That should be the headline but, they have by their actions admitted failure of devastating force for Australia. Tony Abbott’s betrayal of the Liberal Party and Australians in supporting carbon taxes and the cult of environmentalism is the latest act of treachery and political stupidity.
It cannot be said that the problem was one of “intellectual failure” because this would assume that the Right has been intellectually engaged. Last Friday, I alluded to two other disasters which had been set for posting on Monday. A couple of days in between is a long time when it comes to the Right, and the matter of Szoke had to be dealt with yesterday too. So, in this item the two other disasters.
First, an explanation. The use of “Right” is loose. What has wrecked the Liberal Party and is betraying Australians is not the Right. They are not free market warriors, they have done much to overthrow inalienable property rights, which is the foundation of economic freedom and so the general freedom of individuals. It is difficult to find a word to fix them with, a well deserved name that also adequately states what they are.
The Venal Party, for example, has a ring to it but is still astray. Also, they are not a Party, they are group of political parasites who have seized control of the Liberal Party control in order to serve themselves. Consider another of their fine virtues, pusillanimity – cowardice or the fittingly earthy, gutlessness. Oh, I know, the Pongs. That fits in ‘nong’, ocker for a walking, half-witted disaster zone, and grubs or gnomes (misshapen old men and hags clutching to ‘treasure’ deep within the bowels of the earth – their think tanks, and positions), and sulphuric acid – dense, oily, corrosive liquid.
The Pongs. Their current Federal Parliamentary leaders are Malcolm Turnbull, Tony Abbott, Julie Bishop and sundry other forgettables. I do see a problem with the name. Using it in items without attaching the definition could leave new readers in the dark.
Anyway,
The outstanding disasters of last Friday.
1. This has also been noticed by Brookesnews, so I’ll leave the economics in excellent hands -
Last week I sat horrified as I listened to Graeme Samuel expand on his new powers. “Witchfinder General” is no exaggeration, neither the punishments to be dealt to ‘witches’ he detects. Jackson has not exaggerated what Samuel said either ,
These demons from the capitalist underworld “use mobile phones with pre-paid SIM cards [and] meet in hotels, they meet on park benches”
Samuel said just that,
They meet in secret, and conspire to cheat consumers of millions of dollars and even hundreds of millions dollars.
Who are these dastardly fellows? Why entrepreneurs, who unlike Samuel have to actually serve customers if they are to succeed. Undertake genuine service, serve people. Samuel is described as a ‘businessman’. He is what the Pongs call a businessman and that this, according to the Pongs, makes him an economist like them. He was an accountant, which in business is administration only. He then had a plumb job as head of the AFL and there’s no need to explain what that bloated lot in the Commission are.
As soon as entrepreneurs are rooted out, Samuel explained, they must be given prison terms, in addition to lesser punishments such as bankrupting them and make it a criminal offence for them to resume in enterprise. Let’s put it this way, politicians, and served ably by their new police state henchmen such as Samuel, have given every incentive for every entrepreneur in Australia in a position to do so to leave, permanently.
I say, and what about himself. He meets in secret with politicians and other bureaucrats in order to decide how to dispose of Australians. Or, Unions. They meet behind closed doors in order to work out how to impose fixed labour prices. Is Samuel about to go for all these, throwing himself in prison too? He should, as a matter of principle – leading by example.
We are referring to the new ‘anti-cartel’ ‘laws’ that I have warned of as they were raised and came into force yesterday. “Laws” the Pongs supported. The likes of Abbott, Turnbull, Bishop, Kroger and on down a long list of them supported a measure that brings Australia also another step closer to totalitarianism, as well as breaking up firms and throwing decent men and women into prison for the hideous crime of being an entrepreneur. Well, I can appreciate why it is a crime to this lot; entrepreneurs are not what that lot are and never could be – investors don’t entrust stupid clowns with their firms.
Samuel is about to set prices, that is dictate them, for Australia Post’s goods and services. Now in so far as there are might be problems with Australia Post’s services, these then would be due to considerations Samuel cannot fathom in a fit but this all aside from the essential point:
Samuel stated that he can decide and fix prices. Asked how, he replied:
He will examine Telstra’s costs and and it’s revenues to assess what the prices should be. First up:
What are costs? They are the costs of production. How are costs established? By market processes. What are they? They prices of factors. Labour market prices, for instance, is for entrepreneurs a schedule of costs. It is customers that set the values, not firms, with the prices they value goods and services at. The factors of production receive their full marginal value.
