intrepid explorer Henry George who had a unique understanding of that particular horse. He actually proposed total reliance on his land tax horse (his own version of the ideal CM you’ll note), but I’d suggest his knowledge of modern saddlery was a sign of his times which Buchanan and elapsing time have given us the benefit of. By all means use the horse of land tax, but saddle it not on value, but with the latter foresight of land resource use. Now you’ll recall our current CM has no property based rates so far and that needs to be rectified by a resource based taxing of land use rather than on its market value. It’s imperative not to tax land held in trust as natural environment on the market value of it for its next best alternative use, lest it be sold and covered in tuscan boxes or whatever. No, we need to base land resource taxing on a scale of zero for its natural state, to a maximum rate for man-made cover like concrete, bitumen and housing, etc. A logical extension of this policy would be to attribute attendant man-made cover to that privately covered. For example the ratio of roads and footpath cover would be apportioned to existing private cover, a higher penalty for urban than rural resource use. We have the technology in satellite imaging to determine and police such a land use resource tax. The critical point I’ll leave you with, is that the natural environment taxing of say a Walmsley’s Warrawong Sanctuary, must be zero, whereas a Westfield shopping centre would be at the maximum.

  5. observa
    May 26th, 2008 at 15:18 | #5

    If I’m a skeptic about picking losers, I see some are also skeptics about picking winners
    http://www.theaustralian.news.com.au/story/0,25197,23744414-11949,00.html
    You should be too

  6. May 27th, 2008 at 22:14 | #6

    Observa wrote:

    What about all the other packaging we cart home with the shopping, not to mention that Gladwrap, Garbags, kitchen tidy bags and the like, as well as the disposable lighters, ballpoint pens, razors, etc, etc. Where will picking losers ever stop, we may well ask ourselves.

    Spot on!

    It’s ridiculous to imagine that avoiding the use of plastic shopping bags (which I do BTW) will significantly stop our headlong march towards the abyss. What more evidence of the irrationality of the ‘free market’ than the waste of so much of our finite non-renewable resources to make packaging.

    The end of your post is reminiscent of Georgeism which has a lot going for it IMHO. You wouldn’t be a Geoist by any chance?

  7. observa
    May 29th, 2008 at 16:26 | #7

    Woops a senior moment! It was that intrepid explorer John Rawls I was thinking about as providing the modern saddle for old Henry. Daggett, I’m only a modern Georgist to the extent that we all are now with council rates and land tax and to a lesser extent water and sewer rates too. Where I’d diverge from that lies in advocating ditching its ad valorem nature currently and I haven’t said much on the weighting of the various blueprint measures. That would be a matter of trial and error and much politics no doubt. Getting general agreement for an overall blueprint is the priority first.

  8. observa
    May 29th, 2008 at 16:44 | #8

    As for the particular emphasis on carbon taxing, I note that the impetus for it appears to be dissolving somewhat rapidly. Cap and trade might appear at first glance to be the answer to that, but I’m very wary of such Trojan Horses
    http://www.reuters.com/article/environmentNews/idUSL0612415820080506

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