They know what their costs are, Samuel doesn’t and cannot discover them because he is not engaged in the markets. What is going on in markets, therefore, to cause price increases that Australia Post is seeking begs questions involving lines of reasoning beyond Samuel’s ability. Neither are the CIS, IPA, and HR Nicholls Society capable of analysing this out. The price increases is automatically suggestive of causes but it would be folly to venture a conclusion without thoroughly examining what is going on.
For instance, the impact of the RBA’s monetary expansion is working out into prices, being absorbed by nominal price rises. They might also be indicating production is being hit by, oh regulatory burdens, cutting supply; something disturbing could be emerging that is hampering Australia Post’s capacity to work capital efficiently beyond it’s control. It could be a combination of both, and this is only in regards to it internally.
Whatever, Samuel’s reasoning is circular. He can decide what prices should be by examining prices (costs) and subtracting them from earnings and this last statement renders Samuel’s notion all the more weirder, because earnings is the sum of prices. He belongs to the school EE Pritchard studied, primitive Azande witch-doctors studying the entrails of chicken gizzards, but souped up with all the witch-hounding talent of the medieval version.
It returns us straight back to the myth of perfect competition on which firm destroying and now entrepreneur destroying ‘anti-cartel laws’ are based. Samuel exercising his police state ‘muscles’ is really proceeding from this assumption in regards to Australia Post’s prices. As Jackson wrote,
Unfortunately for Australia the likes of Fels and Samuel lack Stigler’s capacity for changing his mind once reality refutes theory. The quantitative approach assumes that unless there are a large number of producers in the market there is no true competition. It therefore reasons that a market with few firms will set prices and cause output to diverge from the competitive level. There is absolutely no justification for this belief. What matters is not numbers but contestability.
The catastrophe is due to the Pongs. They were just over a decade in office. One of their chief gurus, Peter Costello, intensified firm destroying ‘laws’. The IPA and the CIS assume the myth of perfect competition is true and thus conceded the entire battlefield to ‘regulators’. The IPA and CIS had the hide to turn to firms and say, we are fighting regulation. There are too many, they need to be rationalised. Now, see we have written articles explaining this. Now, if we can do this, imagine what we can really do if you hand over another $10/100 thousand’.
It is not a question of numbers of regulation, it is why and the IPA and CIS have concede entirely the falsehood of perfect competition. Now what this also involves is, as advisers and the Pongs having made sure the IPA and CIS and HR Nicholls Society were the sole sources of advice to Cabinet, Howard and genuine Liberals did not have the material needed to sort through these very grave matters carefully, with the upshot being the likes of Peter Costello smugly prepared the way for what is now a savage and destructive and police state ‘Act of Parliament’.
This is not failure on their part. It is stupidity and stupidity entails disaster if it is the basis of action on grave matters. A shocking disaster and a joy only to the treacherous Left.
2). Manufacturing
Last week, headlines in newspapers ran, “Unions demand Cabinet do something to shore up manufacturing’” and manufacturing is in deep trouble so I certainly do not oppose the concern, I oppose what the call amounts to, a call for industry policy and it is music to Kim “Il Carr’s ears. The other was, ‘Unions call for protectionism’ to shore up manufacturing. Music to the ears of protectionists.
Early last year, Senator Kim Carr, after receiving another flaccid tongue lashing over what could have been a blistering attack on manufacturing, could rightly reply, “But you had over a decade in office to do something. I’ve been in office only a few months and it is complex to work through and I have still much work ahead.’
This get’s right back to the monetary expansion of central banks. Carr is right, the Pongs had over a decade in office to deal with this but what they had to do is tackle the RBA’s criminal monetary expansion and, at bottom, work on a return to sound money.
Monetary policy stays tight as economy tanks
Terry MacCrann at least appreciates carbon taxes will smash production in Australia. However, with so many others he holds to the nonsense of ‘the dual economy’, the ‘financial economy’ and the ‘real economy’. Well, the former is, to use that otherwise idiotic term, ‘real’ and it is inseparable from production, for in financial markets capital funds are raised that will be exchanged for capital goods – investments. Needless to say, he refuses to face up to the fact that it was the anti-free market ‘policies’ of central banks that caused the turmoil in financial markets in 2007. He is still at it along with the rest of the media commentariat and the Pongs too, blaming financial markets for the recession, to the joy of hard Leftists such as Quiggin.
Recently, he commenced:
And that’s been great news for us one of three key forces that has made our downturn so mild.
Now it’s been joined by growing optimism in America. At least on “the street” Wall St, where the whole entire mess started.
Crucial times just ahead with the recession
Monetary expansion hits manufacturing, the core of recession as the wiping out of mal-investments.
Having remarked on it many times over, it is enough to say, regulation has also been strangling production.
The Pongs, of course, ignored Brookesnews and its warnings on monetary policy and its impact, and its predictions in 2004 and 2005 that recession would be manifested in 2008. So, taken with also the destructive impact of recession, what we get are many Australians who feeling real pain, others very concerned and what this rectified but unarmed, thanks to the Pongs, are calling for even more damaging ‘policies’ of which one, ‘industry policy’ is another name for Soviet style planning. And it’s not simply, say Unionists who unawares are in this dangerous error. So are Liberals. An example is,
Industry policy, tariffs and the value-added fallacy
Jackson related that in May this year Des Moore (HR Nicholls Society & IPA), and recently Alan Moran (IPA) badly misled members of Berwick Liberal Party Branch over the contraction in manufacturing. Jackson in an article also related -
In brief, due to the central bank’s inflationary policy a process of deindustrialisation sets in, current account problems emerge, the financial sector undergoes excessive expansion as do services in general while manufacturing as a proportion of GDP contracts. This certainly seems to have been the case in the US, the UK and Australia.
What is maddening is that this process used to be fairly well understood…
The heart of his analysis was the insight that money is not neutral
As the reader can easily see this is a vitally important issue, one that directly affects economic policy and living standards. Unfortunately Australia’s economic commentariat not only refuse to debate it they have gone so far as to even deny its existence. Des Moore, a former deputy head of the Australian Treasury and one of our self-appointed defenders of the free market, dismissed the issue on the asinine grounds that the analysis was not part of “the traditional explanation”. According to the likes of Moore and Sinclair Davidson, another self-appointed defender of the market, the a decline a in manufacturing as a proportion of GDP is basically an example of the law of comparative advantage at work.
How America and Australia’s central banks badly damaged manufacturing
Not ”traditional”! What this says is, Moore is not read in economics but then I’ve read enough of his efforts on labour markets to know it and all too painfully. So, both Moran and Moore have even left Liberal Party members ignorant of the economic causes and explanation and the policy actions that might be involved to deal with real pain being inflected.
On comparative advantage, foreign trade is, at bottom, nothing more than exchange between someone in, say, Victoria and another in NSW. Why? It’s cheaper to produce x in Vic and y in NSW. In many goods, foreign trade is spin off from ‘domestic’ production and consumption. Wine production is a case in point and the politicians, both major parties have been hammering domestic markets with regulations and capital eating taxes. Regulation eliminates comparative advantage and to point this up further:
Australia has an absolute advantage in wine and coal and the politicians have proceeded to wipe this out. In the case of wine, it is why investment is on a trajectory in China, America, South America, Spain and Italy. Australian investors are setting up production in overseas countries. We Australians are made poorer, and cannot enjoy the calibre of wine and in quantity at low prices thanks to the politicians as prevailed into the mid 1980’s In the 1970’s they smashed burgeoning 1st rate cognac production with taxes. Humphreys (CIS) and Professor Sinclair Davidson (CIS, IPA, RMIT) ignored advantage can be wiped out by taxes and regulation is a tax too. In doing this, as also Moore and Moran, they also betrayed another very serious free market cause to the hard Left.
So, as the Pongs wreck free markets with their anti-free market, public misleading notions what is left but exactly many decent Australians knowing they are being hurt hard and want things fixed and so, unarmed as to what it means, call for ‘industry policy’ and protectionism. One upshot is such articles as the following in which the only good thing that can be said for it is the sentiment is right – protectionism is an economic evil, but the explanation is an evil too,
Ignore them at our peril: dangers lurk in protectionism
It is an evil because it does not nail the falsehoods behind protectioniswm and set out the sound case. It leads the field free for protectionists and the general voting public can be left scratching their head musing, ‘if that is all the case for free trade is, what is so wrong with protectionism and if it preserves production, then why not?!’ To check, this is what happened in reaction to the HR Nicholls Society’s rubbish they produced as the ‘case for free markets’.
The impact of protectionism is not simple either, as this article steps out:
Protectionism and “free-market absolutism”
Ignore economic laws at your peril. The Pongs didn’t ignore them, they trampled all over them when in Office, and continue trampling all over them and now Australians are in deadly peril in more ways than one, as entrepreneurs will soon find out in a particularly nasty way.
Disasters doesn’t really sum them up, more so when carbon taxes are taken into account.